Over the years I have held a number of stocks that didn't really move up for a period of several years. But, one day, suddenly, they shot up. It is like the growth spurt of a teenager!
Today PPL did just that. PPL had hardly any price appreciation for several years. As a utility, it is very stable business, has a relatively low P/E (compared to most utilities) and a nice dividend yield in the high 4% range.
Some investors with growing portfolios only want the stocks that are going up RIGHT NOW, but often a strong stable company with steady earnings and a great dividend can be a nice "base" component of a solid portfolio. So it isn't a booming stock with immediate returns, it's paying a hefty dividend - while you wait. Like a good play, the stars of the play need a solid cast to back them up. Without the solid cast supporting them, the star of the play can lose their luster. PPL is part of a solid supporting cast.
Sometimes chasing stocks to get "onboard" just before a growth spurt (increase in price) can be counter productive. I call this the Magic Carpet Ride. But another very effective strategy is lying in wait and it avoids the crush brought on by squaring up with the big boy market players
My suspicion is that yield hungry investors are looking to enhance the returns they were getting on bonds. Given the yield and the stability of PPL, it provides a lot of safety while proving much higher yield than even long-term treasuries.
You wouldn't sell your kids if you don't see an immediate growth spurt during the teenage years. With stocks, it may be wise to wait too!
