Roger S. Conrad

n the early stages of a bull market, it doesn’t matter so much when you buy but what. The key is load up on high quality stocks that are weathering the relevant economic and sector stress test.

Energy pipelines are the highest yielding sector in our Utility Report Card coverage universe. Ironically, after a five-year bear market, dividend risk is actually quite low for the handful of companies and master limited partnerships we track.

Roger Conrad will host an online chat for Conrad's Utility Investor subscribers on Feb. 13, 2020 at 2 PM Eastern time.

5-G communications networks promise to unlock a whole host of previously unimaginable applications as they’re rolled out over the next several years, and telecoms around the world are claiming a “lead” over rivals in the race to deploy them.

Utility stocks have picked up in 2020 where they left off in 2019. The Dow Jones Utility Average reached an all-time high of 934 this week. So long as investors crave yield, there’s a case the sector will reach higher ground - but this story also has a less savory side.

Recently released Q4 results indicate there's a sector-wide stress test in progress, and it’s not likely to let up at least until the second half of 2020.

I’ve personally owned Aqua America (NYSE: WTR) since it was Philadelphia Suburban. And thanks to the wealth-compounding power of dividend reinvestment, my Aqua shares are worth almost 14 times what I initially put in.

About year ago, we pounded the table to buy selected high yield bonds. Since then, each of our recommendations has scored solid capital gains, while providing yields as high as 10 percent.

It was a great year for utility stocks with the Dow Jones Utility Average returning 27.3 percent. It was also the best yet for our loaded laggards strategy: Conservative Holdings returned 35.1 percent, Aggressive Holdings 31.2 percent and the Top 10 DRIPs 36.5 percent.

One key catalyst for our outperformance was a spike in investor interest for anything to do with renewable energy. We also mostly eschewed stocks with historically valuations and successfully avoided companies with weakening underlying businesses.