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These Utility Players Are Income Winners

The utilities sector has outperformed all others so far in 2014, and several names are offering good total-return packages.

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Travis Miller: Utilities have been on a tear this year, being the best-performing sector in the market and making up for some lost ground last year. Part of that reason is that interest rates have remained steady. Dividend yields still at 4% for the utilities group are historically good, and we see several utilities that are trading at dividend yields higher than that. For income investors looking for good total returns, we still like the utility sector even after this run.

The yields still offer a premium to U.S. Treasuries, again offering good income for investors looking for that steady growing yield. Of the group, we like Southern Company, ticker SO. It's one of largest U.S. regulated utilities, and we like it for its slow steady income growth. It still offers a premium to the group and yield at over 4%. It is one of the stalwart franchise utilities that is going to keep growing its dividend.

We also think Duke Energy, ticker DUK, offers a similarly good total-return package with a dividend yield in the 4% range and growth that we think can top 5% over the next few years. Duke and Southern Company, again, are two of the strongest utilities that we cover, and we like them for their total-return packages, especially for income investors.

Travis Miller does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.