That should really be no surprise. Bad times for most stocks are often good times for utilities. A study by the Leuthold Group in Minneapolis found that electric companies rose in price or just about broke even in five of the past 11 bear markets. In 1981, for instance, utilities rose 23 percent while the market averages were down 19 percent. First, markets usually fall in anticipation of a slowing economy, but, unless there's a long and deep recession, utilities don't suffer much.
Consumers keep their air conditioners running, and businesses keep the lights on.
Second, an economic slowdown often means lower interest rates, and utilities are huge borrowers, so a major expense of theirs is reduced and their profits rise. This new demand serves to boost prices. Again, more demand and higher prices. Some utilities pay far more. Southern Co., parent of utilities in Alabama, Georgia and Mississippi, yields 4.6 percent.