For most investors, maintaining a diversified portfolio is a good way to help minimize risk while also ensuring that they don't miss out on winning sectors.

Diversification can mean many things -- small versus large stocks, dividends versus growth stocks, and so on -- but most often it's taken to mean spreading your bets among a variety of industries. Of course just because you want to have some exposure to a variety of industries doesn't mean that you want to have the same amount of exposure to all industries.

So what of utilities? Should we be digging in or pulling back right now? Let's take a look.

Performance
Here's a look at how performance has broken down among the S&P 500 industries:

Sector

Month-to-Date Performance

Quarter-to-Date Performance

Year-to-Date Performance

Consumer discretionary

2.1%

0.5%

10.6%

Industrials

1.2%

(5.0%)

6.7%

Financials

0.8%

(7.3%)

2.7%

Consumer staples

1.9%

(4.5%)

0.3%

S&P 500 overall

2.4%

(4.6%)

0.0%

Information technology

2.6%

(4.2%)

(2.6%)

Energy

4.7%

(3.6%)

(3.5%)

Utilities

4.1%

0.1%

(4.6%)

Health care

3.0%

(8.0%)

(5.3%)

Materials

1.3%

(8.1%)

(5.9%)

Telecom services

4.8%

(0.8%)

(6.4%)

Source: Standard & Poor's as of June 14.

Utility stocks are boring incarnate. They are the offensive linemen of the stock market -- hulking, not particularly flashy, and unlikely to make a highlight reel unless they've done something awful (I'm looking at you, Enron). But, just like the big boys of the NFL, utility stocks can protect your portfolio when the market starts going crazy.

But should you be a buyer?
I can't say that I'm a particularly big fan of the utility sector. These are heavily levered, capital-intensive behemoths that generally produce mediocre returns on capital and promise little growth.

The flip side of that picture is that these companies generally pay very dependable dividends and have their profits protected by the government, and their stocks tend to shake off market volatility. So for investors looking to stiffen their portfolio's backbone and score some yield at the same time, utility companies could be a great direction to go.

Having some exposure to utilities isn't a bad idea at all. However, investors looking for yield right now can find that from more attractive sectors than utilities, so keeping your portfolio's utility exposure to 3.5% -- the sector's S&P 500 weighting -- or even slightly less, is probably fine.

Digging in
When it comes to individual stocks in the utility sector, I look for the safest picks I can find while still grabbing a reasonable dividend yield. Below are some of my favorite picks of the group.

Company

Market Cap

Dividend Yield

5-Year Dividend Growth Rate

Payout Ratio

Debt-to-Equity Ratio

Southern Co. (NYSE: SO)

$28 billion

5.5%

4.2%

69.7%

132.4%

Exelon Corp. (NYSE: EXC)

$27 billion

5.3%

8.8%

50.5%

96.0%

Public Service Enterprise Group (NYSE: PEG)

$17 billion

4.3%

3.9%

41.4%

89.0%

Entergy (NYSE: ETR)

$15 billion

4.5%

8.7%

47.7%

137.2%

Consolidated Edison (NYSE: ED)

$12 billion

5.5%

0.9%

66.3%

106.7%

Source: Capital IQ, a Standard & Poor's company.

For the most part, this is a very straightforward collection of utility stocks. As you can see from the chart, they all pay an attractive dividend, most have grown their payout at a modest rate, payout ratios are reasonable, and -- in the context of utility companies -- debt loads are manageable. For a majority of these companies, a glance back over their dividend history will show a commitment to maintaining and growing their payout.

Drilling down a bit further, Motley Fool Income Investor favorite Southern Company is a giant electric utility that serves primarily retail customers in Alabama, Georgia, Florida, and Mississippi. At the end of last year, the majority of the company's generating capacity came from traditional fossil fuel (mostly coal) power plants, with the remainder coming from a trio of nuclear generators and a collection of hydroelectric plants.

Con Ed is similar to Southern in that it focuses primarily on serving the retail market, in this case New York City, other parts of New York state, and areas of New Jersey and Pennsylvania. However, Con Ed does not have significant generating capacity of its own and instead taps the wholesale market.

The wholesale market is where most of the focus is for PSEG and Exelon. Though both companies do own retail-focused utilities, the lion's share of each company's bottom line comes from selling generated power on the wholesale market. For investors concerned about pollution from fossil fuels, it's notable that both companies generate half or more of their power from nuclear plants.

Entergy is a cross between the business models above, bringing in roughly half of its profit from the retail market and half from wholesale, with the latter using primarily nuclear generation. The company had actually been trying to split into two separate businesses, but that process has been stymied.

These are all U.S. companies, of course, but there are interesting utility plays abroad as well. In the emerging markets, Brazil's CPFL Energia (NYSE: CPL) could be worth a look. Not only does it sport a 7.1% dividend, but it has recently reported some very un-utility-like growth. For those looking to stay with the developed world, the U.K.'s National Grid (NYSE: NGG) could be a consideration as well. The stock's fat 8.6% dividend yield makes the company's hefty debt load potentially worth living with.

If you're a fan of dividends, you better know these five keys to successful dividend investing.

Exelon is a Motley Fool Inside Value pick. National Grid and Southern are Motley Fool Income Investor picks. Motley Fool Options has recommended writing puts on Exelon. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you no Wookiees were harmed in the making of this article.