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Eli Lilly and Company Message Board

  • SundayTrader SundayTrader Feb 19, 1998 12:33 AM Flag

    An Unrelated Question - Defensive stocks

    Since this is an active board, I wonder if I can ask an opinion on a non-LLY related topic. If things go right tomorrow, I
    plan to sell my Sears stock with a 20% return since 2-JAN-98. Assuming that 2Q, 3Q and maybe 4Q earnings will be negatively
    impacted by the Asia issue, I'm looking to put my money into something relatively safe and with no Asia exposure. I figure the market
    in general my be down in @Q and 3Q. I figured drugs is one part of that strategy (thus my LLY and BMY), but I am looking for
    another. One thought is utilities. Why? They have higher than average dividend yields. For example, Long Island Light returns 7.4% in
    dividends. Any one on this board have any experience with utilities? How stable are the dividend returns? How cyclical are they? Do
    they weather economic downturns well? I'd ask some folks on the utility boards, but they look relatively inactive. None that I
    have seen have more than 10 posts since the beginning of the year. Any thoughts? Thanks

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    • I honestly don't know anything about utilities..they're probably a good deal per other comments. Another idea might be to look at oil stocks. Depressed and inactive right now so you buy in low...but you have to be patient. I've been watching CHV (Chevron) in particular because they're taking advantage of this depressed market downtime to get into deals and position themselves for the upturn whenever it is that this will happen. Only for long term though.

    • Own no utilities, but you may be aware they are in the process of being deregulated. The result of this deregulation will be some very big winners and some very big losers, unlike when, in years past you could depend on steady income from the whole group.You gotta be a stock picker in this group nowadays. Have read some very positive reviews in various financials on Duke Power.Be cautious.

      • 1 Reply to cydcharisse
      • Utility stocks are not longer the sleepy, "widows and
        orphans" stocks they used to be. But you are spot
        on with regards to their potentially being big
        winners and big losers with deregulation. The low
        cost producers stand to make their shareholders a
        lot of $$$, either by acquiring others or being acquired themselves. Operations-wise, the low cost producers will
        have a big leg up when interstate sales of power become
        more prevalent. Watch out for the high cost producers,
        they are going to be in trouble!!

        If memory serves, LILCO has such a high dividend because
        the company was in so much trouble. Didn't they have a
        lot of nuclear issues?? Are they out of the woods yet??
        I think I remember that there was actually a lot of
        concern over a default at one point. Any New Yorkers on
        this board care to comment??

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