I do not think I know someone who has not played Monopoly. I remember everyone wanting Boardwalk and Park place because a player could win in one fell swoop with either built out. I on the other hand had a soft spot for the smaller properties; especially the utilities. Pay four times the roll if you own one, 10 times the roll if you own both. Not to mention everyone always seemed to land on them.
Utilities are a unique business model. They have almost no competition as they are designated to a specific region. They pay out a reasonable dividend that beats current interest rates. Utilities also have very little price volatility, so your principal is fairly safe. Utilities also fly under the radar as they are categorized as Small- or Mid-cap stocks.
American States Water (NYSE:AWR)
American States Water provides water and electric utilities to southern California. It currently pays a $1.42 dividend or a 2.6% yield. American States has a payout ratio of 45% and has increased its dividend for the 58 years. American States has a market cap of $1.05 Billion
Northwest Natural Gas (NYSE:NWN)
Northwest Natural Gas provides natural gas to Oregon, and Washington. It currently pays a $1.82 dividend or a 4.10% yield. Northwest Natural Gas has a payout ratio of 81% and has increased its dividend for 52 years. Northwest Natural Gas has a market cap of $1.21 Billion
Wisconsin Energy Corp (NYSE:WEC)
Wisconsin Energy Corp provides electricity and natural gas to Wisconsin, and electricity to Michigan's Upper Peninsula. It currently pays a $1.36 dividend or a 3.10% yield. Wisconsin Electricity Corp has a payout ratio of 52%. The company has paid out a quarterly dividend since 1942. Wisconsin Energy has a market cap of $9.87 Billion.
In today's environment interest rates are still low. CDs as well as bonds aren't paying enough to keep up with inflation. Utilities are a great way to keep our principal safe as well as receive a steady income from dividends. As customers do not have much of a choice on what utility is their provider, these companies have proven cash flow over the long term. Not all utilities are a good place to invest. It's best to look over what your needs are and see if utilities are right for you.
Disclosure: I am long IBM, KO, WMT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.