We’ve enjoyed the recent rally in equity markets immensely, with our laggards finding their footing and a handful of the names in our Conservative Income Portfolio hitting all-time highs.
But stretched valuations increase the risk that results will disappoint the market’s lofty expectations. When investors disregard valuations to pay this much for dividends, the risk of a selloff increases.
Meanwhile, first-quarter results from the essential-service companies that we track in our Utility Report Card reveal warning signs that corroborate our concerns about weakness in the US economy.
a number of electric and gas utilities reported slumping sales to industrial users. Although utilities generate the preponderance of their cash flow from residential and commercial customers and shouldn’t be troubled by this headwind, weakness in this segment suggests that activity in this part of the economy have continued to slow.
Against this backdrop, investors should continue to exercise caution on cyclical businesses and names with excessive leverage. You can also play offense by setting limit orders to buy high-quality utility stocks at dream prices that would only be hit in the event of a significant pullback in the broader market.
None of the 214 essential-service companies that we cover announced a dividend cut over the past month.
But elevated valuations and potentially slowing growth suggest that investors should consider reaping at least a partial profit on some of the gains earned during the recent rally. Those looking to deploy capital should scrutinize the soil before they sow their seeds.
We examine the latest mergers and acquisitions, including a rumored deal that makes a world of sense for both parties and a takeover that may or may not make it to the finish line.
We review fourth-quarter results for the bulk of our Portfolio holdings.
In the fourth quarter, the telecom sector's big dogs continued to extend their lead over the also-rans.
We share our latest news and analysis related to our model Portfolio holdings, from guidance updates to recently completed deals.
Consolidated Edison's recently announced joint venture with Crestwood Equity Partners LP is the latest example of a utility leveraging its position as a demand-side customer and its low cost of capital to pursue ambitions in the midstream segment. Expect this trend to gain momentum in coming quarters.
Exelon Corp finally closed its acquisition of Pepco Holdings. Could another deal be in the utility's future?
Investors prize utility stocks for their resilience, but don't overlook their upside exposure to several secular growth trends--including the electric car's long-term potential.
Utility stocks offer exposure to underappreciated growth drivers.
The District of Columbia's Public Service Commission looks set to approve Exelon Corp's proposed takeover Pepco Holdings, if the acquirer agrees to additional terms. Investors can expect more deals to come in the utility sector--and long delays for regulatory approval.
Roger's favorite utilities for investors seeking superior price appreciation by taking calculated risks.
Harness the tried and true wealth-building power of rising dividends.
Nothing compounds wealth like reinvesting a rising stream of dividends.
Warning: Falling Dividends.
Roger's current take and vital statistics on more than 200 essential-services stocks.