So-Called Safe Investments

by David Jenyns on October 12, 2009

Rate regulation by state power commissions permits — and even maintains — a reasonable return on utility operations, but curbs all chance of runaway profits.

Conservative management, steady expansion of plant and generating capacity, and temperate market action maintaining yields at 4 to 5 percent are factors which currently give the better utilities a blue chip rating.

Food production and packaging is another sound and basic industry. The drug manufacturers generally are a conservative group with an impeccable reputation and an enviable profit record and are considered safe investments. Competition among the drug companies is fairly fierce. As suppliers of a basic American necessity, however, the drug group ranks with the food and power producers.

Chemicals must also be near the top of any quality list for safe investments. Certainly, few industrial groups have such a high percentage of truly outstanding companies or such a basic and vital economic function to perform. Interestingly enough, as this is written, they are just beginning to come back into favor. Several years ago they were among the bluest of Blues.

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