A list of utility stock demands
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Dear Mr. Berko:
I want to own three utility stocks. I want each stock to have a different four-month dividend payout. I want dividend checks for each month of the year. I want a dividend yield of 4.5 percent. I want each utility to have a good record of revenue, income and dividend growth. I want each utility to be domiciled east of the Mississippi River. I want each utility to have a dividend reinvestment plan. I want each utility to be listed on the New York Stock Exchange. I want each utility to trade at least 50,000 shares a day. I want your recommendations within five business days after receipt of this letter. I have included a self-addressed, stamped envelope. Thank you.
C.R., Gainesville, Fla.
Dear C.R.:
I get loads of mail with good questions and interesting comments. I get a few pieces that challenge my moral integrity. And several times a year, I’ll get a letter from a certified wacko. But your letter, C.R., really takes the cupcake. I’ll wager that dogs don’t like you, and children run and hide when they see you coming.
Fortunately, utility investing doesn’t require atomic-powered analysis, but one of your special requests was an unusual challenge that could be considered redlining by the Financial Industry Regulatory Authority. I posted your request this afternoon. But it may take more than five days to reach you because Gainesville is north of where I live, which is uphill — and uphill usually takes the post office a day or two longer.
Consider: PPL Corp., also known as Pennsylvania Power & Light (PPL-$27.83). With acceptable revenue, earnings and dividend growth, it sells electricity to 1.4 million customers in central and eastern Pennsylvania. A PPL subsidiary also sells electricity to 2.6 million customers in the United Kingdom, which is east of the Mississippi. PPL expects 2010 revenues to come in at $7.6 billion, earnings to come in at $3.20 per share and a dividend of $1.40, which yields 5 percent.
Then consider: Public Service Enterprise Group Inc. (PEG-$30.83), a $13.3 billion revenue electric (2.1 million customers) and gas (1.7 million customers) company home ported in Newark, N.J. PEG’s book value, its net income and dividend have doubled in the past decade, and the next 10 years could approximate its past 10 years. The $1.37 dividend yields 4.4 percent. PPL and PEG pay dividends in June, September, December and March.
AGL Resources Inc. (AGL-$38.74) is a $24.5 billion public utility holding for Atlanta Gas Light, Chattanooga Gas, Virginia Gas and Elizabethtown Gas. AGL provides natural gas for 2.3 million homes and businesses in Georgia, Florida, New Jersey, Virginia, Tennessee and Maryland, and operates a 46,500-mile underground transmission and distribution system. The $1.76 dividend yields 4.5 percent. AGL has a modestly attractive record of revenue and dividend growth.
Or choose Exelon Corp. (EXC-$43.60), a $17.3 billion holding company for the old Commonwealth Edison (serving 3.8 million electric customers in Illinois) and PECO Energy, which serves 1.8 million electric and 500,000 gas customers in Pennsylvania. EXC also owns and runs 17 very efficient nuclear power plants that should increase output by 25 percent in the coming six years with improved efficiencies. Revenues, earning and dividends are expected to grow nicely in the coming years. The $2.10 dividend yields 4.8 percent. Both companies post checks in August, November, February, and May.
Finally, Southern Co. (SO-$34.45), a $16 billion revenue power company with 4.4 million customers in Alabama, Florida, Mississippi and Georgia. Its $1.75 dividend has been raised in nine of the past 10 years and yields a sweet 5.1 percent. SO expects to complete a 720-megawatt gas-fired plant in North Carolina by 2012.
Or look at NSTAR (NST-$36.57), which acquired Commonwealth Energy. NST serves 1.1 million electric and 301,000 gas customers in a 2,700-square-mile area containing 130 communities in eastern Massachusetts. The $1.60 dividend yields 4.4 percent. NST has modest revenue growth, good dividend growth and good earnings growth. Both it and SO pay dividends in April, July, October and January.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775 or e-mail him at mjberko@yahoo.com. © 2010 Creators.Com
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