Roger S. Conrad

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.

In investing, it’s common for good years to follow good years, and great years often follow average or poor ones. But historically great years like what we’ve just enjoyed at Conrad’s Utility Investor rarely if ever come back to back.

16 Utility Report Card companies reduced their dividends in calendar year 2019. That compares to 128 raising payouts, 23 that held them level and 27 that currently pay no dividend.

In February 2018, I recommended Edison International (NYSE: EIX) as a new Aggressive Holding. Shares had taken just a big hit on concern the company would be held liable for billions in 2017 wildfire damages under the state’s “inverse condemnation” law.

When Vistra Energy (NYSE: VST) emerged from the TXU bankruptcy in late 2016, we weren’t optimistic. Wholesale electricity prices were in a multi-year slide, and the economics of the company’s coal heavy assets were eroding even faster.

Trial testimony has concluded in the court challenge of the proposed merger of two US wireless giants and we expect an early 2020 close. The real issue is whether management will be able to deliver on lofty expectations.

New England-based Eversource Energy (NYSE: ES) is the latest US electric utility to target zero carbon dioxide emissions, with a far more aggressive timetable than the 2050 date set by its sector peers.

California’s wildfire insurance law passed last summer essentially requires Governor Gavin Newsom’s approval for any successful restructuring of PG&E Corp (NYSE: PCG). But the giant utility’s proposal is, in his words, “woefully short.”

The flow of mergers of entire utility companies has dried up, relative to the heady pace of a few years ago. But management teams are still finding plenty of assets to buy and sell.