NEW YORK (TheStreet) -- With the stock market facing a possible correction, investors may want to consider utility stocks that offer sizable dividends and a margin of safety.
The Dow Utility Average set an all-time intraday high at 576.98 on June 30, and through Tuesday's close, the average was up 14% year to date, outpacing the broader market. But even with their run-up this year, utilities are less risky than stocks in general as I continue to believe that the upside for the stock market is limited and the downside risk is significantly more than the 10% correction many strategists are predicting.
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Within the Dow Utility Averaage, Duke Energy (DUK) , Consolidated Edison (ED) , FirstEnergy (FE) , Public Service Enterprise (PEG) and Southern Co. (SO) all have dividend yields between 4% and 4.7%. The other five have dividend yields between 3.4% and 3.8%.
Let's take a look at the weekly chart for utilities and profile the 10 components with the highest dividend yields.
Courtesy of MetaStock Xenith
The weekly chart for the Dow Utility Average is positive with its five-week modified moving average at 556.68 and 200-week simple moving average 473.19.
Looking back to 2007, Dow Utilities traded as high as 555.71 in January 2007, and broke below its 200-week SMA (green line) at 444.07 in September 2008. Utilities set their March 2009 intraday low at 288.66, down 48% for the "Crash of 2008."