EXC...new position for us.

We like electric utilities for the safety, dependable dividend, and consider them a great alternative to US Treasuries.  Most investors obviously think the same since over the last year many have piled into them for some of the same reasons.  The most important of those reasons is yield.  The piling in has caused most, if not all, of our favorites utilities to be pushed up in price beyond where we consider the price to be sustainable long term.   SO our absolute favorite has been that way for some time.  DUK, which we dropped last month due to some real legal issues was there as well.  So we have been looking for a replacement for these in our portfolio. 

We believe we have found one in Exelon.   EXC has been under pressure for some time due to it's merger with Constellation, but we believe it has finally found a bottom here in the $37 range.  Add to that the juicy 5.5% dividend, which has now been confirmed as the payout going forward.  The one point that has held us back from earlier investment in EXC has been the business they do in Maryland. No way to decribe it, but to say the power business in this state is awful.  Maryland regulators are the worst in the country and one reason we have avoided EXC in the past. However the decline in stock price has offered up a value price here that offsets many concerns from those regulators. 

EXC has the largest fleet of nuke plants in the country and in a global warming believing Obama administration that is a plus. 

One other plus, if you can call it that about,  is that EXC is on the receiving end of lots of crony capitalism. Obama has many ties to this Chicago based company and has Exelon people in his administration.  So why not take a position in a company that plays on the real possibility Obama will get re-elected. 

We will begin a position in this stock sometime in the next options cycles with an eye on the stock price of around $37.

We also plan is to replace NNN next cycle, which has been a stalwart in our portfolio for many years, but has become so stable it no longer offers premium option value for cash flow. We are not saying NNN does not continue to hold some value, just that it no longer fits our trading criteria.