Switched on utility dividends

By Mina Kimes, reporter
2009-3-23 11:41:28

NEW YORK (Fortune) -- Investing in an electric utility is a lot like buying the Electric Company in Monopoly. Neither has huge growth potential, but both offer steady payouts: a reliable source of income during a recession or the beginning of a long game.

In 2009 alone, however, three large utilities have chopped their dividends, dimming the prospects for the traditionally safe sector. Since Constellation Energy (CEG, Fortune 500), Great Plains Energy (GXP), and Ameren (AEE, Fortune 500) cut their payouts, their stocks have sunk an average of 31%.

"Now that we've already seen three dividend cuts this year - the most in one year since 2003 - there's more investor anxiety," says David Burks, an analyst at Hilliard Lyons. "People are wondering, is this the start of a trend?"

	Investment Basic Investment Overview Investment Approache Fundamentals Data Investment Stories www.fxj108.com	Switched on utility dividends By Mina Kimes, reporter 2009-3-23 11:41:28 NEW YORK (Fortune) -- Investing in an electric utility is a lot like buying the Electric Company in Monopoly. Neither has huge growth potential, but both offer steady payouts: a reliable source of income during a recession or the beginning of a long game. In 2009 alone, however, three large utilities have chopped their dividends, dimming the prospects for the traditionally safe sector. Since Constellation Energy (CEG, Fortune 500), Great Plains Energy (GXP), and Ameren (AEE, Fortune 500) cut their payouts, their stocks have sunk an average of 31%. "Now that we've already seen three dividend cuts this year - the most in one year since 2003 - there's more investor anxiety," says David Burks, an analyst at Hilliard Lyons. "People are wondering, is this the start of a trend?"