Roger S. Conrad

A defensive reputation at a time when most investors are reaching for growth rather than income, concern about interest rates and inflation, heavy indexing to “green” stock indexes that faltered this spring and an unexpectedly severe winter storm that triggered a natural gas price spike.

DTE Energy (NYSE: DTE) has declared a dividend of 82.5 cents for payment in October. That’s -24 percent lower than what it’s paying this month. But it’s hardly a payout cut in the conventional sense.

Too many small owners lacking critical scale, and unprecedented roadblocks to new energy pipeline infrastructure was at the core of the wave of US oil and gas midstream dividend cuts and bankruptcies of the past few years. But now those same forces are spawning something considerably more positive for investors.

Bloomberg New Energy Finance reports 5.8 gigawatts of operating US solar generation is now co-located with energy storage as of May 2021. And there’s another 28 GW combined with 39 GW hours of battery storage in some stage of permitting and securing financing for start up in the next couple years. Including storage capacity at facilities is the biggest step yet tackling what’s still solar energy’s biggest hurdle to growth, intermittency. And as battery technology develops, the industry will near its ultimate goal of making solar plus storage actually dispatchable to grid operators.

Economic turmoil, political disruption, tough competition, an historic pandemic still wreaking havoc in its core Latin American markets and an environment where investors are largely shunning emerging market risk: Despite all that, America Movil reports a 1.2 percent increase in Q1 revenue, 5.2 percent higher EBITDA and positive stock returns since the beginning of tumultuous 2020.

I first became acquainted with Algonquin Power & Utilities (NYSE: AQN) back in the early ‘00s. Then it was a small power plant developer growing rapidly by taking advantage of the Canadian income trust investment boom.

Sometimes the investing strategy that makes the most sense is just to sit with what you have. That’s pretty much where I see things now with calendar Q1 results all-in for CUI portfolio recommendations. Last issue, I highlighted three encouraging big picture takeaways from the numbers and guidance updates so far. They were the fact that almost all coverage universe companies met or beat previous management guidance, key utility growth themes continue to gain strength and conservative is still cool when shaping sector operating and financial strategies. Those three trends were equally strong in the results from companies reporting the past few weeks. Of the portfolio recommendations, Conservative Holding Duke Energy (NYSE: DUK) increased Q1 earnings by 10.5 percent, affirmed its guidance mid-point of $5.15 per share for 2021 and repeated its target 5 to 7 percent annual growth rate.

The combination of heavy debt and pressured revenue drove dividends cuts at 25 of the essential services companies in our Utility Report Card coverage universe last year. It triggered 16 in 2019 and five more so far this year, last month AT&T Inc (NYSE: T) and Singapore Telecom (Singapore: ST, OTC: SGAPY).

Tapping into outsized profits by betting wisely on unstoppable, long-term trends: That’s now as important for the value proposition of utilities and essential service stocks as generous yields. Pointing out the best-positioned companies when they trade at attractive prices is always my top priority. And what we’ve seen in Q1 earnings and guidance updates the past several weeks has made me more positive on the underlying business health of our recommended Portfolio stocks than I’ve been in some time.

In the May 18 Alert “Hold AT&T for Now,” I advised “sticking with our shares until the immediate market reaction shakes out.” That remains my advice for four reasons.