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Top 5 Utility Stocks by Market Cap

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Duke, National Grid, and Southern Company make the list. Find out if they belong in your portfolio.

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Utility investing is often closely linked to commodities. For the most part, utility firms depend on commodities like natural gas and coal to provide electricity to their customers. While they are certainly not a direct play on the commodity world, their close ties make them a unique indirect play. These stocks are often coveted for high dividend yields, providing steady income when rates are frozen at 0.25%. Below, we outline the five biggest utility stocks by market cap to help investors decided if any of them belong in their portfolio.

Duke Energy (NYSE:DUK)
Quick Stats as of (9/17/2012)
  • Market Cap: $45.2 billion
  • EPS: $3.36
  • Avg Vol: 4.7 million
  • Beta: 0.16
Based in North Carolina, Duke Energy is one of the most well-known names in the investing world. The company operates in the US and Latin America, providing energy for millions of homes each year. With legendary commodity investor Jim Rogers sitting in the CEO's chair, it's no wonder that Duke has become such a successful firm. The stock has a market cap of approximately $45 billion while paying out a handsome dividend of 4.8%. It should be noted that the high dividend yield is a result of a payout ratio of 89%, a figure that may ward some investors away from DUK. For the most part, the underlying financials of the firm look solid but growth has been a bit slow, coming in at just 2% last quarter (yoy).

National Grid (NYSE:NGG)
Quick Stats as of (9/17/2012)
  • Market Cap: $39.5 billion
  • EPS: $4.61
  • Avg Vol: 400,000
  • Beta: 0.66
This UK-based firm provides electricity and gas in Great Britain and northeastern United States. Their above ground electricity lines total to about 4,500 miles, while their natural gas segment provides the commodity to about 10.8 million people. National Grid has a current P/E ratio of 12, making it an attractive buy with its healthy EPS of $4.6. Of course, it wouldn't be a utility stock without a massive dividend yield; investors of this stock are treated to a yield of 7.3% that comes from a payout ratio of 66%, a bit healthier than Duke. Two things to note in their financials: quarterly growth has been relatively weak as of late and they have a massive debt/equity ratio of 264. If you are not to keen on firms financed by a fair amount of debt, National Grid probably isn't for you.

Southern Company (NYSE:SO)
Quick Stats as of (9/17/2012)
  • Market Cap: $39.3 billion
  • EPS: $2.48
  • Avg Vol: 4 million
  • Beta: 0.13
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No positions in stocks mentioned.
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