A year ago, I highlighted “lofty expectations” as the primary danger to the Conrad’s Utility Investor coverage universe. That risk is no longer so acute after a year of generally robust earnings and sliding share prices.
Rather, the key question is whether companies can maintain profit and dividend growth momentum, should the macro environment darken in 2019 as so many fear. And certainly there are plenty of causes for concern on that front, ranging from trade tariffs and potential fallout from a record-long US government shutdown to still-tightening monetary policy.
This month’s Utility Report Card highlights how all 200-plus companies we track stack up on the five criteria behind our Quality Grades: Dividend growth sustainability, revenue reliability, regulatory relations, refinancing/financing ability and operating efficiency.
As the 2018 returns shown in the comments also demonstrate, even A-rated companies meeting all five can see red ink in a given year. But being strong on the inside is the best forecaster for an eventual recovery. And it’s also the most effective protection for investors if the economy and stock market resume their vicious pre-Christmas holiday slide.
This is also the time of year when we publish our sector-by-sector forecast, along with picks and pans for each in the coming year. Last year’s favored stocks once again beat the bad and ugly, though almost everything followed the overall market underwater.
I expect a much better result this year, in large part because investor expectations are far lower across the board for essential services companies.
This year's autumn rains are late arriving in bone-dry California, resulting in another season of devastating fires. Smoke from the massive “Camp Fire” in northern California currently shrouds San Francisco and the ongoing Edison Electric Institute's annual Financial Conference in the city’s downtown area. Executives from PG&E (NYSE: PCG), the utility serving the affected region, withdrew from the conference to deal with the crisis.
NextEra Energy’s (NYSE: NEE) third quarter results are impressive, but the best news is inside that performance.
The final three months of the year are seasonally strong for utility stocks. Since 1969, the Dow Jones Utility Average (DJUA) has posted positive returns in 39 Octobers and 40 Q4s, including (barely) last year.
Southern Company (NYSE: SO) has reached a deal with its partners to keep building two new nuclear reactors at the Vogtle site in Georgia.
The combination of worries about the global economy in 2019 and political chaos have so far made this the worst December for the stock market in memory.
This week, Dominion Energy (NYSE: D) is set to reap the reward for its bold takeover of Scana Corp (NYSE:SCG) as the South Carolina Public Service Commission has approved the merger.
California's historic Camp Fire, so far has claimed more than 60 lives, and estimates of damage to property are in already in the tens of billions. With super-dry conditions in the west and hurricanes in the east recurring more frequently," US utilities now face an increasing challenge ensuring grid resiliency and safety in a new abnormal of violent weather.
Less than a year ago, investors could buy all the Verizon Communications (NYSE: VZ) they wanted at a price in the low 40s, but shares today are closing in on their all-time highs.
Kinder Morgan Inc (NYSE: KMI) is gathering strength and holds favorable portents for the rest of the sector, but remains largely unappreciated by investors.
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Roger's current take and vital statistics on more than 200 essential-services stocks.