Quick Read
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Star Group (SGU) distributes home heating oil with a 6.14% dividend yield and $0.74 payout covered by $1.66 in trailing EPS.
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Suburban Propane Partners (SPH) offers a 6.73% yield with forward dividends well-covered by expected EPS of $1.81.
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Northland Power cut its dividend by 40% to self-fund growth and aims to double operating capacity to 7 GW by 2030.
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Utilities stocks have turned into a refuge for investors as the negative catalysts hitting the market don’t impact them as much. Companies like Suburban Propane Partners LP (NYSE:SPH), Northland Power (OTCMKTS:NPIFF), and Star Group LP (NYSE:SGU) are worth looking into, as they not only pay a fat yield but can also deliver upside.
Utility companies are not directly exposed to tariffs, while being exposed to tailwinds from the AI buildout. Plus, ongoing interest rate cuts are adding another incentive for investors to buy and hold these stocks. Treasury yields are set to trend lower as a result of these rate cuts, so investors are naturally gravitating towards high-yield stocks.
In this case, utility stocks stick out as the best option. Most defensive stocks in the retail or consumer staples industry come with much lower yields, along with lower upside potential. They’re also more vulnerable to tariffs. If you want a yield above 6%, the following three are best among the handful of options that pay such a high yield.
Suburban Propane Partners LP (SPH)
Suburban Propane Partners LP distributes energy-related products. They mainly sell and deliver propane, fuel oil, and other fuels. Beyond that, Suburban also sells natural gas and electricity. It is more of a hybrid instead of a pure utility company.
SPH stock has been mostly rangebound over the past year. It is down 11.4% from its highs of $22, but can easily recover as interest rate cuts take effect and both natural gas and electricity distribution businesses see tailwinds.
Analysts expect 11.42% EPS growth for fiscal 2026, followed by 5.26% growth in fiscal 2027. For a utility company, this is very healthy growth, with which dividends are likely to grow as well.
Speaking of dividends, SPH comes with a 6.73% dividend yield. The forward dividend rate of $1.3 is well-covered by $1.81 in forward EPS.
Northland Power (NPIFF)
Northland Power is a Canadian power producer that generates electricity from renewable sources. It is also responsible for supplying that electricity to the grid and end customers, just like traditional utilities.
The electricity generation makes it a more “aggressive” play, as the company does much more than distribute electricity. However, I see it as a plus due to the AI buildout putting an ever-increasing load on the electricity grid.
Revenue has been steadily increasing over the years, with analysts expecting accelerating growth through 2027. 2025 revenue growth is expected to be 3.22%, with 2026 revenue growth at 5.59%, and 2027 revenue growth at 6.17%.
Anyhow, not all is fine and dandy. NPIFF stock has cratered 34% over the past month, meaning the stock is now down nearly 7.2% year-to-date. This is due to a surprise 40% dividend cut. The cut will allow the company to fund its own growth opportunistically without diluting the stock, and it can be a smart idea long-term.
Besides, the remaining dividends plus buybacks and growth can lead to ~10% in annual shareholder returns. The company is aiming to double its gross operating capacity to 7 GW by 2030.
The dividend yield today is 7.3%.
Star Group LP (SGU)
Star Group LP is the largest distributor of home heating oil in the U.S. The company also sells air conditioning and plumbing products. SGU stock is the smallest of the bunch, as the market capitalization is just $403.6 million.
The stock has remained relatively stable despite the small market cap, up 5.89% year-to-date as of this writing.
SGU has a 6.14% forward dividend yield. The dividend rate is $0.74, well below the trailing EPS of $1.66. Dividends have plenty of room to grow, though the financials themselves are likely to stay rangebound in the coming years.
The stock can still deliver some upside as interest rates fall. SGU stock is off 20% from its mid-2023 peak, and I see a full recovery if management can start growing the top and bottom lines again.
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