Investing Topics: Investment Strategy

Utilities look well-positioned to weather any systemic risk that might emerge from the recent fall in oil prices. But investors should remain cautious and vigilant.

Oil's dramatic retrenchment serves as a useful reminder of why investors should diversify their portfolios.

Investors looking for big, safe yields from real estate investment trusts (REIT) will be better served focusing on company-specific stories instead of buying exchange-traded funds (ETF).

Volatility sparks fear among investors but also creates opportunities. The October issue of Conrad’s Utility Investor highlighted four ways for readers to profit from an unsettled market:

• Picking up high-quality international equities on the cheap, thanks to the strengthening US dollar;
• Buying when dividend-paying stocks sell off because of misplaced fears about the end of easy money;
• Taking advantage of uncertainty and panic in the energy patch to add to positions in high-quality producers and midstream operators; and
• Buying US utilities that have pulled back because of election-related fears.

Our strategy has already produced some happy returns.

Last week, the Federal Reserve ended its bond-buying program. Here's what this long-awaited policy shift means for dividend-paying stocks.

October can be a dangerous month for the market, but this volatility usually moderates and stocks rally through year-end. The Dow Jones Utilities Average has posted a gain in 37 of the past 45 fourth quarters and we're betting on that seasonal strength once again.

Conventional wisdom holds that October is a dangerous month for stocks, which means that investors must think unconventionally to get ahead.

An unsettled market has  rewarded patient investors who kept some powder dry with a number of buying opportunities. Opportunity No. 1: International Intrigue: A strengthening US economy and the Federal Reserve’s push to rein in six years of easy money have boosted the greenback’s value relative to foreign currencies, placing many of our favorite international stocks on the bargain counter. Snap them up now. Opportunity No. 2: Irrational Fear of Rising Interest Rates: The prospect of a stingier Fed has also raised concerns that US interest rates will head significantly higher, undermining returns posted by dividend-paying stocks. I tackle this myth head on and highlight several high-quality telecoms, water companies and electric utilities that have pulled back to favorable price points. Opportunity No. 3: Oil’s Retrenchment: Oil prices have also plummeted of late, fueled by surging US production and elevated refinery outages. This pullback has panicked weaker hands, giving savvy investors an opportunity to buy rock-steady integrated oil companies and first-rate pipeline owners. Opportunity No. 4: Politics as Usual: Uncertainty related to upcoming US elections has likewise unsettled the market and contributed to the market’s recent weakness. We’ll have a full review in the November issue.

Dashed merger hopes, unfavorable regulatory environments and dim prospects signal investor caution is still in order for these companies.

Fears of rising interest rates and falling oil prices got you down? Take advantage of this opportunity to add to some of our favorite essential-services names, many of which now trade below our buy targets. Here’s what you need to know to profit from what’s going on in the utility space.