In June, we analyzed and evaluated Exelon Corporation (EXC) versus Wisconsin Energy Corporation (WEC), one of our portfolio holdings and the only utility that we have a position in and we concluded that Wisconsin Energy was a better choice for utility investors and dividend-seeking investors than Exelon. We came to this conclusion based on a number of factors, such as WEC has grown its dividend faster than EXC, WEC has a lower payout ratio than EXC and EXC is facing the dual headwinds of lower wholesale power prices and the integration of its Constellation Energy (CEG) acquisition.

In July, we dug deeper in our analysis of Exelon versus Wisconsin Energy and we reinforced our thesis that though Exelon offers a bigger dividend and is more recognizable than Wisconsin Energy, Wisconsin Energy offers a better risk-adjusted return prospect for investors based on the additional factors we analyzed.

  • Wisconsin scored higher for business friendliness than Illinois, Maryland and Pennsylvania
  • Wisconsin Energy (a “less-fashionable, less well-known” regulated utility) had a comparable profit margin to Exelon’s well-known, high-potential power generation subsidiary
  • Wisconsin Energy enjoyed significantly higher profit margins than Exelon’s regulated utilities
  • WEC generated more profit in Q1 2012 than all of EXC’s regulated utilities combined
  • Even during the 2002-2008 multiyear boom in natural gas prices, WEC’s cumulative EPS growth of 111% during that time period exceeded the 86% growth that EXC enjoyed.
  • Let us repeat that, even with the benefit of ridiculously high and rising natural gas prices, the well-known power generator EXC’s cumulative EPS growth was less than WEC.
  • Wisconsin Energy lost $1 Million on its ESELCO acquisition, EXC lost $3 Billion on Unicom

Our third report analyzed how although Exelon is better at generating favorable press and publicity for itself, Wisconsin Energy is a much more reliable performer for its customers and its shareholders

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