Friday, January 17, 2014

Top Electric Utilities: Lower Fuel Prices Higher Stock Prices?

One of the major expenses of electric utility stocks is the cost of fuel to run the generators.  When fuel prices drop, assuming utilities are not lock in to long term agreements, earnings can increase. The price of oil is now at its lowest point since the beginning of December. Natural gas has been in a fairly low range since 2009.

Investors want alternatives to low interest bonds and bank accounts. Electric utility stocks are an alternative which can provide income and price growth potential. 

Buying opportunities abound for income investors for income. There are many of electric utilities to choose from with over over a dozen providing yields of 4% or more, according to

TECO Energy, Inc. (TE) uses oil, natural gas, and coal to run their generators, along with a  a small cogeneration facility. The stock pays a yield of 5.1%. This electric and gas utility holding company provides electricity to West Central Florida. The stock trades at 18 times trailing earnings and 15.5 times forward earnings. The company has raised its dividend every year since 2006.

Black Hills Corporation (BKH) provides electricity to customers in South Dakota, Wyoming, Colorado, and Montana. It trades at 18.7 times earnings with a forward P/E of  20.9. The stock pays a yield of 2.8%.

Integrys Energy Group, Inc. (TEG) serves the Wisconsin, Michigan, and Chicago areas. It has a P/E ratio of 14.8, a forward P/E ratio of 14.7, and offers a very generous yield of 5%.

To see a list of dozens of high yield electric utilities, go to  The list has the PE. the forward PE, the PEG, and the yield for these stocks.

Disclosure: Author didn't own any of the above at the time the article was written.


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