Sunday, June 29, 2014

Electric Utilities Can Provide High Income and Growth

Do you realize that electric utility stocks were up over 24% for the last year? As a matter of fact, utilities were up 15.6% year-to-date, and have had positive returns for the last month, the last three months, the last three years and the last five years. Not bad for a conservative industry.

So why is this happening?  The primary reason is the extremely low interest rates. Investors want a return greater than 0.88% from a one year certificate of deposit. Utilities can provide a decent income along with growth potential. There are many electric utilities with yields ranging from 3% to 5%, according to the free list of electric utilities at

For example, Avista Corporation (AVA) is a distributor of electricity and natural gas in the state of Washington, Idaho, and Oregon. 45% of the electrical generation comes from hydro power, 16% coal, 13% gas, and 2% comes from wood waste. The stock trades at 17 times trailing earnings, and 16.8 times forward earnings. Latest quarter's earnings were up 14.5% on a 1.7% increase in revenues. The stock sports a yield 3.9%.

Ameren Corporation (AEE) sports a dividend yield of 4.0%. The company serves customers in Missouri and Illinois, with both electricity and natural gas. The stock has a price to earnings ratio of 19, and a forward P/E of 16. Revenues rose 9% for the latest quarter.

Otter Tail Power (OTTR) has had a stagnating price for a few years, then in the middle of 2012, it started to move up.  The stock has a price to earnings ratio of 19, and a forward P/E of 17.  The stock yields 4.1%.

For a free list of electric utility stocks, which has the PE, the forward PE, the PEG, and the yield, go to

Author doesn't own any of the above at the time the article was written.


No comments: