Dear Mr. Berko: My husband and I are both 73 years old and in excellent health. Both of us retired 10 years ago from Monsanto, and we get a nice pension. We discovered your column about nine months ago. You don’t write like other stock advisers. Your common sense and humor appeal to us. We don’t own any stocks. All our cash ($535,000) is in certificates of deposit and savings because we’re afraid the stocks will go down and we don’t want to lose any money or income.
Both of us read your column about Southern Co. We didn’t realize that there are utilities that pay over 5 percent, and that fact, along with the fact that Southern has increased its dividend payout every year for over 25 years, convinced us that we should buy 300 shares of Southern at $43.10. We’re getting a 5.3 percent return. You explained that the price of Southern’s stock will go up and down every year but that its dividend is solid. It sounded pretty safe to us because as long as Southern pays that good dividend, we will be happy with the stock, and assuming Southern continues to increase its dividend each year, we’ll be even happier. If the stock price goes up or down, it won’t matter to us because we are not looking to make a big score the way many people are.
You have opened our eyes with your column. Are there any other utility stocks that pay at least 5 percent and increase their dividends each year that you could recommend for us? Our neighbor owns stock in PPL Corp. and says it has increased its dividend every year. What can you tell us about this stock, and would you recommend it for us? We’d buy 400 shares.
— C.G., Moline, Ill.
Dear C.G.: PPL Corp. (PPL-$28.06) traces its roots to Pennsylvania Power & Light Co., which was created in 1920 through the consolidation of eight small electric companies formed in the 1880s, including the Edison Electric Illuminating Co., which provided incandescent lighting to many small Pennsylvania cities. Many tiny independent power companies dotted the Pennsylvania landscape in the early 1900s, with 65 companies serving 88 communities in the area that PP&L would eventually serve. It was common in the late 1800s and early 1900s for smaller, regional utilities to merge with larger providers. So, in June 1920, PP&L was formed as a holding company to combine numerous merger operations under a single roof. Today PPL provides power to 1.4 million customers in eastern and central Pennsylvania, 1.2 million customers in Kentucky (it acquired Kentucky Utilities and Louisville Gas & Electric Co. in November 2010) and 7.8 million customers in the U.K., where PPL has a power distribution subsidiary.
