MGEE – A Stock That I Consider Fixed Income

I just purchased a block of MGEE, my local utility.  In the big picture of utilities MGEE is a very tiny player.  Their daily volume is fairly low.

Over the last 5 years MGEE has traded from a low of 28 (Mar 2009) to a high of 38 (June 05).  The 52 week low is 32.36.  I bought at 34.36 on June 7 and it has had a nice short term run up here to 36.35 as of yesterday.  But I am not overly concerned about the value of the stock in this case.  I treat this one as fixed income.  Even in the lowest of the low market back in March of ’09 the stock didn’t really tank.  That is a great indicator of a solid company that people really love (for whatever reason).  Yearly dividends are 1.47, making the yield about 4.05% as it stands right now.

I like this one as a safe long term play and treat it almost like a bond in my allocation.  I do think there is upside potential as this area wasn’t hit as bad as places like Michigan or Arizona in the recession, and there is always a chance that this tiny utility could get swallowed by one of the other giants.  One thing that is nice from a small retail investors perspective is that you can buy their stock directly if you choose, and you can sign up for this service at the MGEE website.  On the other hand, you will never get rich if you are waiting for a stock like this to rocket up.

Madison Gas and Electric has a sparkling reputation here in Madison, home of tons of hippies and enviro weenies.  If a company can do their business relatively uninterrupted in this environment, it really says something to me.  I will more than likely be plowing more into this one in the years to come, keeping track of it in my fixed income side even though it is a stock.

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5 thoughts on “MGEE – A Stock That I Consider Fixed Income”

  1. I think MGEE is a good candidate for the “6” stocks that I will recommend this time around, unless the price goes up a lot between now and August when I will be making recommendations.

    Agreed with you on all points – MGEE is in a utility-friendly state, Wisconsin, and has a good reputation. They don’t own a lot of generation and are mainly a distribution play, which makes them low risk. I used to audit them back in the day and they seemed conservatively run as far as non-regulated investments. And they have a good dividend, which even if the tax rules hit dividends and the stock tanks a bit due to this it won’t kick the long term fundamentals too hard.

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  2. Also another day and another 20 or so spam comments. Some environmental wacko site started spamming us too now since you put up MGEE. As you said thank god for Askimet.

    Also – someone actually put up a legit comment on “The Psychology of Gifting”. You can click through to see their site they actually do stuff and it was legit.

    That is pretty much a first, except for you (sigh). At least we have ONE reader 🙂

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  3. Heh funny about the comments. As far as their recent spike in value, I have no clue why MGEE is doing that now. A big fund must be plowing in as a low risk play or it could be window dressing to make a portfolio look less risky by the end of the month.

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  4. I just got paid my div from ED (I own it in one of my large cap funds) and it was $.71/share. The year is $2.38, making it a yield of 5.50% at this time. Pretty impressive for a huge utility. ED is only a small bit off of its year high though, so not tasty enough for me yet.

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