3 Utilities to Buy, and 1 to Avoid: Duke Energy Corp (DUK), Exelon Corporation (EXC)

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Exelon also provided poor guidance for 2013. Exelon anticipates that it will generate between $2.35 per share to $2.65 per share of operating earnings, representing a decline of 7% to 17% from fiscal year 2012 operating earnings.

Exelon had been sending up a red flag to dividend investors as the company had not delivered a dividend increase since 2008.  Most utilities offer investors dividend increases annually, even if sometimes dividend raises amount to token increases.  Stalled dividend growth for Exelon was a warning signal that all was not right with the company.

The Foolish bottom line

After the cut, Exelon’s dividend yield is now around 4%, slightly below the yield its peers provide.  Investors simply don’t need to put up with a utility that reports collapsing earnings and slashes its dividend.  There are plenty of better alternatives within the utility sector for investors to choose from.  Investing in utilities is often done in the pursuit of reliable, steady cash flow and dividends.  Southern Company, Duke Energy, and American Electric Power all fit that bill.  Investors should give each strong consideration instead of Exelon.

The article 3 Utilities to Buy, and 1 to Avoid originally appeared on Fool.com and is written by Robert Ciura.

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