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Why Fund & Income Investors Are Drawn to Utilities (XLU, SO, EXC, D, IDU, RYU, CEG, NRG, NI, PCS, VZ, UPW, NEE, UTF, UTG, DNP, FSTUX, CMS, POR, RYAUX, FE, FKUTX, SRE)

Administrator — Mon, 06 Jun 2011 14:15:06 +0000

When the going gets tough, the tough often play defense — out of risky assets and into those assets that offer more security and some dividend upside. One choice is utilities, where investments are protected and dividend income is steady. We’ve taken a look at several utilities ETFs, closed-end funds, and mutual funds that answer the call both for defensive purposes and for yields.

The ETFs include Utilities Select Sector SPDR (NYSE: XLU), iShares Dow Jones US Utilities (NYSE: IDU), Rydex S&P Equal Weight Utilities (NYSE: RYU), and Ulta Utilities ProShares (NYSE: UPW). The closed-end funds we looked at include Cohen & Steers Utility Fund Inc. (NYSE: UTF), Reaves Utility Income Fund (AMEX: UTG), Wells Fargo Advantage Utilities and High Income Fund (AMEX: ERH), and DNP Select Income Fund, Inc. (NYSE: DNP). The mutual funds we looked included Invesco Utilities Investor (FSTUX), Rydex Utilities (RYAUX), and Franklin Utilities A (FKUTX).

The utilities sector posts a price/earnings ratio of 18.50, higher than the tech, financial, conglomerates, and materials sectors. The sector’s return on equity is the lowest of all but the financial sector, but its dividend yield of 3.94% is higher than any other sector.

Utilities Select Sector SPDR (NYSE: XLU) holds net assets of $4.33 billion and it’s year-to-date return is 6.81%, while its yield is 3.94%. XLU’s three largest holdings are Southern Company (NYSE: SO) at 8.32.% of assets, Exelon Corp. (NYSE: EXC), and Dominion Resources, Inc. (NYSE: D). The fund’s 52-week range is $27.92-$34.30, and it closed last week at $33.19. Shares are up about 18% in the past 12 months and about 19% from the annual low.

iShares Dow Jones US Utilities (NYSE: IDU) claims net assets of $511 million and its year-to-date return is 7.94%, while its yield is 3.57%. It’s three largest holdings are also Southern Company (6.39%), Exelon, and Dominion. The fund’s 52-week range is $67.94-$84.54, and it closed last week at $81.85. Shares are up nearly 20% in the past 12 months, and about the same from the annual low.

Rydex S&P Equal Weight Utilities (NYSE: RYU) has net assets of $24.5 million, and its year-to-date return is 7.48%, while its yield is 3.27%. Its top three holdings are Constellation Energy Group, Inc. (NYSE: CEG), which is being acquired by Exelon, at 2.7% of total assets, NRG Energy, Inc. (NYSE: NRG), and NiSource Inc. (NYSE: NI). RYU also includes some communications stocks, such as MetroPCS Communications, Inc. (NYSE: PCS) and Verizon Communications (NYSE: VZ). As its name would lead you to believe, its tenth-largest holding accounts for 2.54% of total assets. The fund’s 52-week range is $43.51-$56.28, and it closed last week at $54.47. Shares are up about 24% in the past 12 months and about 25% from the annual low.

ProShares Ultra Utilities (NYSE: UPW) has net assets of $14.45 million, and its year-to-date return is 15.65%, while its yield is 2.32%. Its top three holdings are Southern Company at 5.62%, Exelon, and NextEra Energy, Inc. (NYSE: NEE). The fund’s 52-week range is $32.19-$50.52, and it closed last week at $47.37. Shares are up about 45% in the past 12 months and about 47% from the annual low.

Filed under: Corporate Governance, Defensive Stocks, Dividend, ETF, Mutual Funds Tagged: CEG, CMS, D, DNP, EXC, FE, FKUTX, FSTUX, IDU, NEE, NI, NRG, PCS, POR, RYAUX, RYU, SO, SRE, UPW, UTF, UTG, VZ, XLU

Top Analyst Upgrades and Downgrades (AKAM, BCS, ED, EE, FII, ISRG, LGF, POR, PII, TROW, HD)

Administrator — Mon, 14 Jun 2010 12:27:00 +0000

These are some of this Monday’s top analyst calls with upgrades, downgrades, and initiations seen in Wall Street research notes:

