U.S. markets suffered a bloodbath on Monday. The S&P 500 index fell below 4,000 to finish at its lowest point in a year, the Nasdaq Composite plunged by 4.3% and the Dow Jones industrials lost 2.0%.
Looking at the overall market since the beginning of the year, only one sector (energy) has posted positive performance. Energy stocks as a group have added nearly 37% to their share price so far this year. Only two other sectors are even close to breaking even for the year to date: consumer staples and utilities.
We already have taken a look at a handful of consumer defensive stocks that investors might want to consider, as well as some dividend-paying tech stocks. Here we are looking over the utilities sector, seeking some good defensive plays that deliver energy that people use and need every day to heat and cool their homes, cook their meals and turn on the lights.
Our list includes stocks from several industries within the utilities sector that pay among the best dividends in their industry and trade enough volume to ensure that investors can exit at a fair price whenever they choose to do so.
Companhia Energética de Minas Gerais (NYSE: CIG) generates, distributes and sells electricity in Brazil. The company pays an annual dividend of $0.32 per share, for a yield of 12.55%. The average daily trading volume is around 6.1 million shares. Free cash flow per share is $0.29, and the payout ratio is 40.3%. The 12-month total shareholder return was 19.5%. The company also buys, transports and sells natural gas, along with an IT business and a trading arm.
Houston-based NRG Energy Inc. (NYSE: NRG) is an independent electricity generator and natural gas distributor with about 6 million home customers. The company pays an annual dividend of $1.40, yielding 3.38%, and trades nearly 3 million shares on an average day. Free cash flow per share for the past 12 months was $11.79, and the payout ratio is about 8.1%. Total shareholder return for the past year was 23.3%.
Southern Co. (NYSE: SO) generates, transports and distributes electricity from hydroelectric, fossil-fuel, nuclear and renewable sources. The company pays an annual dividend of $2.72 (yield of 3.64%) and trades about 6 million shares a day. Free cash flow per share for the past 12 months was negative $0.43, and the company’s payout ratio for the period was 122.31%. Total shareholder return for the past year was 16.7%.
NiSource Inc. (NYSE: NI) is a regulated natural gas and electricity utility serving more than 3 million customers from Indiana to Maryland. NiSource pays an annual dividend of $0.94, yielding 3.19%, and it trades about 4.4 million shares daily. Free cash flow per share was negative $1.41 over the past 12 months, and NiSource’s payout ratio was 57.2%. Total shareholder return for the past year was 16.5%.
Canada-based Algonquin Power & Utilities Corp. (NYSE: AQN) owns and operates both regulated and merchant electric generation and distribution and is a leader in generation from renewable sources. The company pays an annual dividend of $0.68 (yield of 5.03%). Algonquin’s free cash flow for the past year is negative $1.77 per share, and the company’s payout ratio is 119.4%. More than 2 million Algonquin shares change hands daily. Total shareholder return for the past year is negative 9.2%.
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