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Investors often tap utility space as one of the lucrative sectors for garnering dividend income and beefing up portfolio’s income stream. The sector offers essentials, including gas, water, electricity and other infrastructure services, whose demand is usually immune to economic fluctuations and strong during economic recovery.
These stocks are vulnerable to movement in commodity prices, like natural gas or coal, but they generally pass those costs to their customers
Recently, complementary energy production has been added as a subcategory of the conventional utility companies. This includes solar electric firms and wind turbine companies.
Let’s have a look at five utilities stocks.
Meridian Energy Limited (ASX: MEZ) Reported Robust Half Year Results
Meridian Energy Limited is involved in electricity production, retailing and trading. It is one of the leading power companies in NZ region, focussed on generating power from renewable resources.
The company has released solid financial results (interim) today for the half year ended 31 December 2019. Group NPAT marked an uptick of 26% to $191 million, while EBITDAF rose by 20% to $465 million.
Its Meridian brand has been ranked as the top huge retailer, while the Powershop was brand as the top electricity supplier by Consumer NZ. The company remains committed to reduce its carbon emissions by 50% by 2030.
Dividend Story
Operating Performance for January 2020
Key highlights of January month include:
- Over the month to 13 February 2020, national hydro storage increased from 123% to 126% of historical average;
- South Island storage sat at 127% of average and North Island storage at 117% of average on 13 February 2020;
- Meridian’s January 2020 monthly total inflows were 71% of historical average;
- The company’s New Zealand retail sales volumes in January 2020 were 25.1% higher than January 2019;
- New Zealand Aluminium Smelter's load during January 2020 was below the contract level of 622MW.
Share Price Trend
The stock of MEZ traded at $4.950 on 26th February 2020 (2:00 PM AEDT), down by 5.7%. The company has a market capitalisation of $13.46 billion with an annual dividend yield of 2.74%.
The total outstanding shares of the company stood at 2.56 billion, and its 52-week low and high is $3.364 and $5.550, respectively. The stock has given a total return of 28.99% and 15.66% in the time period of 3 months and 6 months, respectively.
APA Group (ASX: APA) Noted Crucial Milestone for Sole Gas Project
APA Group is engaged in the business of ownership and operation of energy infrastructure, comprising gas transmission, gas storage and processing, and gas-fired and renewable energy power generation businesses located across Australia.
The Sole Gas Project has passed a vital milestone with the gas access into the Orbost Gas Plant (upgraded by APA to manage gas through the Sole gas field) from the Eastern Gas Pipeline.. Below are key details-
- The development and commissioning of Sole has been finished and the field is ready to supply gas;
- Commissioning of the Orbost plant is progressing for its second phase, which will involve initiation of gas from Sole and commissioning of raw gas processing facilities;
- Full rate production and commercial operation for firm gas supply are expected in March 2020.
Dividend Story
The company recently announced a dividend of $0.23 (~37% franked) for a period of 6 months.
Share Price Trend
The stock of APA traded at $10.830 on 26th February 2020, down by 1.5% (2:12 PM AEDT). The company has a market capitalisation of $13.16 billion with an annual dividend yield of 4.41%.
The total outstanding shares of the company stood at 1.18 billion, and its 52-week low and high is $9.480 and $11.850, respectively. The stock has given a total return of 0.83% and 1.67% in the time period of 3 months and 6 months, respectively.
AGL Energy (ASX: AGL) Agreed To Terminate PHES Project Agreement With Hillgrove
AGL Energy Limited is engaged in the operations of energy businesses and investments, including energy generation, gas storage and sale of electricity and gas to residential, business and wholesale customers.
In April 2019, Hillgrove announced it had entered into binding agreements with AGL Energy Limited, to sell the right of Pumped Hydro Energy Storage (PHES) project at the Kanmantoo mine site. However, AGL and Hillgrove have mutually decided to cease the PHES Project Agreement and related project documents and impact a clean break with no further commitments on either party.
The company now aims to proceed with the regional exploration/drilling programs, optimisation/feasibility studies and mine design plans.
Dividend Story
The company declared interim dividend of 47 cents for 1H20, consistent with the 75% payout ratio over full year.
Share Price Trend
The stock of AGL traded at $19.600 per share on 26th February 2020, down by ~4.3% (2:16 PM AEDT). The company has a market capitalisation of $13.09 billion with an annual dividend yield of 5.42%.
The total outstanding shares of the company stood at 639 million, and its 52-week low and high is $18.390 and $23.310, respectively. The stock has given a total return of 3.59% and 10.40% in the time period of 3 months and 6 months, respectively.
Mercury NZ Limited (ASX: MCY) Revised its Guidance for FY20
Mercury NZ Limited is engaged in electricity generation and electricity retailing, whose core strength is harnessing renewable energy and innovating for its customers. The company is listed in both New Zealand and Australian stock exchange.
The company recently released financial results for the half year ended December 2019 (Refer to the below image from MCY’s ASX update).
The company has revised its FY20 EBITDAF guidance from $510 million to $500 million. This shows an anticipated 170 GWh decline in full year production to 3,900 GWh because of dry weather conditions in the Taupo catchment during H2-FY2020 to date.
Dividend Story
The company declared interim half year dividend of 6.4cents, an uptick of 3.2% on pcp, with the full year guidance of 15.8cents being the twelfth year of ordinary dividend growth.
Share Price Trend
The stock of MCY traded at $4.900 on 26th February 2020, down by 7.9% (2:40 PM AEDT). The company has a market capitalisation of $7.25 billion as on 25th February 2020 with an annual dividend yield of 2.77%.
The total outstanding shares of the company stood at 1.36 billion, and its 52-week low and high is $3.440 and $5.440, respectively. The stock has given a total return of 16.41% and 8.79% in the time period of 3 months and 6 months, respectively.
