Not the Time for Passivity

With the bull market in its ninth year and equity valuations at historically elevated levels, investors’ growing preference for passive and quantitative strategies seems risky at a time in the cycle when selectivity is critical to success. Giving up this control for lower fees strikes us as a heavy price to pay.

Although our favorite utilities proved their worth by maintaining or growing their dividends throughout the Great Recession, these stocks weren’t immune to the gut-wrenching volatility that roiled the market. Weathering the inevitable storms is much easier if you took a little profit off the table when valuations reached unsustainably high levels—a practice we’ve advocated throughout the year.

Investors should also remain opportunistic and snap up shares of high-quality companies that temporarily fall out of favor. To this end, we highlight some of our best ideas in the current market.

Don’t forget to check out the Utility Report Card for our in-depth analyses of second-quarter results, as well as updated ratings and Quality Grades.