Hot Prospects

Lights Out

These old stocks just ain't what they used to be. No longer are utilities the reliable old sawhorses that could see investors through the years, gradually increasing dividends as they increased power bills. Electric utilities have turned over a new leaf--one that's better for the consumer in the way of lower rates but offers less certainty for the investor.

If you still like these stocks, consider the best among them. Look for companies with increasing dividends and dividend payouts that are less than 80 percent of cash flow. If a company is paying out too much, a drop in rates could mean a drop in dividends and a potential fall in the stock's price.

While the future may look so bright you have to wear shades, consider this cautionary note: No matter what the industry or how good its prospects, the fortunes of individual companies will vary. Before you select a stock or industry for your portfolio, be certain to investigate it thoroughly to make sure it fits with your tolerance for risk.

Get information on any investments you may be considering by requesting a copy of the company's annual report. Several rating services, including Value Line Investment Survey and Standard & Poor's Stock Survey, provide opinions and additional information.

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This article was originally published in the December 1996 print edition of Entrepreneur with the headline: Hot Prospects.

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