Investors Finding Safety Again in Utilities, When Dividends Rule (WTR, AWK, PPL, DUK, ED, NEE, AEP, XLU)June 1, 2012 by Jon C. Ogg
By now the markets figured out that all of this week’s preliminary jobs numbers did in fact call it right that the unemployment and jobs report was right. So investors are scrambling to find safety to the point that the 10-year Treasury yield hit yet another record low of under 1.50%. Utilities are acting as a safe haven today and these are defensive stocks by nature.
It turns out that lower and lower interest rates really help out utilities. They have to issue debt to fund that massive infrastructure, so the borrowing costs go way down. Utilities such as electricity and water are ruling the roost today. Despite a 1.4% drop in the DJIA, many of these are hardly down and some are even up on the day.
American Water Works Company, Inc. (NYSE: AWK) is up 0.15% at $34.25 against a 52-week high of $34.89 and with a 2.9% dividend yield. Aqua America Inc. (NYSE: WTR) was up $0.02 at $23.12 against a 52-week high of $23.24 and with a 2.9% yield as well.
Here is how the electric utility giants are doing:
PPL Corporation (NYSE: PPL) is actually UP by 0.2% at $27.43, and its market cap is over $15 billion and it sports close to a 5.3% dividend yield.
Duke Energy Corporation (NYSE: DUK) is really leading the utility sector higher with a gain of 0.8% to $22.17. The market cap is almost $30 billion and Duke yields about 4.6%.
Consolidated Edison Inc. (NYSE: ED) is also up 0.4% at $60.59. and it has a value of almost $18 billion and has a 4% dividend yield.
NextEra Energy, Inc. (NYSE: NEE) is down 0.5% at $64.98 and that is the worst performer but still 1% better than Mr. DJIA. Its yield is ‘only’ 3.7% so investors are looking elsewhere despite its $27 billion market cap.
American Electric Power Co., Inc. (NYSE: AEP) is down by only 0.2% at $38.45, and its market value is $18.6 billion and its yield is now 4.9%.
Utilities Select Sector SPDR (AMEX: XLU) is down by only 0.2% at $35.78 and that is still within about 2% of its 52-week high of $36.27.
We have said it before and we will say it again… Utility stocks are the new certificates of deposits.
JON C. OGG