Feature Article

We booked a 52% gain on Windstream Holdings (NSDQ: WIN). Now it's CenturyLink's (NYSE: CTL) turn to prove the skeptics wrong.

The outlook is much brighter for this utility's foray into solar, and for one of our closed-end funds. Unfortunately, other companies still face serious challenges.

At last count, more than half our Portfolio holdings traded above my buy targets. These are all great companies that will continue to build wealth for investors, but now is the time for discipline.

Rarely will you find a sector’s top-quality stocks on sale more than five years into a bull market. But that’s the case with this new Conservative Income Portfolio holding. Record demand has enabled this utility to grow its first-quarter earnings by 19.7 percent year over year.

Thanks to the rapid development of renewable energy and the support of state regulators, this utility has moved to break its addiction to imported oil, setting the stage for higher profits over the long term and lower bills for consumers.

With valuations elevated in the utility sector, investors should pay close attention to the risks and opportunities created by four key themes.

Hedgeye and Barron's called Kinder Morgan Energy Partners LP and its general partner, Kinder Morgan Inc. a "house of cards."  Richard Kinder, the partnership's Chairman and CEO, responded, "I'll buy, you sell and we'll see who's right."  Since then, this diversified owner of fee-based midstream assets has beaten its own first-quarter guidance, turning the market and burning the critics.

Our Portfolios are a mixed bag in terms of their underlying businesses and growth drivers. But our holdings are on track for solid earnings and dividend growth over the long haul. These names don’t respond uniformly to changing business conditions or short-term market moves so diversification is key to reduce volatility.

Four of the holdings in our Endangered Dividends List still have potential upside, but a questionable acquisition by one propane distributor rates a sell call.

Although the S&P 500 Utility Index has outperformed every other economic sector in the S&P 500 this year, disciplined investors have ample opportunity to lock in above-average yields on some of our favorites.