Page 23 of the latest issue of Barron’s had an interview with Shawn Driscoll, the portfolio manager of the T. Rowe Price New Era fund (PRNEX). (see it online here) While the article was primarily about the oil industry, three utilities were mentioned, Atmos Energy (ATO), Edison International (EIX), and PG&E (PCG). Shawn felt commodities may start peaking out in the second quarter of next year, and that it could lead to a rush back to utilities. I thought I would provide a little more information about these names.
EIX and PCG are two large cap electric utilities that are trading close to their group average based on their 2-year P/E. The dividend yield is close to 3%, but that is a little bit lower than most of their peers.
(Source: SNL)
Historically, these two companies have tended to have a lower dividend than many of their peers.
At current levels EIX’s dividend is higher than the two year average, while PCG’s dividend is slightly below its two year average.
(Source: Factset)
(Source: Factset)
Atmos Energy is a natural gas utility, and has one of the largest market caps in the space. Based on earnings it is trading a little cheaper than it peers, but it has a dividend yield below the group average.
(Source: SNL)
Here’s a look at how ATO’s dividend yield has moved over the last two years.
(Source: Factset)
(Source: Factset)