Roger S. Conrad

Energen Corp (NYSE: EGN) will sell its Alabama gas distribution utility to Laclede Gas (NYSE: LG), for $1.28 billion in cash plus $320 million in assumed debt. The company will deploy the estimated $1.1 billion in after tax proceeds to further develop its high potential properties in the Permian Basin.

Savvy investors who buy the best utility stocks at the best prices will outperform the index huggers.

We run through the first quarter’s biggest winners and biggest losers, while revisiting the investment themes that should outperform in 2014.

Soft economic growth and dysfunctional regulation have brought payout cuts for five European power, telecom and water providers. And all but one signal further reductions in the next 12 to 18 months.

The Conrad's Utility Investor Portfolios have beaten benchmark interest rates since I launched on July 31, 2013 - a clear sign my recommended dividend-paying stocks follow earnings, not interest rates. And with another round of earnings due later this month, all of our companies are set to prove their worth to investors again.

America's leading telecom doubles down on its US business with a key acquisition.

Utility history is rife with poor diversification, and that appears to be the consensus bet against WGL Holdings (NYSE: WGL), the regulated gas distribution company for the District of Columbia, suburban Maryland and Northern Virginia. But an A+ rating on top of an attractive yield could change skeptics' minds.

As a long-time shareholder of Berkshire as well as many utilities, I’m encouraged. I’m skeptical of some of the names being floated as MidAmerican’s next potential targets. But the feature article highlights several companies that fit the mold of NV Energy and PacifiCorp, which Berkshire bought in March 2006 from the former ScottishPower.

MidAmerican earned $1.47 billion in 2013 as one of Berkshire’s “Powerhouse Five” non-insurance businesses. That was approximately 7.5 percent of the company’s overall profit, a share that will rise to around 10 percent in 2014, thanks to a full year of owning NV Energy.

Even after the next acquisition, electric utility assets will be less significant to Berkshire’s fortunes than insurance, or even railroads (20 percent of profits). But there are two clear takeaways from Mr. Buffett’s continuing interest in the power sector.

First, MidAmerican is likely to buy another utility this year, handing investors windfall gains. Second, there are regulated electricity assets that still meet the criteria of the world’s most successful value investor.

Every portfolio has winners and losers. The key is knowing when to let the best performers run, and cut the worst loose.

Closed-end bond funds have pulled back over the past 12 months in anticipation of rising interest rates. Investors eyeing these funds' high yields should proceed with caution.