When interest rates rise, dividend stocks can sometimes fall because investors switch to lower-risk income options, like CDs. But there's another issue facing utilities, given that these capital-intensive businesses make heavy use of debt financing. Thus, rising costs are a second headwind for the sector.

Over the long term, however, regulated utilities should adjust and continue to provide reliable income streams to shareholders. If you think in decades, you'll want to consider adding NextEra Energy (NYSE: NEE), Black Hills Corporation (NYSE: BKH), and Dominion Energy (NYSE: D) to your portfolio in March.

NextEra Energy's 3.7% dividend yield is modest compared to the other two utilities on this list. In fact, it is only 10 basis points above the average of the broader utility sector. But the yield is near a 10-year high for NextEra Energy, suggesting the stock is cheap today.

Continue reading

Source Fool.com