They're some of the most reliable dividend-paying stocks on
Each one owns a virtual
, practically guaranteeing it will receive uninterrupted revenue
for years to come.
Of course, I'm talking about utilities. Their stable demand and
consistently high yields make utilities an undoubted favorite among
Though despite being wildly popular in the income universe, most
people are missing out on the world's best opportunities in this
But because they are utilities, investors think the stocks I'm
about to tell you about carry too much risk. They've never heard of
most of these companies, so they automatically dismiss them as
speculative growth plays.
Nothing could be further from the truth.
Let me explain...
In past years, electric utilities like
Duke Energy (NYSE:
American Electric Power (NYSE:
have become extremely popular among income investors.
That's to be expected... the steady income offered by this corner
of the market is unprecedented. On average, the typical U.S.
utility stock yields 3.8% -- almost double the 2%
offered by the S&P.
But while I wouldn't sneeze at a 3.8%
, it's only a fraction of what you can receive from this industry.
In fact, I've found a utility stock that pays a 7.1% yield. The
company enjoys the same monopolistic advantages as other utility
companies, and better yet, unlike traditional utility stocks, it
also offers investors the chance to see potentially incredible
What's the catch? There isn't one. It just so happens that this
company doesn't do business in the United States. But you can buy
without even leaving the U.S. stock exchanges.
The stock I'm talking about is
CPFL Energia (NYSE:
-- the largest electricity transmission and distribution company in
Brazil, with more than 7 million customers.
When most investors think of large utility stocks, they don't think
about growth. But that's not the case for CPFL.
In the past 10 years, CPFL has a total return of 584%. By
for U.S.-based utility stocks -- returned less than one-fifth that
amount, amounting to 101% during that period.
What's driving this stellar growth for CPFL Energia? It's the
In a developed market like the United States, annual growth in
electricity demand is modest. In the past 10 years (ending 2011),
demand in the United States is up only a total of 7%.
But it's a different story in developing countries like Brazil.
Between 2001 and 2011, the Brazilian
used 33% more electricity... almost quadruple the demand of the
United States in that time frame.
That growth has done wonders to the company's top line. In 2010
alone, CPFL saw total revenue jump 11.2%. By comparison,
Edison International (NYSE:
-- one of the United States' biggest utilities -- only saw a 0.4%
And not only does this utility company
investors the opportunity for growth, it also enjoys a
near-monopoly in its market. Roughly three-quarters of its total
power sales are to captive customers who do not have the
of switching to another electric distributor.
Right now, CPFL pays a
of $1.64 a year. At today's share price, that represents a
of 7.1% -- more than three percentage points higher than the
average American utility stock.
Of course with investing, no stock is guaranteed to make you
money... even a utility. In fact, shares of CPFL are down over the
past few months, which I believe signals a buying opportunity.
But more importantly, stocks like CPFL Energia prove that some of
the world's best high-yield securities aren't located in the United
On average, foreign companies tend to pay higher dividend yields
than their U.S. counterparts. Don't believe me? Consider this...
Out of 227 companies that pay dividend yields over 12%, only 17 of
them are located in the U.S. To see the full list of 17 stocks, or
about investing in international dividend payers,
follow this link here.
-- Paul Tracy
Paul Tracy does not personally hold positions in any securities
mentioned in this article. StreetAuthority LLC does not hold
positions in any securities mentioned in this article.