Akamai Technologies Inc. (NASDAQ: AKAM) Cut to Hold at Citigroup.
Barclays plc (NYSE: BCS) Maintained Buy but cut target and estimates at BofA/Merrill Lynch.
Consolidated Edison Inc. (NYSE: ED) Raised to Neutral at Goldman Sachs.
El Paso Electric Co. (NYSE: EE) Cut to Sell at Goldman Sachs.
Federated Investors, Inc. (NYSE: FII) Raised to Market Perform at FBR.
Intuitive Surgical, Inc. (NASDAQ: ISRG) Cut to Hold at Brean Murray.
Lions Gate Entertainment Corp. (NYSE: LGF) Cut to Market Perform at BMO Capital.
Portland General Electric (NYSE: POR) Cut to Neutral at Goldman Sachs.
Polaris Industries, Inc. (NYSE: PII) Raised to Buy at KeyBanc.
T. Rowe Price Group, Inc. (NYSE: TROW) Raised to Outperform at FBR.

The Home Depot Inc. (NYSE: HD) Raised target to $45 and raised estimates at Citigroup.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Sponsor: 26 Cheap Stocks to Sell – Cheap stocks have been on a tear recently, but nine out of ten stocks are circling the drain!

Filed under: Analyst Calls Tagged: AKAM, BCS, ED, EE, FII, HD, ISRG, LGF, PII, POR, TROW

The Weekly Dividend (CLF, CPY, FDS, KEI, MSA, OPNT, POR, TKR, F, BBT, DOW, FUN, BP, GMCR, SPAN, TNK, IIJI, RAIL)

Administrator — Fri, 14 May 2010 15:27:39 +0000

We are not seeing the floodgate of dividend hikes as we had seen in earlier weeks this year, but hikes, talk of hikes, and other big dividend news changes are out this week. The true dividend hikes are in Cliffs Natural Resources Inc. (NYSE: CLF), CPI Corp. (NYSE: CPY), FactSet Research Systems Inc. (NYSE: FDS), Keithley Instruments Inc. (NYSE: KEI), Mine Safety Appliances Co. (NYSE: MSA), OPNET Technologies Inc. (NASDAQ: OPNT), Portland General Electric Company (NYSE: POR), and The Timken Company (NYSE: TKR). The hints of dividends includes Ford Motor Co. (NYSE: F), BB&T Corp. (NYSE: BBT), The Dow Chemical Company (NYSE: DOW), Cedar Fair LP (NYSE: FUN), BP plc (NYSE: BP), and Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR). Higher dividends that might not be outright hikes were seen in Span-America Medical Systems Inc. (NASDAQ: SPAN), Teekay Tankers Ltd. (NYSE: TNK), and Internet Initiative Japan Inc. (NASDAQ: IIJI). There is a downside of dividends, and that included FreightCar America, Inc. (NASDAQ: RAIL). Details on each are provided below, including the changes, a new implied yield and added color on each where applicable.

Real Hike, Real Payouts….

Cliffs Natural Resources Inc. (NYSE: CLF) voted early this week to increase the quarterly cash dividend by 60% to $0.14 per share. That is close to a yield of 2% now after the drop in the stock.

CPI Corp. (NYSE: CPY) also voted early this week to increase its quarterly dividend payout by 25% up to $0.25 per quarter. The yield today would be about 3.3%.

FactSet Research Systems Inc. (NYSE: FDS) approved a 15% hike to $0.23 per quarter in dividends from a prior rate of $0.20 per quarter. This is about 1.15% today for a dividend yield.

Keithley Instruments Inc. (NYSE: KEI) increased its quarterly dividend early this week to a rate of $0.0375 per share, and this new dividend yield is almost 1.5%.

Mine Safety Appliances Co. (NYSE: MSA) must be expecting new business lines… today declared a second quarter dividend of $0.25 per quarter, up a penny from the prior $0.24 per quarter dividend that had been in place since early 2008.

OPNET Technologies Inc. (NASDAQ: OPNT) hiked its payout after earnings early this week. It raised its quarterly dividend to $0.10 per quarter for almost a 2.4% yield. That is $0.40 per year, up from $0.36 per year for 2009.

Portland General Electric Company (NYSE: POR) announced Thursday night that it was boosting its dividend to $0.26 per share per quarter from a rate of $0.255 previously. The last three hikes have come each year and have been by a full penny rather than by a half-penny per quarter. This still generates more than a 5% yield.

The Timken Company (NYSE: TKR) announced earlier this week that it declared a quarterly cash dividend of $0.13, up 44% or versus a $0.09 prior dividend. This is after the company had seen its dividend go down to $0.09 from $0.18 previously in 2009, so this dividend raise is a game of moving back to even.

