The Top Utility Stocks

Deck: 

A review of total shareholder returns shows how growth and merger strategies drove performance last year.

Fortnightly Magazine - March 2006
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“I would rather be certain of a good result than hopeful of a great one.” —Warren Buffett

“Widows and orphans” is a term that has been used to describe typical investors in electric utility stocks. The utility companies, however, prefer to describe their appeal to investors as “long-term investments.” Accordingly, rather than focus on one-year returns, many utilities emphasize their shareholder performance over the long run—typically a three- or five-year period.

To better understand the performance of the electric utility sector from both a short-term and long-term perspective, we examined the total shareholder return (TSR)—dividends plus change in stock price—of 58 electric companies1 for 2005 and for three- and five-year periods.2

We grouped these companies into four categories to better understand the impact of alternative strategies on investor performance:3

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