(MONEY Magazine) – Encouraged by tax reform's lower rates on dividends, investors have been buying high-yield utilities indiscriminately, according to James McCormick, who follows this industry at A.R. Schmeidler & Co., a New York City money- management firm. ''The utilities that are the safest and likeliest to perform best over the next few years,'' he says, ''are those with no exposure to nuclear power, no need to construct new generating capacity, and enough growth in cash flow to let them raise their dividends 7% to 8% a year.'' McCormick screened more than 125 utilities for those characteristics and further narrowed his list to stocks priced no higher than 14 1/2 times this year's estimated earnings, the average price/earnings ratio for utilities. Here are his top four picks, all traded on the New York Stock Exchange: Savannah Electric & Power ($18.50, dividend yield 4.7%). With a 16% return on equity, Savannah is among the most profitable of the country's utilities yet has a P/E of only 11, probably because few analysts follow the stock. Cilcorp, formerly Central Illinois Light ($38, yield 6%). Its plans to diversify, perhaps into cable-TV and telephone companies, should keep profits rising steadily. Teco Energy ($48.25, yield 5.2%). Completion last year of a coal-fired generating station gives this Tampa utility enough capacity to serve its fast-growing area for a decade. Southwestern Public Service ($32.75, yield 6.1%). Its service areas in New Mexico, Oklahoma and Texas are having hard times, but Southwestern is doing fine. With its fuel costs falling and its electric rates expected to go up, cash flow and dividends should rise this year.