Best way to invest in utilities?

[thomsoad]

Im doing a diversified portfolio and have to admit I have always kinda shied away from utility stox. So curious what you look for? High Yeilds vs Low P/E, both, neither?

[jpg7n16]

That depends on why you're looking at utility stocks in the first place:

Do you want the steady income?
Or do you want companies who'll let your investment grow?

If the 1st, look at high yields. If the 2nd, look at low P/Es.


But either way, you should be evaluating a utility stock just like you would any other company. What are the longterm prospects of the company? What are the expected earnings? How stable are the earnings? Would any competitors drive them out of business in the near future? Things like that.

[DanielB]

Im doing a diversified portfolio and have to admit I have always kinda shied away from utility stox. So curious what you look for? High Yeilds vs Low P/E, both, neither?

Just curious - what made you shy away from utilities in the first place? This is a sector that is heavily regulated with steady income and usually quite steady (and often significant) dividend payments.

[Frugal]

I agree with Daniel B. above. It does seem that utilities are a relatively stable form of income for most investments. However, I suppose if utilities go bankrupt, or enough people cannot pay their bills due to the recession/depression we find ourselves in, this might not be the truth.

[thomsoad]

Just curious - what made you shy away from utilities in the first place? This is a sector that is heavily regulated with steady income and usually quite steady (and often significant) dividend payments.

Ive never really invested in stox in regards to dividends. I have always invested more along the lines of low P/E, solid ROI, and good Net Income growth. So Im going thru my list of Utilities and im frankly finding it very difficult to find any good companies. ROI/ROA/ROE is pretty awful since I cant really find any even close to 10%. So my normal methods of analysis frankly dont work for utilities.

[DanielB]

Ive never really invested in stox in regards to dividends. I have always invested more along the lines of low P/E, solid ROI, and good Net Income growth. So Im going thru my list of Utilities and im frankly finding it very difficult to find any good companies. ROI/ROA/ROE is pretty awful since I cant really find any even close to 10%. So my normal methods of analysis frankly dont work for utilities.

Exactly. Utilities are typically very debt-heavy (among other characteristics that make them very unlike other publicly traded companies), so I would not recommend using many of these metrics to make your judgment calls, at least not in comparison to companies outside the broad utility industry. Keep in mind that ratios really are most applicable to companies when compared within their specific industries...ratios are never an apples-to-apples cross-industry comparative tool.

[Slug]

...ratios are never an apples-to-apples cross-industry comparative tool.

Nice point.

I don't do muck utility investing, but I bought a bunch of Duke Energy (DUK) when the market cratered because the yield was outrageous. It's done just as expected. It's recovered to about 20% higher than the low and continues to pay me great dividends. I am not buying more now, but I am happy with maintaining the position.

[janzz05]

total newbie to investing

Thanks to my parents i will likely have about 100k that i will be able to invest i know absolutely zero about investing i know that they had alot of muni bonds i am interested in looking into what ever the safest investments are and would like some suggestions i saw something mentioned about utilities is that the same Ok let the eye rolling and head shakeing begin

im 52 no savings no retirement (yea i know what a loser)


ps. i thought i was starting a new post didnt mean to hijack this one

[thomsoad]

Thanks to my parents i will likely have about 100k that i will be able to invest i know absolutely zero about investing i know that they had alot of muni bonds i am interested in looking into what ever the safest investments are and would like some suggestions i saw something mentioned about utilities is that the same Ok let the eye rolling and head shakeing begin

im 52 no savings no retirement (yea i know what a loser)


ps. i thought i was starting a new post didnt mean to hijack this one

Define "safe" ... Safest in terms of not losing money would be a Savings Account at a large financial bank. However, you would have about $102,000 when you hit 65. So in my world thats the "riskiest".

[bennkar]

I agree with Daniel B. above. It does seem that utilities are a relatively stable form of income for most investments. However, I suppose if utilities go bankrupt, or enough people cannot pay their bills due to the recession/depression we find ourselves in, this might not be the truth.

I've invested in utilities with I think very good results. Yeah, you don't hit home runs with them, but consistent doubles works great as well (yeah, its baseball season). As for a utility going bankrupt, that won't happen unless either (1) a major catasrophe happens (nuclear meltdown). If you think this is a real risk, then you should diversify your utility holdings. OR (2)Many many people can't pay their bills. My attitude here is if this comes to pass, then the stock market in general isn't going to be doing well, no matter what you're invested in.

For me I think utilities are great to invest in outside of funds. With no maintenance fees, you should do better than utilities within a fund. I use funds for small cap or international stocks, areas I have no expertise in and their fees more than make up for my lack of knowledge in those areas.