Roger S. Conrad

From Deepseek AI to federal government upheaval: There’s been no shortage of stock market-moving headlines since the January issue of Conrad’s Utility Investor posted. Utilities and essential services stocks aren’t known for volatility. But several have taken investors on wild rides over the last month.

XPLR Infrastructure (NYSE: XIFR), formerly known as NextEra Energy Partners, will not pay a dividend for the foreseeable future. That’s the chief result of the company’s strategic review announced in late January. I highlighted the rationale for the move in the January 28 Alert: “More Earnings, XPLR Infrastructure and Deepseek AI Fallout,” also posted on the Conrad’s Utility Investor website.

US-based utilities have always been the core of investment strategy at Conrad’s Utility Investor. More than one-third of the companies in the Utility Report Card coverage universe, however, are actually based outside the US. That includes seven Aggressive Holdings and four Conservative Holdings, one of which TC Energy (TSX: TRP, NYSE: TRP) is also a Top 10 DRIP. Two others—AES Corp (NYSE: AES) and Chevron Corp (NYSE: CVX)—are true multi-nationals.

The explosion of interest in all things artificial intelligence. The long-awaited Federal Reserve pivot to lower interest rates. And a November election result that’s simultaneously sparked euphoria and panic: Those were the key themes shaping returns in the Conrad’s Utility Investor coverage universe for calendar year 2024.

I can say last year was a very good one for our three model portfolios overall. Conservative Holdings posted a total return of 15.8 percent. Aggressive Holdings were up 30.2 percent. And the Top 10 DRIPs gained 28 percent.

Energy Information Administration data says 2024 US electricity demand growth nearly tripled the average yearly rate so far this century. And no energy resource contributed more than natural gas, at 43 percent and rising. National Fuel Gas (NYSE: NFG) is America’s sole fully “integrated” natural gas company, combining exploration and production (E&P) with midstream gathering and pipelines and utility distribution operations. It pays a steadily growing dividend, maintains an investment grade balance sheet and has upside leverage to natural gas prices.

Steady expansion “consistent with financial guardrails:” That’s been the formula for Pembina Pipeline (TSX: PPL, NYSE: PBA) the past two decades, as it’s become the largest Canada-focused midstream energy company. Guidance announced mid-December affirms the strategy is alive and well. Management expects 2025 EBITDA between CAD4.2 and CAD4.5 billion—with volume growth across the Western Canadian Sedimentary Basin, new assets entering service and increased ownership of the Alliance Pipeline and Aux Sable system offsetting lower priced re-contracting of the Cochin Pipeline and likely “moderation of commodity margins.”