Safe High Yielding Stocks To Hold Forever

Karen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

These are the stocks your father wanted you to buy.  They’re not glamorous techs or flashy metals and the mere mention of their names starts a yawn festival.  But while Silicon Valley’s dot.coms were flashing then crashing followed by the housing market’s nosedive, these old-fashioned utilities kept right on paying boring dividends and making their investors richer. 

WGL Holdings (NYSE: WGL) has been paying dividends for the past 160 years.  The company was founded in 1846 and paid their first dividend four years later.  Since then, WGL has never missed a dividend payment and has raised their dividends every year at least since 1972.

WGL provides natural gas to residential, commercial and industrial customers in highly populated areas located in Maryland, Virginia, Delaware and Washington D.C., via pipelines. 

The stock’s trading around $39.04, which is pretty much in the middle of their 52-week range of $36.84 - $44.99.  Given the stock’s snail beta of 0.34, investors shouldn’t expect to see a lot of  flucuation in price. 

WGL saw their fiscal year revenue increase from $2.709 billion in September 2010, to $2.752 billion in September, 2011. Net income followed along, increasing from $111.2 million to $118.4 million, respectively.  The company has cash of $51.52 million, debt of $678.63 million, and operating cash of $250.31 million.

WGL’s $1.60 dividend makes it a 4.10% yield, and has an 80% payout ratio.

Consolidated Edison (NYSE: ED) powers the iconic Manhattan skyline and lights up Times Square.  The utility provides electric and gas service to a large part of New York, New Jersey and Pennsylvania.

The company started paying dividends in 1885 and hasn’t missed a payment in all those 127 years.  They’ve increased their payout in at least 37 of those years, and raised dividends almost every year since 1989.

The stock’s trading around $60.62, which is in the middle of their 52-week range of $54.63 - $65.98.  The stock has a comatose 0.14 beta, meaning that the glaciers will probably melt faster than this stock price will move.

ConEd’s annual revenue decreased from $13.325 billion in 2010, to $12.938 billion in 2011. Net income did just the opposite, increasing from $1.003 billion to $1.062  billion, respectively.  The company has cash of $1.38 billion, debt of $11.88 billion, and operating cash of $2.80 billion.

ConEd pays out a $2.42 dividend for a 4.0 % yield, and has a 67% payout ratio.

Rounding out the list is the baby of the group, Avista (NYSE: AVA).  They’ve only paid dividend for the past 113 years and have raised dividends for 10 of those years.

Avista provides electricity and natural gas to residential, commercial and industrial customers in parts of Washington State, Idaho and Oregon. 

The stock’s 52-week trading range is $22.81 - $28.05, and currently trades around $25.40.   The stock has a lightning-fast beta of 0.60, so it should have more price flucuation than either WGL or ConEd.

Avista’s annual revenue increased from $1.559 billion in 2010, to $1.620 billion in 2011. Net income likewise increased from $92.4 million to $100 million, respectively.  The company has cash of $72.70 million, debt of $1.38 billion, and operating cash of $287.50 million.

Avista pays a $1.16 dividend for a 4.60 % yield, and has a 72% payout ratio.

Although the demand for electricity may change depending on seasonal usage, the need for energy is always there.  Along with reliable dividends, these three utilities’ steady stock prices makes them ideal candidates for writing covered calls to generate additional income.  Utilities may be boring stocks, but for those seeking safe returns, nothing else on the market can beat their high yield and security.

 

 

 


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