Roger S. Conrad

The Dow Jones Utility Average finished 2022 more than 20 percentage points ahead of the S&P 500. So far this year, however, utilities are lagging by roughly the same amount.

The S&P 500’s gains are thanks to the continuing surge in big technology stocks, which led by Apple Inc (NSDQ: AAPL) at 7.673 percent are a record 37 percent of the benchmark index. Meanwhile, the DJUA at -4 percent year to date is tracking weakness in dividend paying stocks—as well as sectors considered “cyclical” and vulnerable to Federal Reserve rate increases and still-elevated recession risk.

Not once since its November 1999 IPO has Brookfield Renewable Partners (TSX: BEP-U, NYSE: BEP) ever cut its dividend. Nor has the company missed an annual increase since 2009—when the rate was held flat following Canada’s death sentence for income trusts.

Last year, Southwest Gas Holdings (NYSE: SWX) shares soared above $90, my “consider taking profits” price listed in the “Portfolio Holdings Trading Above Target” table. We would have done better selling it all.

It’s been mostly more of the same for investment markets this past month, just as has been the case for most of this year.

Thus far in 2023, seven Utility Report Card companies have announced lower dividends than they paid in 2022. None, however, have done so since March. And 97 have raised payouts at least once, with three-dozen more ready to follow their lead.

So far, 2023 has been a great year to own the biggest technology stocks—but little else. The Nasdaq 100 is up roughly 38 percent year-to-date. And the 7 stocks that dominate it have lifted the S&P 500 by 15 percent.

The S&P 500 is still a little more than -10 percent below its January 2022 high water mark. But thanks to a buying wave washing over a handful of now very expensive big technology stocks, the index and related ETFs are up 12.8 percent so far in 2023.

The catalyst: An outbreak of interest in stocks perceived as benefitting from adoption of artificial intelligence.

The bulls envision a world where AI is used to augment productivity to transform pretty much every industry. Yet at least so far, there’s been little attention paid to the immense volumes of energy and communications bandwidth to support ubiquitous AI chatbots needed to make that dream a reality.

The last 18 months have been rough going for financial companies. And unfortunately, that’s when we re-entered Hannon Armstrong Sustainable Infrastructure Capital (NYSE: HASI), a business development company specializing in renewable energy and efficiency projects. Organized as a REIT for tax reasons, Hannon has more than doubled its total assets since 2019. And management reporting year-over-year increases in Q1 of 25 percent and 15 percent in its portfolio and managed assets, respectively. Distributable net income per share stayed on track with guidance for 10 to 13 percent annual growth, fueling robust dividend increases of 5 to 8 percent.