QQQQ's don't pay 7.30%. . .they pay NOTHING!. . .if you are retired (like me), you should be looking for nice safe income stocks. My 2000 shares of EDE pay about $2600 a year (currently taxed at 15%) or around $200 a month. . .a nice little income. I have mostly utilities like Con ed ED, and some oils like Chevron, etc. I have breezed through this recession with an INREASE in income, because ConEd, Chevron, etc. have raised their dividends. . .
Been looking into some utility stocks. Looked at quite a few. It seems they all carry alot of debt. I am not concerned with the ratios. For instance EDE has 3.39 m cash o/h and 780 m in debt and WR has 5 m in cash and 2.8 b in debt. Duke is worse. I got the data from yahoo. It seems to be the standard for all utilities to operate with alot of debt. Why is this? Do any utilities operate with little or no debt?
I cannot give you all the particulars but it has to do with the monopoly status they have and how they are allowed to structure their earnings.
The story is something like this. Because they are allowed to have monopoly status, their earnings are structured in how they are allowed to set rates (and in turn profit). The way it is structured is they are allowed to cover their cost (including debt service) and then turn profit on their invested capital. So to maximize profit they leverage out and invest in bigger and and more expensive power generation plants. More capital invested = bigger profits = higher stock price / dividends
You should be looking at WR. ED has earnings problems. I'd be a little leary on owning them. Look at D also. I also own EDE but have second thoughts. They also have earnings problems. WR and D are my favorate utes. DUK is next for me to buy. Best yet, buy a basket of utes like UTG it pays monthly. About 10% it's an etf. I own a ton of them. BP for oil.
Im looking at WR also pays a nice dividend and the company has been around for a long time. I used to be in DUK drip plan but couldnt justify holding onto DUk when the CEO and upper management were paying themselves 10s of millons in stock options. DUK made alot of aquisitions and spin offs but managemnt profited and sharholders got the shaft! Im also looking at MRK EDE SO FRO BMY as divident plays good luck
Thanks for your input. I also own 4500 shares of EDE and the dividens are nice but within the last 6 months QQQQ has gone up 30+% more than EDE. I have bought a few QQQQ Jan 2011 $35 call options and sold Sept 09 $35's. But I think I will hold on to the EDE also. Thanks again..