At the midway point of 2016, the utility and telecom sectors have emerged as the top performers in the S&P 500, delivering total returns of more than 20 percent. Given the make-up of our model Portfolios, we’re not complaining.
Our Conservative Income Portfolio holdings have rallied an average of about 25 percent this year, while the names on our Top 10 DRIPs list have gained an average of almost 30 percent. The Aggressive Income Portfolio has posted an average total return of about 15 percent, while the spotlighted stocks from each issue have gained an average of 14 percent.
Although we remain confident in our holdings’ underlying businesses and growth prospects, stretched valuations suggest that the recent momentum-driven gains won’t last. Historically, the risk of a pullback is elevated whenever the Dow Jones Utilities Average trades at more than 20 times earnings and yields less than 3 percent—a cause for caution.
We continue to emphasize the importance of taking advantage of this rally to reduce risk, rebalance your portfolio and take some profits off the table in big winners. This dry powder will come in handy during the inevitable pullback.
We review the recent mergers and acquisitions news in our coverage universe, including a flurry of deal closures and the sale of the former TXU Corp, now called Oncor.
Eighteen of the holdings in our model Portfolios trade above our value-based buy targets, while several have reached levels where investors should consider taking some of their profits off the table.
Our basket of fixed-income securities has done well, thanks to the rally in bond prices.
All our Portfolio holdings have reported results for the quarter ended Dec. 31, 2016. We review how the latest batch fared and their outlook for 2016.
The proposed combination of SolarCity and Tesla Motors amounts to little more than a bailout of the fatally flawed renewable-energy company.
The upcoming election season is heating up, but overheated valuations are a bigger concern for investors in utility stocks.
The minimal premium involved in Great Plains Energy's proposed takeover offer for Westar Energy underscores how stretched valuations have become in the utility sector.
After plunging almost 50 percent from early May 2015 to mid-February 2016, the Alerian MLP Index has defied the critics and torched slow-to-react short sellers by surging 45 percent since its nadir. But the easy money has been made: Investors must now focus on which names are best-positioned to grow in an environment where energy prices remain lower for longer.
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.
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.