Feature Article

Perceived value always sets the price for stocks. And anyone who’s invested a while knows that can shift on a dime, as leaders and laggards trade places. Quality doesn’t change so quickly. That’s the health and growth of companies’ underlying businesses.

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.

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.

Three energy utilities “down under” have announced next semi-annual dividends will be lower than the previous year’s: AGL Energy (ASX: AGL, OTC: AGLXY) by -12.8 percent, Contact Energy (NZ: CEN, OTC: COENF) by -12.5 percent and Origin Energy (ASX: ORG, OTC: OGFGY) by -16.8 percent.

A $16 billion market “error”: That’s the latest charge from Texas’ “independent market monitor” stemming from the Lone Star state’s February deep freeze and resulting electricity crisis.

Falling deployment costs, favorable regulation and low cost capital are fueling an unprecedented boom in renewable energy adoption. A rare big winners still trading at a fair entry price: Enel SpA (Italy: ENEL, OTC: ENLAY).

In the past year, BCE Inc (TSX: BCE, NYSE: BCE) took hits from pandemic fallout and government pressure to cut broadband and wireless rates. And though less exposed than archrival Telus Inc (TSX: T, NYSE: TU), the company was forced to overhaul 5G strategy when equipment maker Huawei became persona non grata.