MGE Energy is a utility company based in Madison, Wisconsin. It distributes, generates, and purchases electricity. The company also distributes natural gas through its subsidiaries and also offers transmission services. The main source of electricity generation for MGE Energy is coal. The company also purchases power, while using natural gas, renewable energy, and fuel oil for electricity generation. The pandemic has brought a lot of volatility to the markets. In such scenarios, utility companies offer stability because electricity consumption, especially by residential users, tends to remain steady. Therefore, MGE Energy can be a good pick for someone who wants stability and a constant stream of income through dividends.
More About MGE Energy
MGE Energy operates across four business segments. They are electric utility operations, gas utility operations, nonregulated energy operations, and transmission investments. The nonregulated energy operations include owning and leasing electricity generation capacity). MGE Energy derives a significant portion of its electricity retail revenue from commercial users. The majority of the company’s natural gas revenue is derived from residential users.
MGE Energy is considered to be a small-cap utility. It has a market capitalization of over $2.3 billion. Morningstar lists MGEE as a small-cap core holding. Madison Gas and Electric, the largest subsidiary of MGE Energy, serves more than 300,000 electric and natural gas customers. Most of the customers are concentrated in the Wisconsin area.
One of the most attractive aspects of utility stocks is the steady dividend payments. MGE Energy has paid dividends since 1920, which is over a century. MGE Energy has also raised dividends consecutively since 1975. The stock is up 33% over a 5-year period, but that number was a lot higher at 65% before the pandemic hit the world. Allete Inc is another utility stock comparable to MGE. It trades at a 3.96% dividend yield and is up 18% over a 5-year period.