The 3 Best Dividend Utility Stocks to Buy in November

If you like boring dividend stocks, utilities are a good place to start. But not all utilities are created equal, so you’ll find that Black Hills (BKH -2.15%), NextEra Energy (NEE -2.40%)And Eversource Energy (ES -3.31%) all worth a closer look as November begins. However, the most important thing here is that each of these utility companies is attractive for completely different reasons.

1. Black Hills is a small and reliable company.

Don’t be discouraged if you’ve never heard of the Black Hills. With a market capitalization of approximately $4.1 billion, it is a fairly small player in the utilities sector. It serves approximately 1.3 million electric and natural gas customers in parts of Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. It’s a pretty boring business, although it has and will continue to benefit from the fact that its customer base is growing at a rate almost three times the overall growth of the US population.

However, the real attraction here is Black Hills’ slow and steady rate of dividend growth. Over the last decade, dividends have increased by about 5% annualized, which is pretty good. But the dividend itself has grown every year for 54 straight years, making Black Hills one of the few dividend kings in the utility sector. Now add in the stock’s dividend yield of 4.4%, which is noticeably higher than the average utility of 2.7%. Sometimes good things come in small packages.

2. NextEra Energy’s dividends are growing quickly.

If Black Hills is the slow and steady tortoise, then NextEra Energy is the hare. This is especially noticeable in the 11% annual dividend growth the company has achieved over the past decade. That’s a shockingly high number for a utility where low to mid-single digits are considered a good result. To make its dividend history even more attractive, NextEra has increased its dividend every year for three decades. It’s not as good as Dividend King Black Hills, but add in dividend growth and you can see why investors like NextEra stock.

The growth story here is driven by two companies. First, NextEra has a strong foundation in the regulated utility industry with Florida Power & Light. For years he benefited from immigration to the Sunshine State. From this strong core, NextEra has built one of the largest solar and wind energy companies on the planet. And clean energy still has enormous growth potential, so there’s no reason to think NextEra Energy’s dividend growth story is about to stall.

The only problem is that Wall Street is well aware of this whole story, so the stock tends to trade at a higher price. For example, the dividend yield today is 2.6%. That’s a little below the industry average, but if you’re a dividend growth investor, you probably won’t mind.

3. Eversource Energy Looks Cheap Right Now

Eversource Energy in many ways has the least compelling story of the trio. With a market capitalization of $23 billion, it is a large utility company, but not an industry giant. Its business spans a variety of utilities, including regulated electric utilities, water utilities, natural gas utilities and transmission assets, but it is not actually an industry leader in any of them. Although it operates in the Northeast, which is an important sector of the United States, in terms of population, the region is not as attractive as the Sun Belt.

What makes Eversource interesting is the stock’s 4.3% dividend yield. This is near the highest level in the company’s recent history, suggesting it is on sale right now. To be fair, the company had some problems investing in offshore wind farms, which resulted in large one-time costs. So investors have reason to be a little pessimistic about the stock. However, with dividends rising steadily for more than a quarter century, Wall Street may be too negative.

In fact, management is forecasting earnings growth of 5-7% for the foreseeable future, which should lead to similar levels of dividend growth. If you value value, Eversource stock could be a good pick for you in November.

Three options for three different types of investors

There is no perfect stock for every investor, so investing is an individual endeavor. But as November approaches, you can find dividend-paying companies that suit almost every investor’s needs. Black Hills looks like a conservative investor’s dream. NextEra Energy will likely satisfy dividend growth investors, and investors who like to buy stocks when they’re cheap will likely appreciate Eversource Energy.