The S&P 500 is still holding onto about half its early 2023 gains. But like other dividend-paying stocks, utilities have gone into reverse this spring, with the Dow Jones Utility Average underwater by nearly 6 percent year-to-date. High inflation and rising interest rates are certainly playing a role in the underperformance. But a more important reason may be investors’ disappointment that last year’s Inflation Reduction Act didn’t spark a more robust industry response.
Four more Conrad’s Utility Investor portfolio companies have now reported their Q4 results and updated guidance and all of them generally affirmed longer-term earnings growth guidance.
Thursday, I posted the February issue of Conrad’s Utility Investor. Since then, a trio of portfolio companies have reported Q4 results and updated their 2023 guidance. The best news for all three recommendations was a lack of meaningful surprises.
Is the US economy slowing enough to enter recession this year? And if it is, how well are the companies we own prepared for what’s to come?
Algonquin Power & Utilities (TSX: AQN, NYSE: AQN) has re-set its common stock dividend and will try again to win Federal Energy Regulatory Commission approval for the acquisition of Kentucky Power from American Electric Power (NYSE: AEP).
Last weekend, a Wall Street Journal editorial pointed out the cost of “balancing the grid” added GBP150 to UK household electricity bills in 2022. The authors’ attempt to blame the entire cost on adoption of renewable energy is quite a stretch, as it ignores the larger role of erratic weather and availability of other power plants.
Their broader point that wind and solar are still challenged by intermittency, however, is spot on.
Southern Company (NYSE: SO) has deflated investor hopes yet again, announcing it would postpone the startup of the first of two nuclear reactors under construction at the Vogtle site in Georgia.
Later this year, the 800-megawatt capacity Vineyard Wind 1 project will begin delivering electricity to the Massachusetts grid. After that, however, the way ahead for US offshore wind is considerably less clear.
The worst mistake investors will make this year won’t be getting caught with a stock on the heels of a disappointing earnings report, misjudging the Federal Reserve’s resolve fighting inflation—or the rising risk of a recession.
Communications is a growing and essential service. And a new generation of 5G and eventually 6G wireless—augmented by fiber broadband networks—is on the cusp of spurring a global revolution in productivity.
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