Dividend Hints……

Ford Motor Co. (NYSE: F) also hinted this week at a dividend return for shareholders, but the news we saw was that it is starting its education pay plan first after it repays more debt. Don’t hold your breath here for a dividend on the common shares any time in the immediate future.

BB&T Corp. (NYSE: BBT) hinted earlier this week that it would be among the first of the big banks to raise its dividend. On CNBC it seems that the hint was for a fourth quarter dividend raise, although it is no secret that the new environment is one where regulators have told banks to build capital reserves over paying out higher common dividends. The current rate is $0.15 per quarter, but that was down from $0.47 previously and the current payout was what it was in the 1990′s.

The Dow Chemical Company (NYSE: DOW) declared a dividend of $0.15… this is one we still expect that will buckle to peer pressure and may consider raising its dividend later this year. Much depends upon the merger integration from the 2009 Rohm & Haas deal and the notion that its business is just coming back. The current $0.15 per quarter still generates a yield of close to 2.2%, but this is down from $0.42 before it cut that dividend over a year ago.

Cedar Fair LP (NYSE: FUN) has seen this week with its largest shareholder (Q Funding) demanding that the company reinstate an annual dividend of $0.50 per share after suspending it in 2009. That does not assure a hike, but that is the largest holder. A $0.50 dividend would have an indicated yield before any share price changes of approximately 3.7%.

BP plc (NYSE: BP) has been in the soup over the Gulf of Mexico spill, but this week it declared on Tuesday that its board of directors has approved on April 27, 2010 an interim dividend of USD$0.14 per ordinary share or USD$0.84 per ADS for the first quarter 2010. This is technically a U.K.-based company, so it is doubtful that the administration can nix the dividend. Still, you have to wonder with cost estimates all over the board into the billions of dollars for the cleanup and remediation.

And speaking of very dividends, the stock split for Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) of 3 for 1 will be reflected next week on the May 17 ex-date. Not a true dividend because these are generally tax-free events.

Higher Dividends, Maybe Not Hikes….

Span-America Medical Systems Inc. (NASDAQ: SPAN) usually has a $0.10 per quarter dividend, but this week it announced a Special Cash Dividend of $1.00 per share. That makes the third special dividend, and the regular $0.10 dividend is in effect as well.

Teekay Tankers Ltd. (NYSE: TNK) pays out its income as it comes and is able, so this “higher dividend” should not be considered a true hike. It announced a cash dividend of $0.37 per share, and here are the prior dividend rates to show the inconsistent rates:

Mar 4, 2010 $0.26 Dividend
Nov 18, 2009 $0.15 Dividend
Aug 20, 2009 $0.40 Dividend
May 20, 2009 $0.59 Dividend
Mar 4, 2009 $0.72 Dividend
Dec 1, 2008 $1.07 Dividend
Aug 13, 2008 $0.90 Dividend
May 21, 2008 $0.70 Dividend
Feb 13, 2008 $0.115 Dividend

Internet Initiative Japan Inc. (NASDAQ: IIJI) is one we have not seen the ADR list a dividend, so this may just be in local currency. The company said on Thursday’s earnings that its FY2009 year-end cash dividend forecast was revised from JPY1,000 to JPY1,250 per share of common stock (FY2009 total dividend of JPY2,250, up from JPY2,000 as previously planned).

The Downside of Dividends….

FreightCar America, Inc. (NASDAQ: RAIL) this week that its Board of Directors decided not to authorize the payment of a cash dividend on its common shares in the second quarter of 2010 to preserve cash to help maintain its balance sheet strength.

JON C. OGG

Sponsor: 5 best investments for 2010 – The next nine months represent a bold new era for investors.

Filed under: Dividend, The Week Tagged: BBT, BP, CLF, CPY, DOW, F, FDS, FUN, GMCR, IIJI, KEI, MSA, OPNT, POR, RAIL, SPAN, TKR, TNK

Top Analyst Upgrades (BCS, IDTI, JNY, NTES, POR, SQNM, TRMB, UEC)

247wallst — Wed, 29 Apr 2009 11:51:10 +0000

These are some of the top pre-market analyst upgrades and positive research calls we have seen from Wall Street early this Wednesday morning:

Barclays (BCS) Raised to Overweight at HSBC.
Integrated Device Tech (IDTI) Raised to Buy at Deutsche Bank.
Jones Apparel (JNY) Raised to Buy at Lazard.
Netease.com (NTES) Started as Outperform at Bernstein.
Portland General Electric (POR) Raised to Overweight at Barclays.
Sequenom (SQNM) Started as Buy at Auriga.
Trimble Navigation (TRMB) Raised to Buy at Needham.
Uranium Energy Corp. (UEC) Raised to Sector Perform at RBC.

