Problems of power stock investment

Between the individual investor, it is an investment of but flashy is not the still popular is the "power line". On the variation of performance is less, is the varying elements easy to read. For example, the manufacturing cost is increased if crude oil prices, power consumption in the cooling demand reduction if cool summer (= sales) is decreasing, it is easy to predict even in amateur and so on.

And the biggest feature If nothing else is, on dividend yield is increasing, decreasing dividends risk is very low. Such as Tokyo Electric Power and Kansai Electric Power, dividend yield is always about 2-3% because you have to keep, is higher deals sense than such as the current bank. Risk is to be avoided as much as possible, but, but ... from such thinking yields too low of bank deposits and government bonds for individuals, not a few people that hold the power shares in the long term.

But the author does not recommend so much that you possess the power lines in the long-term. The power strain because suffer from two major problems.

The first problem is the tapering of future electricity demand. As you know in Japan is progressing declining birthrate and aging population, it is hard economic conditions that thought and future power demand increases. Additionally recent energy conservation and Ekobumu also, is the reduction factor of the electricity consumption.

It is ironic, but as advances, the world of energy saving is, sales of power companies is reduced, performance is to worsen. This means that the performance of the power company, it is the relationship of "conflict of interest" with the world of power-saving behavior, such as energy saving and eco, I sad industries.

And is that another problem is, there are rules that can not be achieved above a certain level of profit margin. Electricity rates are bound by law that the power business method, it is a mechanism that is determined put the interests of a certain percentage in manufacturing cost (price of crude oil and coal, such as the cost of manufacturing windmills and dams). The reason for this, in addition to the fact of that electricity is the lifeline that are essential to people's lives, as that Kansai Electric Power Co. in Tokyo Electric Power and Kansai area if the Kanto region, because each company is able to monopolize the power demand of the region, without permission it is because cause a big trouble in people's lives if the price increases to.

But it also means that you can not be in the price system, such as to keep the arbitrarily high profit margin, it is not only sales ... clogging power consumption increase is to increase the profit. However, as mentioned above, for the stronger decrease pressure power demand by declining birthrate and energy saving, it is extremely difficult situation to profit.

Certainly extreme decline → become risk decreasing dividends are located in small industries but, as the subject of long-term investment for the future, because there is growth potential little, you can determine that it is low very attractive industries. In easy idea because dividend yield is high, is not a good idea to invest in power lines.