3 High-Yield Energy Stocks You Can Hold for the Rest of Your Life

Utility stocks are often overlooked. Most consumers aren't familiar with many of them; their only interaction with a utility is when they pay their monthly water, gas, or electric bill.

But utilities tend to be excellent dividend stocks because of the industry's consistent and often regulated nature. They can pay shareholders passive income that increases every year, making utilities substantial additions to any long-term, diversified portfolio.

Here are three utility stocks that have proven to be resilient dividend stocks over the years.

Why are utilities good dividend stocks?

Utilities distribute essential resources like water, electricity, and gas to homes and businesses. Anyone who lives in their own house or apartment knows that paying your utility bills is as essential as buying groceries. Utilities typically don't have to worry about getting paid, regardless of the economy.

Governing bodies and utilities agree on rate hikes and pricing in exchange for commitments to invest in upgrading or maintaining utility infrastructure like pipes, meters, etc. Unregulated utilities will use long-term contracts, providing similar stability to the business.

The drawback of utilities is that many are slow and steady businesses and might not be ideal for investors looking to maximize investment returns. But if you're looking for a reliable dividend that can endure market volatility, you've come to the right place.

1. Consolidated Edison

Energy delivery company Consolidated Edison (ED -0.42%) operates utilities delivering electricity, gas, and steam energy to roughly 10 million people in the New York City and Westchester areas. The company also operates a green energy segment and transmissions business, including electricity and gas pipelines.

Consolidated Edison is one of the most accomplished dividend stocks in the utility sector; the company is already a Dividend Aristocrat and, with 48 consecutive payout increases, will soon be a Dividend King. Investors can enjoy a 3.3% yield at the current share price.

ED Revenue (TTM) data by YCharts.

Over the next two years, the company plans to invest $15.7 billion, primarily into its utility business. It is considering selling its clean energy portfolio for roughly $4 billion to help fund the investments. These investments will bring rate hike requests to regulators, which should boost the company's growth over the coming years.

2. UGI Corporation

International energy distributor UGI Corporation (UGI 0.19%) has a collection of businesses, including natural gas and electric utilities, midstream energy operations, America's largest propane distribution business, and liquified petroleum distribution in Europe.

UGI isn't in the S&P 500, so it cannot qualify as a Dividend Aristocrat, but its 35 years of consecutive dividend growth speak volumes about the company's long-term history of success. The stock offers a dividend yield of nearly 3.5%, and management's long-term goal is to increase the payout by an average of 4% each year.

UGI Revenue (TTM) data by YCharts.

The company's U.S. propane business generated $138 million in net income in Q2 2022, making it UGI's largest reporting business segment by profit. Retail propane prices have risen 62% over the past three years, which has helped support growth and continued dividend raises. It spends just 19% of its net income on the dividend, leaving room to absorb potential volatility in its businesses.

3. Black Hills Corporation

A dedicated utility company, Black Hills Corporation (BKH 0.47%) distributes gas and electricity to 1.3 million people across eight midwestern states. You can see how much more stable Black Hills' revenue over the past decade has been as a pure utility versus companies with other businesses like Consolidated Edison and UGI.

Most investors probably won't be familiar with an obscure business like Black Hills, but the company has delivered, raising its dividend for 52 years. The stock is sporting a 3.2% dividend yield, and management targets a 5% annual growth rate and a 50% to 60% payout ratio for the dividend, making it a slow and steady payout that investors can rely on.

BKH Revenue (TTM) data by YCharts.

The company looks poised to continue delivering; management forecasts 5% to 7% annual earnings-per-share (EPS) growth through 2026 based on forecasted capital spending and rate hikes. The company's financial discipline makes the Black Hills a likely candidate to continue growing its payout well into the future.