Feature Article

After two consecutive winning months, it’s hard to believe utility stocks had so many detractors to start 2014. And it’s even more difficult to find anyone who will own up to being bearish then or now.

In 2013, the Alerian MLP Index gained 27.6 percent. Energy Transfer Partners (NYSE: ETP) did much better at 43.4 percent, thanks to restoring regular quarterly distribution increases.

No US utility is better positioned to profit from America’s energy boom than Entergy Corp (NYSE: ETR). The company’s six electric utility units own and operate 22 gigawatts of power plants in Arkansas, Louisiana, Mississippi and Texas.

Buying stocks of strong companies at the lowest possible prices: That’s been my primary strategy thus far for the Conrad’s Utility Investor Portfolios.

This month, I’m adding two stocks to the Conservative Holdings.

With large financial institutions and exchange-traded funds (ETFs) dominating daily trading, markets are as volatile as ever.

Fortunately, the key to success in utilities and essential services is the same as it’s been for more than a century: Spotting where investment will earn a fair return, and following the money to a rising stream of dividends.

Nothing destroys shareholder value like a dividend cut. Investors should steer clear of these names.

Long-term contracts with creditworthy customers, strong finances and scale: Aggressive Holding NRG Energy (NYSE: NRG) features all of them. That’s why the unregulated power company continues to thrive, even as rivals flounder.

Oklahoma Natural Gas Company has provided regulated gas distribution service to Tulsa, Oklahoma since 1906. Today, successor company ONEOK (NYSE: OKE) serves 2.1 million customers as the largest gas utility in Kansas and Oklahoma, and third biggest in Texas.

Seek stocks of healthy and growing companies whose prospects exceed investor expectations. Then build a diversified and balanced mix you can hold long-term, to enjoy the rising cash flow and share price appreciation that growing dividends provide over time.

The Dow Jones Utility Average has lost ground in 17 of the 30 Januarys since 1984. Happily, only 5 of those declines led to a losing year. And in 13 winning Januarys, the average total return was 24.8 percent—the only losing year 1987.