Harry Domash's Winning Investing



Boring Utilities: Rx for this Scary Market?

Utilities are one of the few market sectors showing strength these days. Why?

Utilities provide products that everyone needs regardless of which way the economy is heading, namely electricity, water and natural gas.

Another advantage of utilities is that many of them pay high dividends. Thus, even if share prices drop, you’ll still be collecting substantial income while you wait for the market to recover.

Screening for Utilities

With that in mind, I’m going to describe a strategy for using my favorite stock screener Finviz, to scan the market for utility stocks worth considering.

Why do I recommend Finviz so often in these columns? For starters it’s free, more capable, and is easier to use than other screeners that I’ve tested.

Set Up Screener

Start by selecting Screener on the Finviz home page (finviz.com). On Finviz, you use filters to specify your screening criteria. From the home page, click “All” on the Filters bar to see the available filters. For each filter that you want to use, click on the associated dropdown menu to select a search value.

Define Candidate Universe

To begin, limit your list to U.S.-based utilities by using the “Sector” dropdown menu to select “Utilities” and the “Country” filter to select “USA.”  

Specify Dividend Yield

For stocks, dividend yield (annual dividend divided by price you pay for stock) is analogous to the interest rate you receive on a bank account. Specify “Over 2%” using the Dividend Yield filter to limit your list to utilities paying significant dividends. Later, you could adjust that number up if you want to only see higher payers.

Fastest Growers

Most utilities operate relatively stable businesses, in terms of earnings per share. However, I’ve found that generally, stocks with the fastest earnings growth tend to outperform their category. So, use the “EPS Growth This Year,” EPS Growth Next Year,” and “EPS Growth Next 5 years” filters and specify “over 5%” for each to limit your list to the fastest earnings growers.

Smart Money

Next, limit your list to utilities in favor with the smart money by specifying “Over 80%” for “Institutional Ownership.”

Finally, as you’ve probably already heard, in the stock market, “the trend is your friend.” So, use the “Performance” filter to specify “Month Up” to isolate uptrending utility stocks.

Screen Results

My screen turned up five utilities paying 3% plus dividend yields.

  • Evergy (EVRG): Delivers electricity to 1.6 million customers in Kansas and Missouri. Dividend yield is 3.2%.

  • First Energy (FE): Serves six million electricity customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York, 3.3% dividend yield.

  • NRG Energy (NRG): Serves six million electricity customers in Texas, 3.3% dividend yield.

  • UGI Corporation (UGI): Delivers propane, liquefied petroleum gases, natural gas and renewable energy products to customers in numerous states and in 17 European countries, 3.8% dividend yield.

As always, consider these utilities to be research candidates, not a buy list. The more you know about your stocks, the better your results.

published 4/12/22

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