North Dakota's Two Gifts to Investors

MDU Resources and Otter Tail are treating shareholders superbly.

While widely held utility stocks such as Duke Energy, Exelon, FPL and Southern Company flicker this year, a much-lesser-known duo from North Dakota are generating yet another pair of double-digit total returns.

MDU Resources (symbol MDU) and Otter Tail Corp. (OTTR) have delivered year-to-date returns of 16% and 17% through August 19, even after Otter Tail shares fell 19% on August 5 on news of a less-than-requested rate increase in Minnesota and the company's reduced profit forecast for the rest of 2008. The same day, MDU issued stronger-than-forecasted quarterly results and raised its earnings "guidance" substantially through the end of 2008. Since then, Otter Tail shares have gained back half the one-day loss, closing at $39.58 on August 20, while MDU has traded flat. This says that traders overreacted (as they frequently do), dumping Otter Tail shares over a one-time disappointment, and that they are waiting to see whether MDU can keep its new profit promises.

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Jeffrey R. Kosnett
Senior Editor, Kiplinger's Personal Finance
Kosnett is the editor of Kiplinger's Investing for Income and writes the "Cash in Hand" column for Kiplinger's Personal Finance. He is an income-investing expert who covers bonds, real estate investment trusts, oil and gas income deals, dividend stocks and anything else that pays interest and dividends. He joined Kiplinger in 1981 after six years in newspapers, including the Baltimore Sun. He is a 1976 journalism graduate from the Medill School at Northwestern University and completed an executive program at the Carnegie-Mellon University business school in 1978.