Ben Bernanke And Utility Stocks

Posted by D4L | Saturday, November 10, 2012 | | 0 comments »

When Federal Reserve Chairman Ben Bernanke announced on Sept. 13 that low interest rates will prevail well into the future, every utility stock shareholder should have cheered with approval --and the roar of buy orders being placed should have been deafening. Utility company shares have long had a reputation as "widow and orphan stocks." Considered to be boring with a predictable dividend income flow, they're often perceived to be best suited for only the most risk-averse of investors.

This economic model should continue well into the future. Global central bankers, with Bernanke at the helm, have pledged to keep interest rates low for the long term. Fuel prices are falling because of an anemic recovery in the United States, slumping economic growth in China and India, and Europe's slide back into a recession. All of these factors combine to make utility stocks very appealing for both the near term and the long term, as the superior income and capital gains of these stocks power a higher total return.

Source: Motley Fool

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