After a major event in the markets, I like to look at my list of 57 investor-owned utilities (IOUs) to see if any of them have interesting patterns. And sure enough, some interesting patterns emerged.
As background, every company on the list owns at least one regulated electric utility, and several own more than one. Some also own natural-gas utilities, generating companies and unregulated assets. But the key is that every investor-owned electric utility in the U.S. is included somewhere in my list, except for foreign-owned ones, such as Central Maine Power, Bangor Hydro Electric and Green Mountain Power.
After the markets closed, I listed the companies in order of market capitalization. The biggest is still Southern Co. (SO), which has a market capitalization of $32.4 billion. The lowest is Unitil (UTL), whose market capitalization is $275 million.
I aligned the dividend yield and price drop against each utility and found the following:
1. Every utility in the group lost ground, some more than others. The group's mean loss was 5.83%, and the median loss was 5.89%.
2. Four utilities were hit particularly hard. AES (AES) was the biggest loser of the group, with a loss of 11.86%. Great Plains Energy (GXP) was next with a loss of 9.74%. OGE Energy (OGE). PNM Resources (PNM) lost 8.19%. Other than AES, all utilities that lost 7% or more had market capitalizations of $4 billion and below.
3. All of the nation's top utilities with market capitalizations above $10 billion experienced losses below 6%.
4. Four utilities lost less than 4% of their market capitalization. Southern Co. lost only 3.86%. UniSource Energy (UNI) lost 3.51%. DPL (DPL) lost 2.13%. Unitil lost 2.1%. And Central Vermont Public Service (CV) lost only 0.46%.
5. As anyone would expect, all members of the group saw their yields increase. The group's mean yield is 4.75%, and the median yield is 4.90%.
6. Three utilities in the group now have yields exceeding 6%. Empire District Electric (EDE) has a yield of 7.03%, Otter Tail (OTTR) has a yield of 6.36%, and Pepco Holdings (POM) yields 6.36%.
7. Three utilities have yields that remain below 3%. AES does not pay any dividends. El Paso Electric (EE) pays 2.87%. Constellation Energy Group (CEG) pays 2.79%. And Central Vermont Public Service (CV) pays 2.64%. Both Constellation and Central Vermont are in the process of merging with larger entities.
Southern appears to be a winner. It sits in the safer region of the group, and it did not lose much value.
The dividends at Pepco Holdings are worth watching. Serving the Washington, D.C., area, Pepco has solid customer base but developed a problem with its image. The problem is isolated to one of its three local distribution companies, and Pepco is working hard to restore confidence. At present, Pepco's dividend appears safe.
While most of these companies are rock-solid, jumping in now may not be wise. Wait for Jim Cramer to provide RealMoney readers with the precise buying signal. If you cannot wait, then average down by buying a few shares now and a little more each time the stock drops.
If you want to go hog-wild for crazy "utility" dividends, jump into Veolia Environmental (VE).
