NEW YORK (TheStreet) -- The Federal Reserve is widely expected to increase interest rates this year, but so far, it has not yet acted. The International Monetary Fund recently warned against prematurely raising interest rates, saying it believes the Fed should hold off until at least the first half of 2016.
The IMF is not the only organization concerned about premature rate increases. An account of the April Federal Reserve meeting shows that the chairwoman Janet Yellen and other Federal Reserve members are still concerned about the lower-than-expected pace of growth. As a result, they have not yet increased interest rates.
Inactivity from the Federal Reserve has not stopped speculation about rising interest rates. Despite current fears, rising interest rates will not break dividend stocks. The market has overreacted - and acted prematurely. Utility stocks specifically have seen price declines. When markets overreact, savvy investors can purchase shares at a discount. This article covers 2 utility stocks with dividend yields over 4% that appear undervalued at this time.
First Energy Corporation
First Energy (FE) provides electrical utility services to more than 6 million people in Ohio, Pennsylvania, West Virginia, New Jersey, Maryland and New York. The company generates 44% of its electricity from coal plants, 26% from nuclear plants, and purchases the other 30%.
The company has struggled in 2013 and 2014. It had to cut dividends from $2.20 per share in 2012 to $1.65 per share in 2013, and $1.44 in 2014, due to an underfunded pension and weakness in the company's unregulated business.