Today I want to focus on United Utilities (UU.), one of the UK’s major utility suppliers. The stock markets have rallied in recent weeks to set new yearly highs and as a result many of the utility companies have been sold off as investors switch to more exciting companies. However United Utilities does now look like a good long-term investment.

For a start it pays a very healthy dividend. At it’s current price of 450p the dividend yield is 7.26% for the current year and is expected to come in at 7.67% and 7.51% for 2010 and 2011. So it’s a great stock for high dividend investors but it also appears to be oversold as well.

On a technical basis the RSI (14) is currently down to 30 and the stochastic and CCI indicators are currently well into oversold territory. Of course the price could yet fall further but interestingly the most recent low back in March was also 450p so this is a strong support level.

So with an undemanding PE ratio of 8.1 for 2010 and 10.4 for 2011, I think United Utilities is a solid long-term investment that may even offer a decent short-term return as well.

(Disclosure: Author currently holds shares in United Utilities)

 

 

Filed under: UK Stocks

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