These two utilities can cope with higher rates

Article Excerpt

The U.S. Federal Reserve continues to gradually increase its benchmark interest rate. That hurts utility stocks like Ameren and Alliant Energy by making it more expensive to raise money and refinance their existing debt. However, the Fed has raised interest rates in response to the improving U.S. economy. Generally, that should spur demand for power. Even so, we feel Alliant is the better choice for new buying: its push into green energy better prepares it for increasingly stringent environmental rules. AMEREN CORP. $58 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 242.6 million; Market cap: $14.1 billion; Price-to-sales ratio: 2.3; Dividend yield: 3.2%; TSINetwork Rating: Average; www. ameren.com) provides power and natural gas to 3.3 million clients in Illinois and Missouri. Thanks to colder-than-normal weather, which spurred demand for home heating, Ameren’s earnings in the three months ended March 31, 2018, jumped 47.6%, to $0.62 from $0.42 a year earlier. Revenue also gained 4.6%, to $1.59 billion from $1.52 billion. Ameren still plans to…

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