Dear Mr. Berko: 

I have too much money sitting in my money market account. It earns practically nothing. I need more income, and at this point, I’m not comfortable putting this money in the stock market, because I’m concerned about the volatility. I did buy some AT&T and some Kinder Morgan and Mercury General, which you recommended, but I have about $80,000 that I’d like to get more income on. What is your opinion of the Duke Energy money market mutual fund, which advertises a yield of 1.41 percent? Is it safe? What are the costs, and is it liquid? Do you get checks with the account? 

H.A., Port Charlotte, Fla.



Dear H.A.: 

The first thing you should know is that Duke Energy Corp. (DUK-$66.79), which has pilfered billions from Florida utility customers, may be the largest electric utility in the nation. This giant crook has 7.2 million electricity customers and more than 500,000 gas customers, providing power to those folks who live, work and multiply in North Carolina, South Carolina, Ohio, Kentucky and the Sunshine State. The share price of this $25.3 billion-revenue utility may be a little rich in comparison with its competitors. Most would agree that 22 times earnings is historically too high for any electric utility stock. Still, DUK’s revenue growth should compound at 3 percent, to $29.3 billion, by 2018, and earnings could improve by about 5 percent annually, from the current $4.05 a share to $5. And in the coming four years, the $3.09 dividend, yielding 4.6 percent, could rise to $3.35.

In spite of the fact that DUK is collecting for a nuclear plant that won’t be built, this is a well-run company in an attractive service area. It has a good balance sheet, a strong income statement, net profit margins of better than 12 percent and a $60 per share book value. I’d be comfortable putting $80,000 into DUK’s money market fund. Most banks would lend your $80,000 at 8 percent, charge the customer various bodacious loan preparation fees plus costs and then pay you borscht. So the 1.41 percent you would get from DUK is enormously better than the niggardly 0.35 percent an ignoramus would get from a bank.

Though this DUK product walks and talks like a money market account and though you can write checks on your balance, the people at DUK consider it an investment in their PremierNotes. The notes are not subject to regulation under the Investment Company Act of 1940, and they are not rated by Moody’s Investors Service or Standard & Poor’s, even though they’re direct obligations of Duke Energy. DUK smartly borrows money directly from the public (you), issuing those notes and eliminating the onerous underwriting fees. In return, you get a very favorable floating interest rate that puts short-term certificates of deposit and money market accounts to shame.

But before you invest, call DUK for an investors kit, using the phone number in the advertisement. This kit will tell you that interest is compounded daily and credited monthly. It also will tell you that the minimum investment is $1,000 and that the maximum investment per person is $1 million. And if your balance falls below $1,000, DUK will liquidate the account and post you a check, less any applicable withholding. As I said, the account pays a competitive floating rate. It is determined on a weekly basis, and all rate changes become effective on the following Monday.

Yes, you get checks with this account. When you run out, you’ll order additional checks, just as you do at your bank, but unlike your bank, DUK won’t charge you for them. The investors kit also will tell you that there are no maintenance fees associated with your PremierNote account. However, there will be a $10 charge for writing checks for less than $250, a $15 stop payment charge and a $20 fee for insufficient funds. Statements are mailed quarterly, but you will also receive a statement for any month that has an electronic transaction. You can also sign up for online access so you can view your account anytime.