Investing in utility stocks for value safety yield is not always about trying to make the most money that you can. There are other reasons such as income and/or safety that causes people to choose certain investments. Of course, bonds and other fixed income instruments are perfect examples. You buy a bond typically to get a good yield and for the promise to get all your money back at least in nominal terms on your maturity date. You expect to make a lot of money, but you sure expect to not lose it. With interest rates at all-time lows, it is very difficult to find adequate yields from fixed income. Consequently, investors have sought quality dividend growth stocks as an alternative.
In recent years, the law of supply and demand caused the valuations of high-quality dividend paying stocks to rise above justified levels. Utility stocks are no exception. However, since the beginning of last year that has changed for many utility stocks. Not for all utility stocks, but for some.
FAST Graphs Analyze Out Loud Video:
The 6 utility stocks that I am highlighting in this video have recently reverted to mean valuations. Therefore, I consider these all good choices for people seeking income and safety to complement their portfolios. PPL Corp (PPL), OGE Energy (OGE), Edison International (EIX), FirstEnergy Corp (FE), Pinnacle West Capital (PNW), Duke Energy (DUK)
Disclosure: Long OGE at the time of writing.
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.