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Utilities and Telecoms: AI’s Undiscovered Beneficiaries

By Roger S. Conrad on Jun. 12, 2023

The S&P 500 is still a little more than -10 percent below its January 2022 high water mark. But thanks to a buying wave washing over a handful of now very expensive big technology stocks, the index and related ETFs are up 12.8 percent so far in 2023.

The catalyst: An outbreak of interest in stocks perceived as benefitting from adoption of artificial intelligence.

The bulls envision a world where AI is used to augment productivity to transform pretty much every industry. Yet at least so far, there’s been little attention paid to the immense volumes of energy and communications bandwidth to support ubiquitous AI chatbots needed to make that dream a reality.

Strong Utilities will Navigate the Culture Wars

By Roger S. Conrad on May. 11, 2023

Earlier this month, New York announced a ban on new natural gas hookups starting later this decade. Then Texas imposed major new restrictions on wind and solar deployment. And both states respectively released plans to spend billions of taxpayer money to build new renewable energy and natural gas generation, if the private sector doesn’t jump fast and high enough.

Not to be left out, Congressional Republicans passed legislation to undo the Biden Administration’s two-year solar panel tariff relief. And the House is threatening to trigger a first-ever US default if Inflation Reduction Act subsidies aren’t unwound, just as the Biden Administration is rolling out all-new restrictions on fossil fuel use including transport.

Utilities Rebound But the Market’s Still Flashing Yellow

By Roger S. Conrad on Apr. 10, 2023

Is the Federal Reserve about to wrap up this tightening cycle? Many investors appear to be betting on it, with the Nasdaq 100 up almost 20 percent year-to-date.

Tech is the 21st century’s most interest rate-sensitive sector because stocks trade on the promise of future cash flows. But traditional income stocks too enjoyed a big rebound last month: After being deep in the red, the Dow Jones Utility Average is now solidly in the black. And a substantial majority of stocks in my Utility Report Card had a positive Q1, while adding to gains so far in April.

What’s Wrong with Renewable Energy

By Roger S. Conrad on Mar. 10, 2023

The S&P 500 is still holding onto about half its early 2023 gains. But like other dividend-paying stocks, utilities have gone into reverse this spring, with the Dow Jones Utility Average underwater by nearly 6 percent year-to-date. High inflation and rising interest rates are certainly playing a role in the underperformance. But a more important reason may be investors’ disappointment that last year’s Inflation Reduction Act didn’t spark a more robust industry response.

Looking Abroad for Utility Values

By Roger S. Conrad on Feb. 9, 2023

The S&P 500’s nearly 9 percent year-to-date return and the resilient labor market are raising hopes the US will avoid a recession and deeper slide for stocks this year. I’m not entirely convinced.

Inflation remains untamed and the Federal Reserve will keep pushing interest rates higher to rein it in. And Q1 results we’ve seen so far show pressure on earnings, including some essential services companies.

In 2023 Focus on High Quality and Cash

By Roger S. Conrad on Jan. 10, 2023

2022 was the worst year for the stock market since 2008. And bonds suffered their biggest losses since the 1980s. Nonetheless, for the third year in a row, the Dow Jones Utility Average launched a powerful Q4 rally, finishing with a 2.08 percent total return. And that in turn helped carry our Aggressive Holdings ahead 3.5 percent, Conservative Holdings 1.3 percent and Top 10 DRIPs 9.5 percent.

Every January feature article highlights the top picks and pans by sector for the coming year, as well as the past 12-month’s best and worst performers.

Rising Interest Rates and the Debt Issue

By Roger S. Conrad on Dec. 12, 2022

Sticking to long-term guidance in face of severe near-term headwinds: That’s the difference maker for investor returns in utilities and essential services stocks this year. And it’s certain to be once again in 2023.

The greatest challenge is the most dramatic increase in interest rates since the 1980s. Debt is an indispensable pillar of financing for capital-intensive sectors like power, communications and water. And even solidly investment grade companies like WEC Energy (NYSE: WEC) have seen their cost of short-term debt increase as much as 350 basis points since the beginning of the year.

Solid Earnings Drive Strong Returns

By Roger S. Conrad on Nov. 14, 2022

Q3 numbers and guidance updates are almost all in. And rarely if ever have I seen results so immediately consequential for utilities and essential service stocks—as investors ascertain whether business growth plans will withstand headwinds from inflation, rising interest rates and a potentially severe recession.

The 42 Utility Report Card companies raising guidance have answered any questions about their strength for now. And their stocks have staged a big recovery rally from October lows. That includes several companies that faced extreme doubt going into reporting season, notably Aggressive Focus stock AT&T Inc (NYSE: T) and Hannon Armstrong Sustainable Infrastructure (NYSE: HASI).

Income Stocks in a Sell Everything Moment

By Roger S. Conrad on Oct. 10, 2022

The income stock selloff that began in mid-September has picked up steam this month. The Dow Jones Utility Average is now underwater by –9.42 percent year-to-date including dividends, and nearly -19 percent since almost hitting a new all-time high last month.

That’s for sure a massive outperformance of the S&P 500, which has resumed its year-long slide and is down almost -24 percent for 2022. And with the exception of oil and gas stocks, utilities are also well ahead of almost everything else in the income investing universe, particularly bonds with the 10-year Treasury note yield again pushing towards 4 percent.

Utilities are Bear Market Champions So Far

By Roger S. Conrad on Sep. 8, 2022

Stocks’ summer rally swung into reverse starting mid-August. And with the Federal Reserve pushing hard against stubbornly high inflation, it’s unlikely we’ve seen maximum damage or duration of what’s looking more and more like a real bear market.

Among the very few pockets of strength are regulated utilities. Even as the S&P 500 is again at a -17 percent year-to-date loss and income benchmark iShares Select Dividend ETF is in the red by -1.6 percent, the Dow Jones Utility Average is well in the black with a 5.66 percent total return.



Roger S. Conrad needs no introduction to individual and professional investors, many of whom have profited from his decades of experience uncovering the best dividend-paying stocks for accumulating sustainable wealth. Roger b