Utility companies
are in the delivery business. They meet fundamental needs for homes and businesses by providing water, electricity and natural gas. Because the services that utilities provide are so basic, declining economic conditions are a minimal risk. This makes utilities an attractive sector for investors who are looking to diversify their portfolio.
Instructions
1. Invest in mutual funds that targets the utilities sector. Most investment management companies offer this type of fund. Go to the Morningstar website to research them in depth (see Resources below).
2. Purchase shares of an exchange traded fund that invests in utility companies. Exchange traded funds are similar to mutual funds, except that there is a set number of shares available and these shares are traded on a stock market. Each share represents partial ownership in each of the companies in the funds portfolio.
3. Buy shares in the stocks of individual utility companies. Utilities vary widely from local natural gas companies to integrated, regional utilities. Compare utility companies before choosing to invest in one. Look at the price to earnings ratio, dividend yield and recent earnings history.
4. Invest in related companies, too. There are many indirect ways to invest in utilities. You can buy shares of stock in a company that manufactures generators, mines natural gas or provides unique services for the utilities industry.
