Is the market getting to look a little too frothy to
you? If so, maybe it’s time to consider something really boring like
Actually, there’s a lot to like about utilities. For
starters, many are paying dividends equating to
3% or higher yields compared to the 1%
or so that banks are still paying these days.
If the market does correct, you’ll still be
collecting quarterly dividends while you wait for the market to turn
back up. Although utility share prices typically drop with the
market during a downturn, they usually recover when the market
October 2016 Screen
little over a year-ago (October 14, 2016), I described a strategy
for pinpointing worthwhile utility stock candidates. When I
checked, the four utilities that I
highlighted in that column had averaged a 24% return, edging out the
S&P 500’s 21% over the same timeframe.
Encouraged by those results, I’ve produced a new list of utilities
for this column. It uses the same selection strategy as last year,
except for a couple of tweaks inspired by recent research results.
As usual, I’ll use the free and user-friendly
stock screener to find worthwhile candidates. Start by selecting
Screener on the Finviz home page, and then, on the Filters bar,
click “All” to see the available screening filters. For each filter
that you use, click on the associated dropdown menu to select a
Define Search Universe
Start by limiting your list to U.S.-based utilities by using the
“Sector” dropdown menu to select “Utilities” and the “Country”
filter to select “USA.”
Then, rule out the smaller and, hence, more volatile players by
selecting “Large ($10 billion to $200 billion)” for Market
Capitalization,” which is the value of all outstanding shares.
Next, use the “Dividend Yield” filter and specify a “Over
Then, following the “work smarter, not harder” philosophy, use the
“Institutional Ownership” menu to specify “Over 40%” to limit your
list to utilities favored by mutual funds and other “in the know”
Along those same lines, piggyback on the efforts of stock analysts
by requiring “Buy or better” for average “Analyst Recommendation.”
Moving Average: Minimize Losses
Finally, because resent research has found that stocks trading above
their 200 day moving averages (average closing price) outperform
those that don’t, especially in weak markets,
use the “200-Day Simple Moving Average” filter and specify “Price
Utilities Screen Results
My screen turned up four utilities. Click
here to see which utilities the screen is turning up today.
• American Electric Power Company (ticker
symbol AEP), serves electricity customers in 11 states. Its dividend
yield is 3.4%.
• Exelon (EXC),
customers in Illinois, Pennsylvania, Delaware, and Maryland, and
natural gas customers in Delaware, New Jersey, Maryland.
• Public Service Enterprise Group (PEG),
serves electricity and natural gas
customers in Northeastern and
Mid-Atlantic states. Yield: 3.4%.
• WEC Energy Group (WEC) serves
electricity and natural gas customers inWisconsin, Illinois, and
Michigan. Yield 3.1%.
As always, consider these utilities to be research candidates, not a
buy list. The more you know about your stocks, the better your