Utilities: not necessarily a power play

FOR retirees who are looking to invest their money, or for a risk-averse person just starting out, a common question will be: What are the stable stocks in the market? Not everyone is interested in chasing the latest technology initial public offering (IPO) that might be up 10 per cent one day and down 15 per cent the next. Rather, it is the counter that gives steady returns of 5-8 per cent a year that might be more appealing.

Returns like these are nothing to sniff at when compounded over the long term. Assets that deliver 7.2 per cent a year, for instance, will have doubled in value over 10 years.

What businesses offer the lowest risk in the market? In theory, the providers of utilities such as electricity, water and gas fall under this category.