Here's a test for you: Try to find a trio of stocks that pay a dividend as good as or better than a 10-year treasury. Make sure they also trade with P/Es under 15 and post a 10-year EPS growth rate of 10% or better.

If that's too tall a task, below we've provided you a crib sheet. Here are three stocks that meet the above criteria and then some - all of which, incidentally, hail from the utilities sector. (To learn more, see Trust In Utilities.)

IN PICTURES: How To Make Your First $1 Million

Northern California EPS Dynamo
PG&E Corporation
(NYSE:PCG) is in the electricity and natural gas distribution business. The company services more then 5 million electricity and 4 million gas customers in Northern and Central California. Remarkably, PG&E has grown earnings per share at an extraordinary 56% rate over the last decade.

The company offers a current dividend yield of 4.23% and trades with a price/earnings ratio of 13.5. Also attractive are its price to book and price to sales ratios, which come in at 1.54 and 1.19 respectively. Its market cap is $16 billion.

In the last year PCG stock has risen over 14%, outperforming the sector, as represented by the Utilities SPDR ETF (NYSE:XLU), which tacked on only 8.7% in that time frame. PG&E shares are also up better than 66% over the last decade, far better than the broad market, represented by the SPDR S&P 500 ETF (NYSE:SPY), which is down over 24% in 10 years.

Better Dividends
Avista Corporation (NYSE:AVA) offers investors a better dividend yield and lower P/E than PG&E, but can't touch its long term EPS growth. AVA pays 4.91% annually and trades with a multiple of 13.2-times last year's earnings. For the decade just passed, Avista has grown earnings per share at a 23.6% clip - nothing at all to be ashamed of.

Avista is headquartered in Spokane, Washington and also operates in the electricity and gas distribution business.

Price to book is an impressive 1.05, while price to sales only 0.75.

The best dividend and P/E readings for the group, however, belong to Exelon Corporation (NYSE:EXC), which offers electricity and gas service to communities in and around the Greater Philadelphia area. Exelon's current yield is 5.15%, and her P/E is 9.8. In the past decade, EXC has grown EPS numbers at a 10.25% rate.

The Bottom Line
EPS growth can be tied directly to a strong management team, something each of the above three companies possess. Couple with solid dividends and reasonable earnings multiples, and these issues have very little that doesn't commend them for purchase.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    Top Three Transportation ETFs

    These three transportation funds attract the majority of sector volume.
  2. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  3. Investing Basics

    Tops Tips for Trading ETFs

    A look at two different trading strategies for ETFs - one for investors and the other for active traders.
  4. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  5. Fundamental Analysis

    Use Options Data To Predict Stock Market Direction

    Options market trading data can provide important insights about the direction of stocks and the overall market. Here’s how to track it.
  6. Stock Analysis

    2 Oil Stocks to Buy Right Now (PSX,TSO)

    Can these two oil stocks buck the trend?
  7. Investing News

    What Alcoa’s (AA) Breakup Means for Investors

    Alcoa plans to split into two companies. Is this a bullish catalyst for investors?
  8. Mutual Funds & ETFs

    Top 4 Investment Grade Corporate Bonds ETFs

    Discover detailed analysis and information about some of the top exchange-traded funds (ETFs) that offer exposure to the investment-grade corporate bond market.
  9. Stock Analysis

    Top 3 Stocks for the Coming Holiday Season

    If you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
  10. Investing News

    Could a Rate Hike Send Stocks Higher?

    A rate hike would certainly alter the investment scene, but would it be for the better or worse?
  1. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  6. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!