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Bullish: That’s the key takeaway from first quarter results of the roughly 50 percent of Utility Report Card companies reporting to date.

Focus stocks BCE Inc (TSX: BCE, NYSE: BCE) and Amerigas Partners (NYSE: APU) had especially good news. So did the energy utilities highlighted in Portfolio Update and the best in class telecoms of the sector-intensive Feature article.

As Endangered Dividends reveals, not every company had a strong report. That includes Aggressive Holding Buckeye Partners (NYSE: BPL), and we’re taking action. The greater risk to portfolios now, however, is from a growing number of stocks’ extreme valuations.

The return to very high prices wouldn’t have been possible without the three-months-old uptrend in utility stock averages. As has been the case the last few cycles, growth has enabled the sector to shrug off worries about rising interest rates. Since early February, the Dow Jones Utility Average has returned 10 percent, versus less than 4 percent for the S&P 500.

A more important reason for caution, however, is newly resurgent utility takeover fever. Market reaction has been lukewarm to the biggest deal so far this year, the proposed union of wireless giants Sprint (NYSE: S) and T-Mobile USA (NSDQ: TMUS).

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