The Southern Company (SO), Xcel Energy Inc (XEL): Utilities – Today’s Best Bond Alternative

As I indicated throughout this article, safety, yield and total return are all dependant on sound valuation when investing in utilities.  Due to their regulated nature, I do believe that utility stocks provide more predictability than most equity classes.  However, predictability comes at a price, and that price is low growth coupled with low capital appreciation potential and a slow rate of dividend growth.  On the other hand, the above-average yields that utilities often offer make them attractive candidates for yield-hungry investors seeking safety of principal along with decent yields.  But once again, in order to receive the benefits of safety and yield that utilities offer, investors must be very careful with their entry prices.

This concludes my series of articles searching for attractively valued dividend growth stocks in today’s low interest rate environment.

Disclosure:  No positions at the time of writing.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.