Business & Money

Sizable gains return to the market.

 

With an average appreciation of 18.9 percent since we last ran SNL Financial's dividend data , SNL's safe dividend picks appeared to do well for any market. However, like the fine golden years of the late '90s for all things technology, recent months have returned sizable gains to investors of energy stocks-not what one would expect from slow growth, dividend-paying electric and gas utilities that make up the majority of the SNL Energy universe.

Such appreciation doesn't necessarily reflect new economic value-although results have improved, and the weather earlier this year helped-but simply a market correction. Stock prices were glum after the barrage of events in the months preceding our first analysis: Enron imploded, California exploded, spark spreads vanished, and debt rating downgrades became more common than energy executives looking for work.

Alas, our 18.9 percent average performance since Feb. 28, 2003, slightly surpassed the S&P 500 (+17.4 percent) and the entire SNL Energy universe (+16.8 percent) while significantly underperforming the SNL index of merchant generators, up a cool 55.1 percent after rebounding from bankruptcy fears. Twenty-two of the 23 companies on our February list posted positive gains in the period.

Still, if 2003 and the present administration has taught us anything, it is that paying a dividend still matters.

Whether due to the higher stock prices or debt ratios that continue to inch up, only 19 companies make our list this time around, down from 23. The average dividend on our list currently pays 4.4 percent, down from 5 percent in February.