Utilities Stable On Day Of The Dow Decline

Utilities are powering the trading systems, televisions and networks that Wall Street traders and investors are using to watch the historic events taking place. While the Dow Jones Industrial Average recorded its biggest one-day decline in history on September 29, falling 777 points, the utilities sector offered two measures that safety protection-seeking investors should explore. (Speaking of the Dow, be sure to check out Calculating The Dow Jones Industrial Average.)

Practical Energy Usage
On the day of the Dow's massive decline, the best performers on the Dow Jones Utility Average offered two measures of safety:

• First, the opportunity to capture dividends that the utilities offer. (Interested in dividends? Then see The Importance Of Dividends.)
• Second, unless candle wax, gasoline-powered generators or lanterns are being horded by the masses, energy use should prove to be a somewhat stable play.

Midwest Utilities

American Electric Power (NYSE:AEP) fell the least among the group mentioned, dropping only 1.29%. AEP is one of the largest electricity providers in the U.S., serving more than 5 million customers in 11 states in the Midwest and the Southeast. Revenue from its utility operation increased 10.36% to $6.61 billion for the first six months of 2008 over the same period a year ago. The increase in revenue was mainly due to rate increases in Ohio, Virginia, Texas and Oklahoma. AEP has a current dividend yield of 4.4%.

Edison International (NYSE:EIX) fell 1.45%. Edison supplies electricity to central, coastal and Southern California. Revenues from Edison's electric utility operations increased 9.06% for the first six months. The increases were driven by rate and sales volume increases tied to higher temperatures in the regions it serves. Under its subsidiary Southern California Electric, Edison filed an application in March with the California Public Utility Commission to implement a solar photovoltaic (PV) program targeting the rooftops of commercial and industrial buildings in its service area. Edison has a current dividend yield of 3%.

Consolidated Edison Inc. (NYSE:ED) of New York dropped 1.97%. Con Ed provides electric, gas and steam utility services primarily to 3.2 million customers in New York, Northern New Jersey and eastern Pennsylvania. Con Ed's operating revenues were also up 6.53% for the first six months of the year over the same period in 2007. Revenues from electricity and non-utility sales led the way.

In May, Con Ed submitted a proposal to the New York State Public Service Commission for a three-year electric rate plan with a flat annual rate increase of $556.7 million beginning in April 2009. Acceptance of the proposal would lock in revenues for the next three years, which could be a good move assuming the cost of generating power doesn't increase dramatically. Con Ed has a current dividend yield of 5.4%.

Final Thoughts
The turmoil in the financial markets is casting fear, and investors should be concerned. While there's nothing wrong with sitting in cash if an investor is looking for an option, a play on utilities offers a few safety measures to consider. (By the way, a good read: Adapt To A Bear Market.)