While the S&P 500 was relatively flat over the past year, U.S. utility stocks gained an average of 14.8%. It is the top-performing sector by almost 5 percentage points. There has also been a lot of news coming out about some mergers and about the top performers. These are the companies that are worthy of further research.
Duke Energy Corporation (DUK): DUK and Progressive Energy, Inc. (PGN) are in the midst of creating the largest electric utility in the United States. A recent ruling from the Federal Energy Regulatory Commission has postponed this $13.7 billion merger. The FERC ruled that there was not an acceptable plan to protect the wholesale market competition in the Carolinas after the merger. There is fear that the combined company’s markets will create a monopoly.
The companies announced that they would extend the termination date by six months to July 8, 2011. This was the date that, contractually, either side could extend the termination date to. (This was defined in DUK’s January 9, 2011 8K.) DUK and PGN will propose a new plan to protect competition within the next two to three weeks. Although this merger has been delayed, DUK can still be considered a buy. It is trading near its 52-week high after a 21.23% 52-week change, it has a payout ratio of 71%, and its 5 year average dividend yield is 5.6%.
Progressive Energy, Inc.: Recent news consistently puts PGN next to DUK, being that they are merging in less than six months. PGN pays out almost all of its retained earnings, with an 8% retention ratio, and has the same 5 year dividend yield of 5.6% .To continue reading, click here.