Roger S. Conrad

In first half 2020, COVID-19 fallout triggered the sharpest global economic and stock market plunge on record. Now relaxing of pandemic control measures has raised hopes for an equally dramatic recovery the rest of the year.

China was first hit by the virus and first to take control of its spread. And while certainly not back at 100 percent, its economic rebound is picking up speed.

That’s not only good news for Aggressive Holdings China Mobile (HK: 941, NYSE: CHL) and CLP Holdings (HK: 2, OTC: CLPHY). It also bodes well for durability of green shoots we’re seeing in America, including signs of steadying power demand reported by Utility Report Card electric utilities.

This spring Centerpoint Energy (NYSE: CNP) cut its quarterly dividend in half. That followed a $155 million reduction in distributions from Enable Midstream Partners (NYSE: ENBL), of which the company owns 50 percent of the general partner and 53.7 percent of common units.

Conservative Holding Sempra Energy (NYSE: SRE) has traded as high as $162 and as low as $88 this year. That volatility contrasts sharply with the steady business performance of the diversified utility and midstream energy company, including the robust 8 percent dividend boost this spring.

Stocks’ recovery since late March looks a lot more like a “V” than it did a month ago. And after breaking through resistance this month, the S&P 500 is now just 6.3 percent from making a new all-time high.

Utility stocks have also perked up lately. As a group, they’ve lagged since mid-April. Nonetheless, we’ve seen some spectacular recoveries among Portfolio holdings.

May set records for S&P 500 dividend cuts, with 18 companies suspending and 5 others reducing. They were joined by 3 non-US essential services providers from our Utility Report Card coverage universe.

AusNet Services (ASX: AST, OTC: SAUNF) raised its semi-annual dividend for payment in June by 4.9 percent. But the Australian electricity distribution utility also issued guidance for a payout cut of -7 to -12 percent for the next 12 months.

Last August, I harvested a basket of high yielding stocks from what I called “stony ground.” My point was falling interest rates had become a double-edged sword for income investors. On the one hand, returns for dividend paying stocks and fixed income securities were rising. And companies’ generation-low borrowing costs were firing up earnings as well.

Communications sector leaders are playing a long game just now, sacrificing revenue gains from surging communications traffic, while absorbing the costs of building leading positions for critical applications to serve the exploding digital economy.

In March 2008, Southern Company (NYSE: SO) became the eighth US electric company within a year to announce construction of new nuclear reactors. A dozen years later, Southern’s pair of 1.1 gigawatt capacity reactors at the Vogtle site in Georgia are the only AP1000s under construction in America. 

Total SA's (Paris: FP, NYSE: TOT) first-quarter results are a warning to those who would bet against the future of super majors. The environment is changing, but the business model is alive and well.