3 High-Dividend Utility Stocks for Stable Income

The utility sector shows strong potential this year as it transitions to renewables, natural gas, and nuclear energy, ensuring long-term stability. Government initiatives like IRDA and IIJA, along with rising investments in grid modernization, energy storage, and clean energy technologies, enhance resilience and efficiency.

Therefore, high-dividend utility stocks such as The Southern Company (SO), Duke Energy Corporation (DUK), and ONEOK, Inc. (OKE) offer attractive yields for stable income, making them smart investment choices.

Electricity demand is rising sharply after years of stagnation, driven by increased electrification, the growth of data centers, and a shift toward manufacturing onshoring, ensuring steady revenue growth. This positive outlook for the utility sector highlights the appeal of high-dividend stocks in this space.

Likewise, utilities are driving growth by balancing affordability with rate regulations, maintaining a steady customer base, and minimizing volatility. The global utilities market is projected to reach $7.31 trillion by 2025, growing at a CAGR of 6.9%. Alongside this, key advancements, such as AI adoption, smart meters, and digital-first customer solutions, are cutting costs, improving reliability, and boosting profitability.

Furthermore, investors’ interest in utility stocks is evident from the SPDR Select Sector Fund – Utilities’ (XLU) 32.6% returns over the past year. Considering these conducive trends, let’s analyze the fundamental aspects of the three Utilities - Domestic picks, starting with the third choice.

Stock #3: The Southern Company (SO)

SO and its subsidiaries engage in the generation, transmission, and distribution of electricity. The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects, and sells electricity in the wholesale market. Additionally, it distributes natural gas in Illinois, Georgia, Virginia, and Tennessee.

On January 13, 2025, SO’s subsidiary, PowerSecure, announced a collaboration with Edged Energy to supply electrical and mechanical systems for Edged's first North American data center in Atlanta.

On November 21, 2024, SO announced the Phase III expansion of its Millers Branch Solar Facility, adding 132 MW to reach a total generating capacity of 512 MW. This expansion strengthens SO’s renewable energy portfolio, furthering its commitment to clean energy.

In terms of the trailing-12-month Return on Total Capital, SO’s 4.92% is 20.5% higher than the 4.08% industry average. Its 17.87% trailing-12-month net income margin is 41.3% higher than the 12.65% industry average. Furthermore, the stock’s 49.42% trailing-12-month EBITDA margin is 32.3% higher than the 37.36% industry average.

SO has paid dividends for 35 consecutive years. Its annual dividend is $2.88, which translates to a yield of 3.45% at the current share price. Its four-year average dividend yield is 3.83%. Moreover, the company’s dividend payouts have increased at a CAGR of 3.1% over the past five years.

In the fiscal third quarter ended September 30, 2024, SO's total operating revenues rose 4.2% year-over-year to $7.27 billion, and its operating income increased by 12.2% year-over-year to $2.37 billion. Moreover, the company’s net income - excluding special items, and EPS - excluding special items, both grew marginally from the year-ago values to $1.56 billion and $1.43, respectively.

For the quarter that ended December 31, 2024, SO’s revenue is expected to increase 2.4% year-over-year to $6.19 billion. Its EPS for the quarter ending March 31, 2025, is expected to rise 11.2% year-over-year to $1.15. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 22.4% to close the last trading session at $83.48.

SO’s POWR Ratings reflect strong prospects. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It is ranked #25 out of 58 stocks in the Utilities – Domestic industry. It has a B grade for Momentum. Click here to see SO’s ratings for Growth, Value, Stability, Sentiment, and Quality.

Stock #2: Duke Energy Corporation (DUK)

DUK and its subsidiaries operate as an energy company in the United States. It operates through two segments: Electric Utilities and Infrastructure (EU&I), and Gas Utilities and Infrastructure (GU&I).

On January 17, 2025, DUK announced its participation in a U.S. Gen III+ small modular reactor (SMR) technology grant, advancing nuclear energy as part of its 'all of the above' energy strategy. The collaboration with GE Hitachi aims to reduce costs and risks while supporting long-term economic development and industry best practices.

