Dividends4Life: Stay Away From Most Electric Utility Stocks

Stay Away From Most Electric Utility Stocks

Posted by D4L | Saturday, September 07, 2013 | | 0 comments »

Electric utility stocks have long been considered a safe haven for income-oriented investors. These companies usually pay high dividends and the regulated nature of their business means it is unlikely they will engage in high-risk behavior that creates large losses. Today, though, we see the almost desperate chase for income leading to these stocks being purchased for the dividends without much thought for the underlying fundamentals of the individual companies.

Quite simply, electric utility stocks are not seeing the type of earnings growth and cash flow generation that would justify their purchase at current prices. Still, I was able to find two electric utility stocks that currently qualify as a “buy.” Black Hills Corp. (BKH) serves customers in South Dakota, Montana, Colorado and Wyoming. The region is one of the strongest economically because of shale oil and gas operations that have provided high-paying jobs in the region. The other stock to buy is OGE Energy (OGE), which serves customers in Oklahoma and parts of Arkansas.

Source: Investor Place

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