JON C. OGG

Posted in Analyst Calls Tagged: BCS, IDTI, JNY, NTES, POR, SQNM, TRMB, UEC

Top Pre-Market Analyst Upgrades (BXP, DWA, DUK, MET, MTB, PRXL, POR, PFG, PSA, UDR)

247wallst — Fri, 10 Oct 2008 07:02:08 +0000

These are some of the top pre-market analyst calls we are seeing this Friday morning:

Boston Properties (BXP) Raised to Outperform at FBR.
DreamWorks Animation (DWA) Raised to Buy at Jefferies.
Duke Energy (DUK) Raised to Neutral at Goldman Sachs.
MetLife (MET) Resumed at Overweight at Morgan Stanley.
M&T Bank Corp (MTB) Raised to Neutral at Baird.
Parexel (PRXL) Raised to Outperform at William Blair.
Portland General (POR) Raised to Buy at Goldman Sachs.
Principal Financial (PFG) Raised to Equal-weight at Morgan Stanley.
Public Storage (PSA) Raised to Outperform at Wachovia.
UDR Inc. (UDR) Raised to Outperform at FBR.

Jon C. Ogg
October 10, 2008

Posted in Analyst Calls Tagged: BXP, DUK, DWA, MET, MTB, PFG, POR, PRXL, PSA, UDR

Top Pre-Market Analyst Downgrades (AZO, CX, FNM, ISIL, MHK, NVDA, PETM, POR, TSCO, UST)

247wallst — Mon, 08 Sep 2008 06:34:12 +0000

These are some of the larger impact calls from analysts with downgrades or negative calls we are seeing this Monday morning with more than two hours to the open:

AutoZone (AZO) Cut to Neutral at Goldman Sachs.
Cemex (CX) Cut to Hold at Deutsche Bank.
Fannie Mae (FNM) and Freddie Mac (FRE) Cut to Sell from Buy at Citigroup.
Intersil (ISIL) Cut to Neutral at UBS.
Mohawk Industries (MHK) Cut to Underweight at JPMorgan.
NVIDIA (NVDA) Cut to Sell at UBS.
PetSmart (PETM) Cut to Neutral at Goldman Sachs.
Portland General Electric (POR) Cut to Neutral at Goldman Sachs.
Tractor Supply (TSCO) Cut to Neutral at UBS.
UST (UST) Cut to Neutral at UBS.

Jon C. Ogg
September 8, 2008

Pre-Market Stock News (June 13, 2007)

247wallst — Wed, 13 Jun 2007 06:51:11 +0000

(AOB) American Oriental enters into a letter-of-intent to acquire an established plant based pharmaceutical company named Changchun Xinan Pharmaceutical Group for up to $30 million.
(CEN) Ceridian largest shareholder says the private equity buyout is underpriced.
(EBAY) eBay is still in court over this MercExchange LLC patent over its “Buy It Now” patent.
(F) Ford confirmed that it is reviewing sales of Jaguar and Rover; Goldman Sachs and others hired.
(GWR) Genesee & Wyoming reported a total carload decrease of 0.3%.
(GYI) Getty Images announced it has filed its 10-K for 2006.
(HS) Healthspring lowered guidance.
(LWSN) Lawson Software raised guidance to $0.05 to $0.07 EPS vs $0.04e.
(MAGS) Magal Security announced a new strategic partnership in Brazil for services providers.
(PAY) VeriFone Holdings announced it has been selected as the sole provider of electronic payment systems by the China Postal Savings Bank.
(POR) Portland General Electric announced the pricing of a 21 million share secondary at $26.00; seller is Enron Disputed Claims Reserve.
(SAPE) Sapient $0.07 EPS vs $0.01+e.
(SHLM) A. Schulman lowered guidance.
(SNY) Sanofi-Aventis diet drug all in one pill is being reviewed; already marketed as Acomplia in other countries.
(SSYS) Stratasys will replace LSS on S&P Small Cap 600 Index on June 14.
(TYC) Tyco will take a $500 Million pre-tax and $370 million after tax impairment charge for the sale of its Power Systems business.
(VLCM) Volcom will replace PXR on the S&P Small Cap 600 Index on June 15.

Jon C. Ogg
June 13, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.