On January 9, 2025, DUK announced a quarterly cash dividend of $1.05 per share on its common stock and $359.38 per share on its Series A preferred stock, payable on March 17, 2025. This marks 99 consecutive years of cash dividends on common stock.

In terms of the trailing-12-month EBIT margin, DUK’s 26.11% is 22% higher than the 21.41% industry average. Likewise, its 47.41% trailing-12-month EBITDA margin is 26.9% higher than the 37.36% industry average. Furthermore, the stock’s 41.96% trailing-12-month Capex / Sales is 23.5% higher than the 33.99% industry average.

DUK has paid dividends for 18 consecutive years. Its annual dividend is $4.18, which translates to a yield of 3.80% at the current share price. Its four-year average dividend yield is 3.98%. DUK’s dividend payouts have increased at a CAGR of 2% over the past three years.

DUK’s total operating revenues for the third quarter ended September 30, 2024, were $8.15 billion, up 2% year-over-year. Its operating income increased 1.6% compared to the prior year, reaching $2.14 billion. For the same quarter, the company’s adjusted net income and adjusted EPS available to DUK common stockholders were $1.24 billion and $1.62, respectively.

Analysts expect DUK’s EPS and revenue for the quarter ended December 31, 2024, to increase 9.8% and 6.2% year-over-year to $1.66 and $7.65 billion, respectively. Over the past year, the stock has gained 16.2% to close the last trading session at $109.86.

DUK’s positive outlook is reflected in its POWR Ratings. It has a B grade for Momentum and Stability. DUK is ranked #20 in the same industry. Click here to access the additional grades for DUK’s Growth, Value, Sentiment, and Quality.

Stock #1: ONEOK, Inc. (OKE)

OKE engages in gathering, processing, fractionation, storage, transportation, and marketing of natural gas and natural gas liquids (NGL) in the United States. It operates through four segments: Natural Gas Gathering and Processing, Natural Gas Liquids, Natural Gas Pipelines, and Refined Products and Crude.

On December 4, 2024, OKE announced the completion of the MB-6 NGL fractionator in Mont Belvieu, Texas, increasing its fractionation capacity to over 1 million bpd. Additionally, the full looping of the West Texas NGL Pipeline expands its capacity to 515,000 bpd, with further expansion expected in 2025.

On November 24, 2024, OKE announced its agreement to acquire the remaining publicly held common units of EnLink Midstream for $4.30 billion in OKE stock, with the transaction expected to close in the first quarter of 2025. Each EnLink unit will be converted into 0.1412 shares of OKE common stock.

OKE’s 16.87% trailing-12-month Return on Common Equity is 35.6% higher than the 12.43% industry average. Similarly, the stock’s 5.48% trailing-12-month Return on Total Assets ratio is 8.4% higher than the 5.06% industry average. Its 22.89% trailing-12-month EBIT margin ratio is 17% higher than the 19.56% industry average.

OKE pays an annual dividend of $4.12, which translates to a yield of 3.94% at the current share price. Its four-year average dividend yield is 5.81%. Its dividend payouts have increased at a CAGR of 2.3% over the past five years. OKE has paid dividends for the past 26 years.

OKE’s operating income for the third quarter that ended September 30, 2024, rose 52.6% year-over-year to $1.13 billion. In the same period, OKE’s net income came in at $693 million, up 52.6% from the prior year’s quarter. In addition, the company’s earnings per common share increased 19.2% year-over-year to $1.18.

Street expects OKE’s EPS and revenue for the quarter ended December 31, 2024, are expected to increase 29.7% and 29.4% year-over-year to $1.49 and $6.77 billion, respectively. Over the past year, the stock has gained 51.8% to close the last trading session at $104.53.

OKE’s POWR Ratings reflect its robust fundamentals. OKE has an A grade for Momentum and a B grade for Growth. Within the Utilities - Domestic industry, it is ranked #13. To see OKE’s rating for Value, Stability, Sentiment, and Quality, click here.

What To Do Next?

Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:

3 Stocks to DOUBLE This Year >

SO shares were trading at $85.65 per share on Monday afternoon, up $2.17 (+2.60%). Year-to-date, SO has gained 4.05%, versus a 1.88% rise in the benchmark S&P 500 index during the same period.

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.

More...