Investing Topics: Regulated Utilities

Taper talk is rife again in the financial media. And the all-too-familiar consensus is still that the Federal Reserve will abandon cheap money in the near future, driving up interest rates and sending dividend-paying stocks plummeting.

Only three of the 28 current Conrad’s Utility Investor Portfolio recommendations have yet to report calendar third quarter earnings. That’s plenty of data to identify relevant sector trends, while we assess the health of individual companies.

AT&T Inc (NYSE: T) was the only Conrad’s Utility Investor Portfolio pick to report numbers last week. Takeaway one is quite positive: The results followed closely those of arch-rival and co-Big Two US communications company Verizon Communications (NYSE: VZ).

Earnings season is now underway for the Conrad’s Utility Investor portfolios, with Kinder Morgan Energy Partners (NYSE: KMP) and Verizon Communications (NYSE: VZ) the first to report full numbers.

Utilities and other providers of essential services are proven survivors of even the worst market debacles. As the 2008 market crash showed, the sector takes hits with the rest of the stock market.

You had questions about utility and telecom stocks, we had answers. 

RWE AG (Germany: RWE, OTC: RWEOY) plans to cut its 2014 annual dividend (payable April 17) to one euro, from a previous rate of 2 euros. That’s the third dramatic cut in five years for the German power giant. And it may not be the last, given some uniquely challenging conditions.

In the October issue, I added four stocks to the Conrad’s Utility Investor model portfolios.

Who says the bond market is washed out? Certainly not Verizon Communications (NYSE: VZ).

The company’s record $49 billion bond sale has not only locked in financing for its $130 billion buyout of Vodafone Plc’s (London: VOD, NYSE: VOD) minority stake in Verizon Wireless. But it was actually doubled, eliminating the need to raise funds in Europe.

The Environmental Protection Agency's ongoing crackdown on carbon dioxide emissions from coal-fired power plants continues to dominate the headlines. But investors shouldn't overlook the importance of utility-regulator relations at the state and local level.