Top Energy Dividend Stocks

Brian Hicks

Written By Brian Hicks

Posted December 23, 2013

With the stock market becoming more uncertain and analysts talking of a correction ahead, a greater number of investors are turning away from conventional stocks. But it doesn’t necessarily have to be this way.

dividend stocksWhile some investors are looking for other avenues like gold or Bitcoin, you can still get in on the speculative market, and one of the best ways to do that is by investing in dividends. With dividends alone, you can often get at least a 4 to 5 percent return annually.

The end of the year is coming up, and it is about time to contemplate the best stocks going forward. Here are some of the top energy dividend stocks to look into:

EV Energy Partners (NASDAQ: EVEP)

The current annual dividend for EV Energy is $3.08 per share, which is paid out each quarter. Shares are trading around $34, and you can get a higher-than-normal dividend yield of around 9% annually.

Duke Energy (NYSE: DUK)

Duke quarterly payouts are $3.12, an annual yield of around 4.5%. Shares are trading around the $70 price mark – about the middle of its 52-week range – and the company is up for the year. According to projections, Duke shows signs of long-term growth and has had a positive track record in the dividends market.

Green energy dividends are gaining as well.


This is a green energy firm with numerous projects, including the supply of thermal energy to businesses. It currently has 910 MW of natural gas, 253 MW of solar, with 60 MW more under construction. Wind energy also amounts to 101 MW. Its quarterly dividend is $0.92, or roughly 2.3 percent, and it’s up nearly 40% since it began trading publicly this summer.

Hannon Armstrong Sustainable Infrastructure (NYSE: HASI)

Expected dividends for 2014 will be .93 at 7.5 percent for this firm, according to Renewable Energy World. Its current dividend is $0.56 at 4.2 percent. The company specializes in infrastructure contracts and energy performance in geothermal and solar.

Risks With Dividends

While dividends do look promising, for every $1 of dividend, the stock value loses $1. But with regenerative cash flow from these companies, you would still be making 50 cents in return.

With that being said, you are still taxed at three levels. You are subject to federal income tax withholding at 20 percent, with the remaining 80 percent subjected to state and federal taxes.

And speaking of income, remember that you are giving up growth in the stock market for safe and steady income through dividends. This is the ideal choice for retirees, but in a growing market, you may be missing out on valuable stocks.

But given the turbulence of the markets, dividends are a good bet if you’re looking for a stable source of income. It may not be as high as with conventional stocks in a bull run, but with dividends, you’ll have income nevertheless despite the three-tier layer of taxes.

If you’re looking for a less confined market, look to Canada. The market there is less restrictive, and you stand a higher chance of earning more gains each year. You also get lower valuation in a less liquidated market.

Most importantly, always be aware of dividends that show high yields but not much stock value. You should never pick a company just because it has the highest yield. This is why you’re better off going to the Russell 1000 index and looking for those companies with mature caps of a 5 to 6 percent return. While the hottest dividends may be showing a 20 percent return or more, it is always best to look beneath the surface and research the history of a company’s performance.

Lastly, be aware of changes in the market, particularly with the Federal Reserve. With word of stimulus tapering and the possibility of raised interest rates, the market is nervous, and some of those dividends that used to pay out 6 percent have already been cut in half to 3 percent.

In this instance, it is tempting to look back to those 20 percent returns, but don’t let temptation get the better of you. Keep an eye on your stocks as new Fed chairwoman Janet Yellen takes the helm. Most of the changes in Fed policy probably won’t be in full effect until 2016, but they are something to be mindful of going forward.

Despite the risks in minimal return and low payout, dividends are still the safest bet you can make in a turbulent market. Remember to do your due diligence before jumping in.


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