Roger S. Conrad

There were zero dividend cuts in the Utility Report Card coverage universe last month. Nor were there any negative Q3 surprises to push another company onto the Endangered Dividends List.

Dominion Energy (NYSE: D) is off this list this month. Management provided details during its Q3 earnings call that strongly back the integrity of the current dividend. The stock is a buy up to 65 and is my Conservative Focus.

This fall, utility stocks faced their worst selling pressure in years. That’s now eased up for one major reason: The much predicted and feared sector-wide earnings Armageddon never happened. Rather, Q3 results and guidance show plainly that companies are adapting successfully to everything from rising labor costs and pressure on customers’ finances to the likelihood of higher for longer interest rates.

Focus on quality. Invest incrementally, and keep a generous pile of cash to scoop up bargains when prices become too low to resist. That’s been our basic strategy in 2023, in anticipation of worse to come for the economy and markets. And tough times are exactly what we’ve seen over the past month. Since September 15, the Dow Jones Utility Average has lost more than -10 percent, taking its year to date loss to -14.6 percent including dividends.

As always happens in major downturns, some of the biggest losses are in places where we least expected them. A good example is NextEra Energy (NYSE: NEE). America’s leading producer of solar, wind and energy storage reduced dividend growth guidance at its affiliate NextEra Energy Partners (NYSE: NEP). And the result was several days of the worst selling for utilities since March 2020.