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Related topics: dividends, StockScouter, utilities, investing strategy, oil

The Dow Jones Industrial Average ($INDU -0.91%)and the Standard & Poor's 500 Index ($INX -0.85%)have had their best starts to a year in more than a decade, despite a steady drumbeat of distressing headlines.

Stocks could continue to buck the economic headwinds in the second quarter, of course, but a renewal of bad news could trigger another flight to safety that benefits utility stocks.

Utilities zoomed higher as the major indexes sagged last month on the upheaval in Libya and the corresponding rise in oil prices. The sector offers investors relative safety, appealing dividend yields and a reliable source of earnings for operators, which pass along higher fuel costs to customers.

Utility stocks dominate the latest list created with StockScouter, an MSN Money stock-picking tool that generates a monthly catalog of 50 stocks whose business fundamentals, price behavior, valuation and ownership characteristics appear to predict a rising price in the coming month, based on how those factors have influenced prices in the past.

Here are StockScouter's best investment ideas for April:

Benchmark portfolio for April
Company Sector March 31 close Scouter score
American Water Works (AWK) Water utilities $28.05 9
Companhia de Saneamento Básico do Estado de São Paulo (SBS) Water and sewer services $58.74 10
Eletrobras (EBR) Electric utilities $15.51 10
AT&T (T) Telecommunications $30.61 9
Cleco (CNL) Electric utilities $34.29 9
Dominion Resources (D) Electric utilities $44.70 9
DPL (DPL) Electric utilities $27.41 9
CPFL Energy (CPL) Electric utilities $87.41 9
ShoreTel (SHOR) Communication equipment $8.23 8
Exelon (EXC) Electric utilities $41.24 9
América Móvil (AMX) Telecommunications $58.10 9
MDU Resources Group (MDU) Building materials $22.97 9
Empresa Nacional de Electricidad (EOC) Electric utilities $55.62 9
NiSource (NI) Natural gas, electricity $19.18 9
NorthWestern (NWE) Electricity, natural gas $30.30 9
Calpine (CPN) Electric utilities $15.87 9
Alliant Energy (LNT) Electricity and natural gas $38.93 9
Northeast Utilities (NU) Electric utilities $34.60 9
DTE Energy (DTE) Electric utilities $48.96 9
Edison International (EIX) Electric utilities $36.59 9
CMS Energy (CMS) Electricity and natural gas $19.64 9
CenturyLink (CTL) Telecommunications $41.55 9
Idacorp (IDA) Electric utilities $38.10 9
WGL (WGL) Natural gas utilities $39.00 9
ITC (ITC) Electric utilities $69.90 9
Aqua America (WTR) Water $22.89 9
AGL Resources (AGL) Natural gas utilities $39.84 9
Pinnacle West Capital (PNW) Electric utilities $42.79 9
Scana (SCG) Electricity and natural gas $39.37 9
Consolidated Edison (ED) Electricity and natural gas $50.72 9
Hawaiian Electric Industries (HE) Electric utilities $24.80 9
Entergy (ETR) Electric utilities $67.21 9
OGE Energy (OGE) Electric utilities $50.56 9
Spectra Energy (SE) Oil and gas pipelines $27.18 9
Black Hills (BKH) Electric utilities $33.44 9
El Paso Electric (EE) Electric utilities $30.40 9
Telekomunikasi Indonesia (TLK) Telecommunications $33.58 9
Nicor (GAS) Natural gas utilities $53.70 9
TC PipeLines (TCLP) Oil and gas pipelines $52.02 9
Southern Union (SUG) Natural gas utilities $28.62 8
Millicom International Cellular (MICC) Mobile communications $96.17 8
ProAssurance (PRA) Property and casualty insurance $63.37 10
Bio Rad Laboratories (BIO) Scientific instruments $120.14 10
Ball (BLL) Containers and packages $35.85 10
Analog Devices (ADI) Integrated circuits $39.38 10
Cerner (CERN) Health care $111.20 10
Ansys (ANSS) Technical software $54.19 10
FactSet Research Systems (FDS) Financial information $104.73 10
Texas Instruments (TXN) Semiconductors $34.56 10
Roper Industries (ROP) Industrial equipment $86.46 10

Put StockScouter to work

Investment research firm Gradient Analytics uses StockScouter to create daily and monthly stock lists. Writer Jon Markman, at the time a columnist for MSN Money, collaborated with the company to devise strategies for putting the tool to work.

One of Markman's strategies involved investing an equal amount of money in each of the stocks in the computer-generated portfolio, selling them six months later, then beginning the process again. For investors who prefer to handle fewer stocks, Markman recommended using the strategy with just the top 10 stocks on the list.

An investor who followed Markman's 10-stock strategy since it was launched would have realized a gain of 693% through March 31, according to Gradient Analytics, and had an average annual return of 23.4%.

Over the same period, the S&P 500 rose by 9.5%.

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An innovative mix

StockScouter depends on advanced mathematics and software and an innovative mix of measurements and historical testing to forecast the short- and long-term outlook for all U.S. companies that have traded on the major exchanges for at least the past six months.

The analytical tools are applied to score stocks on fundamental, valuation, technical and ownership components.