Roger S. Conrad

As of Friday’s close, the S&P 500 was down roughly -17.5 percent from its late February high. That’s officially a correction, and the most dramatic decline since February/March of 2020. Utilities and essential services stocks have fared somewhat better. Year to date, the Utilities SPDR ETF (XLU) has lost less than a percentage point. The three CUI Portfolios are well in the black, as are two-thirds of Utility Report Card companies—50 by a double-digit percentage.

US demand for electricity is projected to grow six-fold over the next 20 years. And no power company is better positioned to benefit than Florida-based NextEra Energy (NYSE: NEE). The company is best known as America’s largest producer by far of energy from solar, wind and battery storage. But it’s also the seventh largest nuclear power developer and operator in the world. That includes 4 plants selling into wholesale markets, with the shuttered Duane Arnold facility in Iowa now reopening.

Rising free cash flow as 5G wireless and fiber broadband expansion reaches targets. More favorable regulation, regardless of what party wins upcoming Canadian elections. Rapid artificial intelligence growth in partnership with NVIDIA (NSDQ: NVDA), and a building West Canada energy boom: All are driving growth at Canadian communications company and new Aggressive Holding Telus Corp (TSX: T, NYSE: TU).

Elevated debt has claimed another dividend: Communications infrastructure operator Crown Castle (NYSE: CCI) announced last month it will cut its quarterly dividend from $1.565 to $1.0625 per share, starting with the June payment. The -32 percent “re-set” reflects the earnings loss from the sale of real estate investment trust Crown Castle’s fiber broadband and “small cell” operations in two separate deals for “aggregate proceeds” of $8.5 billion. Management expects to use $3 billion of that to fund a share buyback plan, the rest to pay down credit lines and make a dent on $23 billion plus of long-term debt.

Even on washout trading days like April 4, 2025, some stocks gain ground. Friday’s Utility Report Card winners were basically a handful of non-US stocks. The long-lagging utility sector has gained strength since featured in the February issue.

Call it “Liberation Day” or the “Greatest Economic Own Goal in History.” The Trump Administration’s tariffs on substantially everything Americans buy will have an impact. That realization has now sunk in for the stock market. Down roughly -18 percent from its late February peak, the S&P 500 is now firmly in correction territory. That’s defined as a drop of at least -10 percent from the most recent high.

The stock market’s post-election bump has flattened. But utilities are holding firm so far this year, well in the black and running ahead of the S&P 500. There are exceptions. With the Federal Reserve keeping benchmark interest rates higher for longer, many investors are understandably reluctant to own companies with higher levels of debt. Sempra Energy (NYSE: SRE) took a hit last month when management cut 2025 earnings guidance, though management actually raised the utility’s long-term growth projections. Worries about politics and fallout from California’s worst-ever wildfire season are still roiling some stocks.