Low-risk Utilities for Income-seekers

Article Excerpt

Bonds provide investors with steady income, and preservation of capital. While there’s not as much room for interest rates to fall, higher rates could lead to major losses on fixed-income investments. In our opinion, most income-seeking investors are better off in high-quality, well-managed utility stocks, such as these four. In taxable accounts, these stocks provide roughly as much income as most long-term bonds, after the dividend tax credit. They also give investors the possibility of a capital gain. TRANSALTA CORP. $24 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; SI Rating: Average) operates 51 electric power plants in Canada, the United States, Mexico and Australia. The company currently pays a quarterly dividend of $0.25 a share, for an annual yield of 4.2%. TransAlta’s stock has stayed in a narrow range in the past three years. Investors feared that rising coal and natural gas prices, which account for 85% of TransAlta’s fuel needs, would force it to cut the dividend. Concerns over future maintenance costs at…

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