Feature Article

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.

We start this month’s Portfolio strategy discussion with the three cornerstones of our investment strategy: 1) Sell stocks of companies that are weakening as businesses, 2) Build a pile of cash by unloading weakening companies and also taking partial profits on favorites that have run to unsustainable valuations, 3) Build a watch list of high quality companies to buy when they hit designated entry points.

Zero companies in our Utility Report Card coverage universe announced dividend cuts last month. To date, only a small number have shared calendar Q4 results and guidance. But that’s still a very good sign managements are comfortable with steps taken so far to deal with what for most are still quite challenging business conditions.

Net zero emissions of carbon dioxide by 2050: We’ve now heard that promise made by dozens of countries as well as US electric and natural gas utilities. Even midstream energy companies have joined in. And 1,185 corporations worldwide have now signed onto the Science-based Targets Initiative framework, slated for publication in November of this year.

Takeover activity was the bright spot in an otherwise gloomy year for communications, with two more deals closing in December. New Aggressive Holding Telephone & Data Systems (NYSE: TDS) is this year’s most eligible candidate for a high premium offer.