Are the utilities contrarian?

2014-10-17 11:42:07

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Electric Utilities,Diversified Utilities,Water Utilities,Gas Utilities

Trend Strength: *****, Change: 7.07% Trend start: Friday, 2014-10-03 11:30

Motif instruments:


Southern Company Outperforms During Weak Markets

Ameren Corp (AEE) Boosts Fourth Quarter Dividend by 2.5%

Despite the declines on stock markets, the utilities don't follow the rest. Since 3rd October the aggregated price of utility companies grew by 7.07 percent. The stocks of Southern Company reached their 52-weeks high.

It is no accident, that utilities outperform the broad market during the declines. webside has compared the utilities and S&P 500 yields and has come to conclusion, that those stocks perform better during the S&P 500 declines and the utility stocks price reduction comes later.

As Paul Withfield from the says, there are only two "Dividend Aristocrats", which have higher dividend yield than Southern Company (4.7 percent), the second largest electricity producer in US. The utility sector is known for it's high dividend yied. When we look at outlined companies, all of them pay dividend higher than 2.5%.

The next characteristic and the reason of high dividends are value indicators. The Price to Earnings and the Price to Book Value remain lower than for the broad market. As says, the current S&P 500 Price to Book Value equals 2.6. The weighted average P/BV indicator for presented utilities reached 1.64.


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