5 Utility Stocks to Buy on Fed's Dovish Stance

Fed officials also wanted the inflation rate to move up to the desired target of 2% before raising rates. Some Fed voting members during the meeting said their confidence that inflation will climb to 2% “had not increased” since the July meeting. They also said that the current global economic developments have placed further downward pressure on inflation in the near term. Fed staff estimated inflation won’t be able to touch the 2% goal even by the end of 2018.

Dovish members in the policy meeting argued that a rate hike soon will drag inflation lower. Nine out of 10 Fed members said that rates will remain steady in September, with the only exception being Richmond Fed President Jeffery Lacker.

5 Utility Picks

Investing in utility stocks will be a good idea if the low interest rate persists for the time being. Utilities are a capital intensive business and the funds generated from internal sources are not always sufficient to meet their requirements.

Hence, these companies have a high level of debt loads. Low interest rates will help them pay off debts and book profits. Our selection is also backed by good Zacks Value Score and Zacks Rank.

We narrowed down our choices with the help of our new style score system.

Our research shows that stocks with a Value Style Score of ‘A’ or ‘B’ when combined with a Zacks Rank # 1 (Strong Buy) or Zacks Rank #2 (Buy) offer the best investment opportunities in the value investing space.

Ameren Corporation AEE provides energy services to customers in Missouri and Illinois.

AEE holds a Zacks Rank #2 (Buy) and has a Value Style Score of ‘B.’ AEE has a dividend yield of 3.89%. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 16.48. The company’s price/earnings to growth ratio (PEG) is 2.41, in contrast to the industry’s negative PEG ratio of 3.19.

American Electric Power Co., Inc. AEP engages in the generation and distribution of electricity for sale to retail and wholesale customers.

AEP holds a Zacks Rank #2 (Buy) and has a Value Style Score of ‘B.’ AEP has a dividend yield of 3.78%. It has a P/E (F1) of 15.57x. The company’s PEG ratio is 3.23, in contrast to the industry’s negative PEG ratio of 3.19.

Atmos Energy Corporation ATO distributes and sells natural gas to residential, commercial, agricultural and other customers.

 ATO holds a Zacks Rank #2 (Buy) and has a Value Style Score of ‘B.’ ATO has a dividend yield of 2.66%. It has a P/E (F1) of 18.15x. The company’s PEG ratio is 2.63, less than the industry’s PEG ratio of 2.86.

PPL Corporation PPL is an energy and utility holding company.

PPL holds a Zacks Rank #2 (Buy) and has a Value Style Score of ‘B.’ PPL has a dividend yield of 4.63%. It has a P/E (F1) of 14.85x. The company’s PEG ratio is 6.33, in contrast to the industry’s PEG ratio of 3.19.

DTE Energy Company DTE is a Detroit-based diversified energy company involved in the development and management of energy-related businesses.

DTE holds a Zacks Rank #2 (Buy) and has a Value Style Score of ‘B.’ DTE has a dividend yield of 3.63%. It has a P/E (F1) of 16.90x. The company’s PEG ratio is 3.23, in contrast to the industry’s negative PEG ratio of 3.19.

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