5 Utility Stocks With Yields High Enough to Matter and Coverage Strong Enough to Trust
Regulated utilities promise predictable dividends, but rising interest rates and shifting demand are testing that promise right now. These five names have yields worth collecting and raise records worth trusting, including one payer that has not missed a dividend increase…
Income investors who need a payment they can plan around keep returning to regulated utilities for one simple reason: state commissions set the rates, customers pay their power and gas bills in every economy, and earnings that fund the dividend grow as the rate base grows. That structure makes the payout far more predictable than most high-yield corners of the market. It does carry one sector-wide catch. Rising interest rates pressure utility valuations and raise the cost of the debt these companies carry to fund capital spending. The five names below pair meaningful yields with payout ratios and raise records that hold up under scrutiny, led by a payer that has raised its dividend for 56 consecutive years.
Southern Company: Southeast Data Center Demand Backs a 3.42% Yield
Southern Company (NYSE: SO) | SO Price Prediction owns Alabama Power, Georgia Power, Mississippi Power, Southern Power and Southern Company Gas, which includes Nicor Gas. Its regulated customer base grew 0.7% to 9 million. At $88.03, the stock yields 3.42%, and the quarterly dividend recently stepped up from $0.74 to $0.76.
Dividend safety: Trailing dividends of $2.98 against EPS of $4.15 put the payout ratio near 71.8%, and management expects full-year adjusted EPS “near or at the top” of its $4.50 to $4.60 range. Like most utilities building heavily, Southern funds capital spending with debt and equity rather than internal cash, so credit matters more than free cash flow here. Management targets about 17% FFO to debt by 2029 and cut its remaining equity need through 2030 to $1.1 billion. The quarterly payout has risen every year, from $0.49 in 2012 to today’s level.
Bull case: Data center usage ran 55% higher than a year earlier, and the electric subsidiaries hold more than 17 gigawatts of signed large-load agreements. Those contracts carry minimum bills covering 100% of the additional cost to serve. As one executive put it on the second-quarter call, “The bottom line is the load is very real.”
Risk: Part of this yield comes from a falling share price. The stock is down 7.29% over the past year, and management cited interest expense from higher debt balances as a drag. At a trailing P/E of 21, Southern is the most rate-sensitive valuation in this group.
Duke Energy: Highest Yield in the Group With a Mid-60s Payout
Duke Energy (NYSE: DUK) serves the Carolinas, Florida, Ohio, and Indiana, plus Piedmont Natural Gas, with roughly 8.73M retail customers. At $118.16, it yields 3.65%, and the next quarterly payment of $1.085 is already declared.
Dividend safety: Trailing dividends of $4.26 against EPS of $6.64 put the payout near 64.2%, a comfortable level for a regulated utility. Duke confirmed full-year adjusted EPS guidance of $6.55 to $6.80 and long-term EPS growth of 5% to 7% through 2030, and it has exceeded estimates for five consecutive quarters. The quarterly dividend has increased every year from 2020 through 2026, and it has risen from $0.765 in 2012.
Bull case: Rate case outcomes across several states and 7.6 GW of economic development projects under signed service agreements give Duke a long path of rate-base growth. A forward P/E of 16 is modest for that visibility.
Risk: Duke’s growth plan leans on large new loads showing up as scheduled. Management lists a potential data center load shortfall as a risk, and spending ahead of demand that never fully arrives would raise depreciation and interest costs without matching revenue.
Consolidated Edison: 52 Straight Raises and the Lowest Payout Ratio Here
Consolidated Edison (NYSE: ED) delivers electricity, gas, and steam across New York City and Westchester through CECONY, Orange and Rockland Utilities, and Con Edison Transmission. At $107.91, it yields 3.24% on a quarterly dividend of $0.8875.
Dividend safety: Con Edison’s payout is the best covered of the five. Trailing dividends of $3.475 against EPS of $6.07 work out to about 57.2%, and management confirmed adjusted EPS guidance of $6.00 to $6.20. The company describes this as its 52nd consecutive year of dividend increases, with a 4.4% annualized increase this year. The yield here comes alongside a rising share price: shares are up 10.56% over the past year.
