Investing Topics: Income Investing

It's been an active year for mergers and acquisitions in the utility sector. We discuss our key takeaways from a major deal that closed ahead of schedule and highlight some of the main themes that will be in play going forward.

A baker's dozen of our Portfolio holdings have reported second-quarter results. Here are our key takeaways.

Momentum has carried utility stocks to historically high valuations, limiting the number of attractive buying opportunities. Master limited partnerships have also rallied hard from their nadir in February, but stock selection will become increasingly important going forward.

We review our investment strategy in light of our macro outlook and key takeaways from first-quarter earnings.

The recent rally in utility stocks has pushed valuations to elevated levels and lowered dividend yields. We explain our strategy for navigating this environment.

Exelon Corp finally closed its acquisition of Pepco Holdings. Could another deal be in the utility's future?

The utility sector's implosion in 2002 and 2003 has some important lessons for MLP investors.

For the 39th time since 1969, the Dow Jones Utilities Average rallied in the fourth quarter. But this upside didn’t prevent the benchmark from finishing the year with a 3.1 percent loss, the index’s first negative return after a positive January since 1987. Fortunately, the primary catalyst for the loss—uncertainty about when the Federal Reserve would start raising interest rates—no longer exists. And just like the beginning of the 2004-06 tightening cycle, utility stocks have gained ground despite weakness in the broader market. But last year’s challenges remain in play for 2016. Energy prices have yet to find a bottom. Non-investment grade debt has become crushingly expensive to refinance, tightening capital markets for all but the strongest companies. Emerging markets continue to struggle. And any international currency not pegged to the US dollar find itself under pressure. The Quality Grades for the 214 essential-service companies tracked in our Utility Report Card provide insight into the spectrum of risk and help investors to avoid the riskiest names.

By most measures, last year was a difficult time for income-seeking investors, as anticipation of the Federal Reserve’s first rate hike since 2006 weighed on sentiment toward dividend-paying stocks. Here’s our strategy for 2016.

Our proprietary quality grades help investors to assess the spectrum of risk across the more than 200 essential-service companies covered in our Utility Report Card.