Roger S. Conrad

The utility sector's implosion in 2002 and 2003 has some important lessons for MLP investors.

For the 39th time since 1969, the Dow Jones Utilities Average rallied in the fourth quarter. But this upside didn’t prevent the benchmark from finishing the year with a 3.1 percent loss, the index’s first negative return after a positive January since 1987. Fortunately, the primary catalyst for the loss—uncertainty about when the Federal Reserve would start raising interest rates—no longer exists. And just like the beginning of the 2004-06 tightening cycle, utility stocks have gained ground despite weakness in the broader market. But last year’s challenges remain in play for 2016. Energy prices have yet to find a bottom. Non-investment grade debt has become crushingly expensive to refinance, tightening capital markets for all but the strongest companies. Emerging markets continue to struggle. And any international currency not pegged to the US dollar find itself under pressure. The Quality Grades for the 214 essential-service companies tracked in our Utility Report Card provide insight into the spectrum of risk and help investors to avoid the riskiest names.

By most measures, last year was a difficult time for income-seeking investors, as anticipation of the Federal Reserve’s first rate hike since 2006 weighed on sentiment toward dividend-paying stocks. Here’s our strategy for 2016.

Our proprietary quality grades help investors to assess the spectrum of risk across the more than 200 essential-service companies covered in our Utility Report Card.

Five new members joined the Endangered Dividends List this month.

After closing a big deal, this Northeast utility has the financial wherewithal and opportunity set to drive annual dividend growth of 10 percent in coming years.

This high-quality midstream name exclusively serves the Marcellus Shale and Utica Shale, owns regulated gas pipelines that operate under long-term contracts with utilities and continues to leverage its low of capital to fund growth projects.

We share our latest news and analysis related to our model Portfolio holdings, from guidance updates to recently completed deals.

We take a tax loss on one loser as part of a year-end swap.

Here are our thoughts on KInder Morgan's dividend cut.