Bull case: Electrification of buildings and transportation is pushing New York demand higher, and Con Edison projects an 8.8% five-year CAGR in its regulated investment base to about $67.2B by 2030. A larger rate base supports a larger earnings base for the dividend.
Risk: New York’s regulatory climate is tightening. A state law known as Chapter 58 may constrain future rate increases, and Moody’s carries a negative outlook on Con Edison and CECONY. That pressure arrives while the company leans on a $2B at-the-market equity program, which reduces per-share earnings.
WEC Energy Group: Free Cash Flow Covered the Dividend in the Winter Quarter
WEC Energy Group (NYSE: WEC) serves 4.4 million customers across four states through We Energies, Wisconsin Public Service, Peoples Gas, Michigan Gas Utilities, and Minnesota Energy Resources. At $105.73, it yields 3.56%. Shares are down 4.92% over the past year, which contributes to that yield.
Dividend safety: WEC raised its quarterly dividend by 6.7% early this year to $0.9525. The trailing payout sits near 71.7% of EPS of $5.15. First-quarter free cash flow was $400.5M after $817.9M of capital spending, enough to cover roughly $310 million in quarterly dividends, though winter is the seasonally strongest quarter for a gas-heavy utility. The quarterly payout has risen every year, from $0.495 in 2016.
Bull case: Data center and large-customer buildouts are driving capital investment, weather-normalized retail electricity deliveries rose 1.2%, and WEC has beaten estimates five consecutive quarters. Confirmed EPS guidance of $5.51 to $5.61 keeps the raise pattern intact.
Risk: Core household demand is soft. Residential electricity use fell 1.1% in the second quarter, and electrification requirements threaten long-term natural gas volumes across WEC’s large gas distribution business.
Black Hills: Dividend King With a Wyoming Data Center Pipeline
Black Hills (NYSE: BKH) serves more than 1.37 million gas and electric customers across Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota, and Wyoming. At $76.64, it yields 3.63% on a quarterly dividend raised from $0.676 to $0.703.
Dividend safety: Management says the latest raise extended its record to 56 consecutive years, making Black Hills a Dividend King (we ranked ten of the cheapest Dividend Kings by valuation in a free report), and the payment history shows no reductions. Trailing dividends of $2.758 against GAAP EPS of $3.97 put the payout near 69.5%, above the company’s 55% to 65% target. Still, GAAP results include merger costs, and adjusted EPS guidance of $4.25 to $4.45 brings coverage closer to that range. Management targets 14% to 15% FFO to debt, 100 basis points above its downgrade threshold, with more than $650 million of revolver availability.
Bull case: Black Hills has more than three gigawatts of data center opportunities in its pipeline, with about 600 megawatts already in its plan through 2030. A prospective 1.8-gigawatt Cheyenne project includes up to $377 million in refundable customer advances. The stock is up 32.63% over the past year, so this yield reflects a rising business.
Risk: Higher rates hit Black Hills directly. Its next debt maturity is $400 million of 3.15% notes that must be refinanced, likely at a higher coupon, and financing and depreciation costs already took 29 cents per share out of first-half results.
Who These Five Utilities Suit
These five names fit a retiree or near-retiree who wants a quarterly check that rises over time and comes from customers who pay their bills in any economy. Con Edison and Black Hills offer the longest verified raise runs, Duke pays the highest yield with a comfortable payout, and Southern and WEC add data center growth on top of steady raises. Rising rates are the shared pressure point, so their appeal rests on collecting and growing dividends over many years.
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Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad, diverse career, including a stint as creative services director at an NBC affiliate in Austin, Texas, gives him unique insight into the financial industry.
Lee Jackson's journey in the financial industry spans more than 30 years, including nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career spanned pivotal sell-side Wall Street events, from the dot-com rise and bubble to the Long-Term Capital Management debacle, 9/11, and the Great Recession of 2008. This reflects his resilience and adaptability amid market volatility.
Lee Jackson’s practical financial industry experience, gained through a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing across various platforms. This unique combination allows him to shed light on the intricacies of Wall Street in a way only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.
Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.
