The Average Electric Utility Bill Is $147 a Month. Here's How Much You'd Need in Utility Stocks to Cover It.
It's not quite what most investors intended for their income-generating utility names. But, given current circumstances, it's not a bad idea.
Since 2021, the price of power has risen, with the average American home's electricity bill now at $147 each month, though the total cost, including water and gas, jumps to $470 per month. Faced with mounting bills, some families are finding innovative ways to stay lit. One unconventional approach could be to invest in utility stocks that are known for their high dividend payouts.
These stocks, which include the Vanguard Utilities ETF (VPU), Southern Company (SO), and NextEra Energy (NEE), offer a dividend yield of about 3.1%, similar to the VPU's yield. To cover the $1,764 needed annually for electricity, an investor would need to put away around $60,000 in one of these stocks. This means buying approximately 335 shares of VPU, generating $5.20 in annual dividends per share.
While this strategy isn't common, it could provide a financial lifeline in challenging times. However, it's important not to add more debt to cover bills, particularly with interest rates at their highest levels in recent years. Investing in utilities might offer a way to avoid debt, but it's crucial to consider market changes and potential shifts in dividend payments.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
