DTE Energy Plans To Raise Rates: Will These 2 High Yielding Investments Do The Same?

As of March 1, 2022, the utilities sector began outpacing the S&P 500, and is currently up 10.83% year-to-date, while the S&P 500 is down 11.67%. 

On January 19, 2022, DTE Energy DTE, Michigan’s largest energy company, proposed a $388 million investment in the state’s energy grid and electric storage and generation system to prepare for 21st century demands. DTE Energy is seeking the Michigan Public Service Commission's (MPSC) approval for its first rate increase in two-and-a-half years, which will cause consumers' bills to increase by roughly $10 per month.

As energy inflation remains elevated, it may come as no surprise that utility companies may have to raise their rates to keep up with price pressures. Here are two companies in the utilities sector that could benefit from the upcoming winter season.

National Grid PLC NGG is offering a dividend yield of 6.65% or $4.19 per share annually, making semiannual payments, with an inconsistent track record of increasing dividend payments. National Grid owns and operates the electric and gas transmission system in England and Wales, and in the Northeastern United States, it serves 7.1 million electricity and gas customers combined in three states, as of 2021.

For the full year results ending March 31, 2022, National Grid saw its operating profit increase by 82%, as it continues to invest in its five-year $35 billion to $40 billion investment program, while already allocating a record $7.7 billion in critical energy infrastructure.

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Sempra Energy SRE is offering a dividend yield of 2.63% or $4.58 per share annually, through quarterly payments, with a stellar track record of increasing its dividends for 19 years. Sempra Energy serves one of the largest utility customer bases in the United States, distributes natural gas and electricity in Southern California and owns 80% of Oncor, a transmission and distribution business in Texas, which serves 10 million Texas customers, as of 2021.

In the second quarter of 2022, Sempra Energy saw adjusted earnings of $663 million, compared to the prior year's quarter of $504 million in 2021, up 32%.