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Strategies & Market Trends : Dividend investing for retirement
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To: chowder who wrote (13033)11/1/2012 8:52:41 PM
From: E_K_S  Read Replies (1) of 34328
 
Jim and/or Dabum3 -

What percent of the dividend portfolio do you want in electric/gas utilities? Do you qualify the category of "electric utilities" by just their dividend payment(s) and/or the growth of those dividend OR do you dig deeper into the assets they hold and the "other" business segments they operate?

I ask this as I have focused my dividend search from the source of the fuel, Natural Gas. I come up w/ MLP's that do the processing and gathering of the fuel, pipeline companies that transport the fuel, electric utilities that burn the fuel to generate electricity and other residual components like fertilizers etc. Each of these component companies generate good FCF and pay nice dividends.

I did discover that some of the most undervalued companies own assets in one or more of these segments. MDU and GAS are two I like. GAS may be stretched in their valuation and I need to review their dividend growth history.

The one thing I like about the utility component is that this segment is regulated and usually generates stable revenues, cash flows and dividend payments. But by itself, I think future growth is limited (that implies future growth in dividends is limited too). Just a thought as I read each of your analysis of the sector.

For me, the winner is the company that owns assets in all of the segments with the bottom line being (1) the dividend yield (and/or current PE) and (2) what has been the dividend growth over the last 10 years AND is it due to contributions from growth in their other business segments.

EKS
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