Some News You Can Use

The Utility Sector has been one of the top sectors this year producing steady earnings growth and high dividend yields. And there appears to be a smart way to profit from this utility stock boom. Do this by paying attention to companies that are acquisition targets - but more specifically, those companies that are takeover targets and are likely to be acquired at premiums of 15% to 20% over their current share prices.

Two such likely targets are:

1. PPL Corp (NYSE: PPL) now yielding about 3.1%

2. SCANA Corp (NYSE: SCG) now yielding about 3.6%

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The Treasury will resume selling the 30-year bond in early 2006, but it should be avoided because in this present shaky interest rate environment, it simply does not make good sense to tie up money in such a long-term security because of the potential long-term risks that may be involved.

The way that interest rates affect long-term bond prices, if you did purchase the new 30-year bond, and if interest rates rise by one percentage point during the next year, that 30-year bond would lose roughly 10%. And a 10-year Treasury bond under the same circumstances would suffer only a 3% decline.

Of course, the good thing about bonds is that if you hold your Treasury bond until it matures, you are certain to get your money back. The rise or the fall in interest rates only becomes a problem if you are forced to sell before the bond matures!

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Over the past 15 years, stocks that paid dividends have produced higher annual returns with far less risk than have those that didn't pay dividends. And the reason for that is the fact that many dividend-paying stocks are mature companies that have predictable earnings streams, and thus they are able to be steady dividend payers.

When seeking out good dividend paying stocks, you should do so by picking companies that regularly raise their dividends. Two companies in particular that have raised their dividend annually for at least 30 years are Johnson & Johnson (NYSE: JNJ) and Procter & Gamble (NYSE: PG).

If you had read Professor Jeremy J. Siegel's new book, The Future for Investors, you may have been surprised to learn that from a list of the 20 companies with the best annual stock returns during the period from 1957 - 2003, the company which tops that listing - with an annual return of 19.75%; an earnings per share growth rate of 14.75%; an average P/E ratio of 13.13; and a dividend yield of 4.07% - is none other than Altria Group (formerly Philip Morris) (NYSE: MO).

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In case you haven't noticed, the S&P 500 Index has changed. Where previously, a company's Index representation was based on its total shares outstanding; now, each company is weighted in the Index based on its "float" - which is how many shares trade freely in the marketplace.

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For those of you who follow Bob Brinker's Moneytalk program each Saturday and Sunday, you may have noticed that the football season appears to be playing havoc with the program - especially on Saturdays. So what to do about it? The show is available on the Internet by going to either www.kabc.com or www.kgo.com - however station kgo also appears to be covering football during the Bob Brinker time period, so KABC will be your best choice.

Also, you can listen to previous editions of Moneytalk, which are available for download from Bob Brinker's own website at www.bobbrinker.com.

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