Have You Seen This Hidden Dividend Gem?
Otter Tail (NAS: OTTR) is a funny little beast. If Berkshire Hathaway (NYS: BRK.A) (NYS: BRK.B) is a large conglomerate built around predictable insurance revenues, then Otter Tail is a miniature conglomerate built around rock-steady electric utility services. With a proven business model like that, it's no wonder to see the stock sporting five out of five CAPS stars and landing on our list of the most-watched electric utility stocks.
The longtime Motley Fool Hidden Gems recommendation just reported second-quarter earnings, showing muscle in all the right places. Last year's $0.40 loss per share on continuing operations turned into a $0.16 net profit on the same basis. Revenues jumped 26% year over year.
The company has been busy refining and focusing its range of non-electric operations. The wind-power equipment segment is facing challenges but remains worth a turnaround effort -- but the heavy transport service for hauling those heavy wind towers around has gone by the wayside. And the Idaho Pacific dehydrated-potato producer was recently sold to a private-equity firm, bringing in $87 million of crisp, clean dollar bills in return for a stale potato business.
There are other "strategic realignment" moves coming, though we don't know whether Otter Tail plans to be a buyer or a seller at this point.
Backed by $41 million in operating cash flows this quarter and a solid business model, Otter Tail pays generous dividends. The current 5.8% yield is very comparable with much larger electric peers Duke Energy (NYS: DUK) or Progress Energy (NYS: PGN) .
Want to learn more about this swimming mammal? I can think of two excellent resources:
- Add Otter Tail to My Watchlist for a steady flow of news and Foolish analysis.
- Grab an absolutely free, no-strings-attached 30-day trial to Hidden Gems. You'll get instant access to six years of in-depth analysis and a tremendous discussion board for every Gems recommendation.
At the time this article was published Fool contributorAnders Bylundholds no position in any of the companies discussed here. The Motley Fool owns shares of Berkshire Hathaway.Motley Fool newsletter serviceshave recommended buying shares of Berkshire Hathaway and Otter Tail. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. You can check outAnders' holdings and a concise bio, follow him onTwitterorGoogle+, or peruseour Foolish disclosure policy.
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