Roger S. Conrad

Here's our take on the first three Model Portfolio holdings to report third-quarter results.

We take a big profit on Piedmont Natural Gas after the Portfolio holding accepted a takeover bid from Duke Energy Corp.

Sell WGL Holdings for a 66 percent gain.

Entergy Corp's recent efforts to reduce its exposure to wholesale power markets in the Northeast move the utility one step closer to resuming regular dividend growth.

Will utility stocks avoid their first down year following a January gain since 1987? Since early August, the Dow Jones Utilities Average has outperformed the broader market, narrowing its year-to-date loss to the mid-single digits. And this basket of utility stocks has rallied in the fourth quarter on 38 occasions since 1969, including a 13.1 percent gain last year. Although strong business fundamentals and investors’ preference for safety in uncertain times bode well for utility stocks in the fourth quarter, an aging bull market means that investors should remain cautious. This year, we’ve taken advantage of what the market gives us to exit weaker names and high-grade the Portfolio by adding best-in-class utility stocks when they pull back to favorable valuations. Most of these stocks have posted gains since they joined the model portfolio, while the six stocks we sold have slipped even lower. With technical indicators suggesting that the epic bull market of the past six years may be winding down, we continue to highlight the strategy of setting buy limit orders to purchase our favorites at dream prices. (See Dream a Little Dream for more on this strategy.) Four of the stocks on our list have already hit these levels and surged in subsequent trading sessions. Shares of Chevron Corp (NYSE: CVX), for example, have rallied 26 percent since they hit our dream buy price of $70 per share. Narrowing market leadership and other technical indicators suggest that the S&P 500 could suffer a correction of at least 20 percent in the first half of 2016. In light of this elevated risk, investors should continue to focus on the highest-quality names, keep some dry powder to take advantage of buying opportunities and consider using our dream prices strategy. Regardless of whether we’re in a bull or bear market, Conrad’s Utility Investor always strives to steer you toward stocks backed by strong underlying companies—the best way to build sustainable wealth.  

We highlight some of the most profitable themes for income-seeking investors in essential-service stocks while sounding a note of caution on the near term.

How comfortable would you be holding your stocks in a bear market? With the bull market show its age—including consistently bad breadth—this question has taken on new urgency as the year winds down.

The recent rally in the broader market gives investors an opportunity to exit the names on our Endangered Dividends List.

A transformative deal promises to help this large utility unlock additional value and drive dividend growth.

Concern about this global utility's exposure to Brazil is overblown, creating a buying opportunity for savvy investors.