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Reduce your portfolio’s volatility with these 3 US utilities

Mircea Vasiu

The US utility sector is known for low volatility and high distribution yields. Here are three stocks to add to your portfolio to reduce volatility while earning a hefty dividend: NextEra Energy, Duke Energy, and Dominion Energy. 

Utility companies are known for their low volatility and high distribution yields, and for these reasons, they are often an interesting option to diversify the portfolio while earning dividend income. Here are three US utilities to reduce your portfolio’s volatility: NextEra Energy, Duke Energy, and Dominion Energy.

NextEra Energy

NextEra Energy is based in Florida and was founded in 1925. It serves 11 million people and generates and sells electricity.

It has one of the longest streaks of increasing annual dividends – 26 consecutive years. Moreover, the dividend payout ratio is 60.63%, and the forward dividend yield is 2.03%. Furthermore, NextEra operates with a gross profit margin for the past twelve months higher than the sector median by 17.91%.

Besides the quarterly dividend, investors benefited from the stock price appreciation too. Over the last decade, NextEra’s stock price increased by more than nine times and was recently rejected above $90.

Duke Energy

Duke Energy is another US utility, this time from Charlotte, North Carolina. It serves close to 10 million customers and generates and distributes electricity across 19 states.

The dividend yield is even higher than the one paid by NextEra – 2.78%, and the payout ratio too – 72.93%. Moreover, in the last 5 years, the dividend growth rate was 3.03%, and the company increased its annual payments to shareholders over the previous 10 consecutive years.

Dominion Energy

Dominion Energy is based in Richmond, Virginia, and employs close to 20,000 people. It produces and distributes energy in Virginia and North Carolina, and it operates with a gross profit margin for the last twelve months of 49.26%, higher than the sector median by 15.43%.

The stock price has been up +8.72% in the last twelve months and currently, the company has a market capitalization of $64.94 billion and an enterprise value of $109.03 billion. Dominion pays a quarterly dividend to its shareholders, and the forward dividend yield is 3.33%, while the payout ratio is 66.84%.