Investing Topics: Midstream Energy

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

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.

This high-quality midstream name exclusively serves the Marcellus Shale and Utica Shale, owns regulated gas pipelines that operate under long-term contracts with utilities and continues to leverage its low of capital to fund growth projects.

Having confidence in your holdings’ underlying businesses makes it easier to endure a volatile market without losing too much sleep.

Keystone XL's controversial cross-border leg doesn't really matter.

Here's our take on the first three Model Portfolio holdings to report third-quarter results.

Energy Transfer Equity LP finally prevailed in its pursuit of Williams Companies. Here's our take.

Shares of best-in-class utilities rarely sell for bargain prices, which is why we've taken advantage of recent weakness to snap up this stock for our Conservative Income Portfolio.