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Utility Stocks with the Highest Dividend Growth

Vincent Kruger
Utility Stocks with the Highest Dividend Growth

Analyzing Utilities in the Week Ending January 4(Continued from Prior Part)## Dividend growthIn this part, we’ll discuss the S&P 500 Utilities with the highest dividend growth over the last five years. Utilities at large managed to raise their dividends per share by an average of ~4% in the last five years compounded annually. Competitive utility AES (AES) increased its dividend per share by more than 26% compounded annually during the same period. However, AES has a shorter dividend payment history. The company started paying shareholders in 2012. AES offers a dividend yield of 3.8%, which is higher than utilities’ average of 3.3%.## NextEra EnergyNextEra Energy (NEE), the biggest utility by market cap and the largest component of the Utilities Select Sector SPDR ETF (XLU), increased its dividend 11% in the last five years. NextEra Energy’s superior earnings growth has fueled its above-average dividend growth in the last few years. NextEra Energy yields 2.6%—one of the lowest yields among its peers.Despite a lower yield, NextEra Energy outperformed broader utilities and even broader markets in the last several years. To learn how NextEra Energy achieved this feat, read These S&P 500 Utilities Have Delivered the Best Five-Year Returns.In comparison, leading water utility American Water Works (AWK) has raised its dividend 10%, while California-based Edison International (EIX) reported a higher dividend growth of 12.4% in the last five years. American Water Works is trading at a yield of 2%, while Edison International offers a yield of 4.3%.Continue to Next PartBrowse this series on Market Realist: * Part 1 - Utilities: Gains and Losses Last Week * Part 2 - XLU: What to Expect from Utilities in 2019 * Part 3 - Utilities versus Broader Markets’ Total Returns