Tag Archives: $D

Dividend Payout Ratio: Is It Relevant?

I was just going over some of my sector-based watch lists and was struck by the wide variety of dividend payout ratio targets that have been set by companies. This got me thinking about how often investors, and specifically dividend investors, use payout ratio as an initial screening tool for finding potential investments.

Not only do payout ratios vary significantly from sector to sector, but they also can vary significantly between companies operating in similar businesses. For example, it is quite common for utility companies to pay out more than 50% of their earnings in dividends, as they operate in generally stable businesses that have predictable earnings. However, when looking at my 30 stock utility watch list, there is a range of targeted payout ratios from 40-75%, with UGI Corporation $UGI on the low end and Dominion Resources $D at the top.

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2017’s Top Ten Utilities For Dividend Growth And Income

My latest coverage of the utility sector was posted on Seeking Alpha, highlighting my Top Ten picks for 2017.

The sector as a whole remains quite expensive on a historical basis, with 27 of the 30 companies trading at least 10% above my “fair value” estimate. Nonetheless, there are still a few companies worth a look, especially for those looking investors looking specifically for income.

For quick reference, here is the list of the Top Ten, as well as the valuation and projection spreadsheets from the article.

A list of my top ten utility stocks for dividend growth and income for 2017.
Valuation Spreadsheet
Income and total return projections.

Finally, here is the article:

2017’s Top Ten Utility Stocks For Dividend Growth And Income