``Most utility issues offer high yields and superior price stability, which appeal to investors in a bear market,'' the Value Line Investment Survey noted.
Some investors snapped up the highest-yielding utility issues. Generally these companies have completed, or are about to complete, the construction of nuclear plants. Their shares carry more than usual market risk, since expensive nuclear projects often create rate-setting conflicts with state regulatory commissions.
One example is the Centerior Energy Corp., a Cleveland-based electric utility. Its shares pay an annual dividend rate of $2.56 a share and yield slightly more than 15 percent. Some Wall Street analysts, while underscoring the risk of a dividend cut, recommend the stock for investors willing to assume that risk.
``I think it is a good investment,'' said Mark D. Luftig of Salomon Brothers. ``Under the worst-case scenario, the company might reduce its dividend by one-third, but that would still provide a yield of 10 percent, based on current costs.''
S. Arlene Barnes and Nancy G. Fertig, utility analysts at the First Boston Corp. pick Centerior as a ``special situation'' stock.
``While we believe there continues to be risk of a cut in the company's dividend,'' they said in a recent report, ``we think this is probably pretty much reflected in the stock price. …