Friday, August 28, 2009

Utility Stocks: Looking for Good Relative Yield


As Dave Kansas points out in his recent article, stock dividends do make a difference, particularly when other forms of yield--such as Treasuries--are offering paltry returns. Dave makes the excellent point that dividends are typically taxed at lower rates than bond income, which could help support the prices of higher-yielding equities.

Of the sectors tracked by FinViz (click above), utilities show up with the highest yields. While they may not be sexy for their beta (they're up around 30% for the past six months vs. 50% for many of the other sectors), they may find nice floors as those nearing retirement seek relatively safe yield.
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1 comment:

Jonathan said...

Dr. Brett:

I very much appreciate you sharing your insights.

One can also sell calls out of the money calls against utility to further enhance yield.

Jonathan K.