Roger S. Conrad

So far, 2021 is shaping up favorably for dividends in our Utility Report Card coverage universe. That’s thanks to last year’s aggressive measures to shore up balance sheets as well as the firming global economy.

Electricity, heating, water and communications have been essential services for well over a century. And over that time, not one of the literally thousands of mergers between operators has failed to produce a stronger and more resilient company.

No other industry can boast such a track record. And it’s the clearest possible endorsement of the advantages of utility scale. These sectors must be able to raise and effectively deploy massive amounts of capital to assuring universally reliable, affordable and environmentally sustainable service.

Exhaustive reviews, impossible public interest standards and no guarantee of eventual success: That’s the consensus outlook for mergers and acquisitions activity under the Biden Administration. Nonetheless, utility M&A is alive and well.

The results are in for the most expensive wireless spectrum auction in US history. The question for the Big Two is whether their huge outlay will produce the revenue and cash flow to be worth it.

Our advice to heed the lessons of Robinhood.com has already proven timely: Build capital gains on solid business fundamentals, cash out of high-flyers and invest in successful adopters of wind and solar.

For the 17^th year since 1984, the Dow Jones Utility Average ended the month of January in the red (-1.4 percent). And utilities have dropped further, with the DJUA down slightly less than 5 percent for the first 9 weeks or so of 2021.

The good news: 10 of those years, utilities ended higher. And only in 2008, 2002, 2001 and 1994 were they meaningfully lower.

The natural gas price spikes during the great Texas freeze will force new scrutiny of supply chains from wellhead to burner tip. One energy company that won’t have to: Aggressive Holding National Fuel Gas (NYSE: NFG), which operates everything from regulated distribution utilities to oil and gas wells.

Since 1999, utility stocks have finished higher 7 years when interest rates have risen and never lower. In fact, three worst performances by far were during years of falling rates: 2008, 2002 and 2001.

“Strong businesses are best but watch the price.’ That was the main theme of the February issue of CUI. And our advice to cash out of “the Teslas of the world” proved on the mark.