Stock Market Very Vulnerable Now: This Sector Is Safe and Pays Big Dividends

With approximately 20 trading days left in 2021, and the major indexes up as much as 20% and more year to date, many portfolio managers are stuck with a very unique problem. Despite the incredible gains for the indexes, there is one huge issue for many who run money. With the S&P 500 just 3% or so below its all-time high, 275 of the 500 stocks are trading below their level from six months ago. In other words, most of the gains have been driven by just a few stocks, most of which of course are mega-cap technology leaders.

The problem for those that run portfolios is that they have to cut loose many of their losers, and with the market fully valued, and very overbought, the buy-the-dip crowd can’t save what could be coming. It makes sense to raise some cash now, especially with the recent strength, by taking winners, squaring up by selling losers and moving to some safer areas. One spot that makes sense now is the top dividend-paying utility stocks. While hardly exciting, they can withstand heavy selling pressure better than almost any other sector.

We screened our 24/7 Wall St. utility research database looking for the highest yielding Buy-rated stocks and found four, and a top fund, that look very solid now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Pinnacle West Capital

The folks in Phoenix know this company well, and the incredible growth there will help drive revenues. Pinnacle West Capital Corp. (NYSE: PNW) through its subsidiary, Arizona Public Service Company, provides retail and wholesale electric services primarily in the state of Arizona.

The company engages in the generation, transmission and distribution of electricity using coal, nuclear, gas, oil and solar generating facilities. Its transmission facilities include approximately 5,728 pole miles of overhead lines and approximately 74 miles of underground lines. Its distribution facilities comprise approximately 11,225 miles of overhead lines and approximately 22,453 miles of underground primary cable, as well as owns and maintains 80 transmission substations and 443 distribution substations. The company also owns or leases approximately 6,321 megawatts of regulated generation capacity. It serves approximately 1.3 million customers.

Top Wall Street analysts feel that the company’s planned investments in strengthening its infrastructure and an increasing focus on renewable sources for power generation will help it take advantage of the expected demand surge for clean energy. Also, the firm’s top executives’ efforts to lower costs are expected to help boost its earnings going forward.

Pinnacle West Capital stock investors receive a 5.31% dividend. Argus has a $72 price target, while the consensus target is $66.77. The shares ended Thursday trading at $65.55 apiece.

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