Consolidated Edison (ED) or Southern Co. (SO) are examples of these. The 4.7% income on the treasury looks good, but you pay more tax on treasury income that is only abopuit 3.1% net after taxes. ED has a 17 P/E and it now has a 4.9% dividend afterthey hiked dividend. The after-tax yield on this is 4.1% plus you get the chance to see another dividend hike and you get upside if stocks go up. Utilities trade up as rates come down because of longer-term leverage to rates. SO stock has roughly a 4.3% yield and also trades at just over 17 times earnings.
Jon C. Ogg
January 19, 2007
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