While the determination on interest rates going higher isn’t a totally done deal, the signs pointing to a December lift-off are about as strong as they can be. Toss in the fact that Federal Reserve board governors are chiming in that the landscape looks better and the odds improve even more. Like we have told our 24/7 Wall St. audience on numerous occasions, the increase of 0.25% or maybe even 1.00% is negligible and should have little overall impact.
One area investors have looked for income has been the utility sector, which roared during the multiple quantitative easing periods and has since slowed down on concerns of rate increases. We scanned the UBS research universe for the top companies in the sector that should continue to do just fine in a very slowly rising interest rate scenario.
Included in the data is the current dividend yield and how the stock has traded around expectations and history. Many of the Wall Street firms that we cover are becoming more positive on utilities again after this year’s underperformance and this top company also resides in the UBS quality growth at a reasonable price portfolio.
Dominion Resources, Inc. (NYSE: D) is one of the nation’s largest producers and transporters of energy, with a portfolio of approximately 24,600 megawatts of generation and 6,455 miles of electric transmission lines.
Dominion operates one of the nation’s largest natural gas storage systems with 928 billion cubic feet of storage capacity and serves utility and retail energy customers in 13 states.
Dominion investors are paid a solid 3.83% dividend. The UBS price target for the stock is $77. The Thomson/First Call consensus price target is at $78.59. The stock closed Monday at $67.58.
With the potential for another cold winter on tap, this company may look to extending 2015 gains into next year. DTE Energy, Inc. (NYSE: DTE) is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide.
DTE has operating units which include an electric utility serving 2.1 million customers in Southeastern Michigan and a natural gas utility serving 1.2 million customers in Michigan.
DTE’s Energy portfolio includes non-utility energy businesses focused on power and industrial projects, natural gas pipelines, gathering and storage, and energy marketing and trading.
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