We can make this short and sweet: buying utilities pays off in many ways that other investments do not. Utilities pay regular dividend distributions that are higher than most stocks, bonds, Treasuries, and certificates of deposit. In these volatile times, utility stocks add stability to your portfolio and moderate the wild swings. And, here is the kicker that everyone but day traders will appreciate: long term returns beat all of the major indices over time.The following charts and stocks will further make the case.
For most of the last 81 years the DJUA Index has beaten the DJIA index, and over the last 20 years it has been no contest.
For most of the last decade, the utility index has been a better investment than the industrial average, the S&P 500 Index and the NASDAQ, and to date it was worth a 10% to 30% advantage.
Some of the opportunities available to investors include the following stocks with the current yields, highest to lowest:
Duke Energy (DUK) Yield 6%
Consolidated Edison (ED) Yield 5.5%
Southern Company (SO) Yield 5.41%
Xcel Energy (XEL) Yield 4.89%
Edison International (EIX) Yield 3.97%
FPL Group (FPL) 3.95%
Northeast Utilities (NU) Yield 3.93%
An alternative investment with the same goal and far more diversity is the Vanguard Utility Index (VPU) owning large and small companies throughout the country.
These electric utilities are all active in alternative energy like wind and solar facilities -- FPL Group being the largest in the country. The growing need for electric power with ever increasing devises being created and the continuing automobile industry expansion into electric vehicles should notably increase industry revenue over the next decade.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: At the time of this post he owned shares of DUK, FPL, SO and VPU.
Reader Comments (Page 1 of 1)
5-28-2010 @ 6:08AM
Jessica said...
We can make this short and sweet: buying utilities pays off in many ways that other investments do not. Utilities pay regular dividend distributions that are higher than most stocks, bonds, Treasuries, and certificates of deposit. In these volatile times, utility stocks add stability.
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