Utilities are Popular Again, Here’s How to Take Advantage

The Federal Reserve is getting serious about reining in inflation. And the kind of big money that never rests for long has apparently decided US utility stocks are an ideal haven.

The happy result: After lagging the past couple years, the Dow Jones Utility Average has pushed out to a 10 percent year-to-date return. That’s even as the S&P 500 has retreated -5.5 percent and the Nasdaq 100 is down -12 percent. 

In the March 25 Utility Roundup, I highlighted “reshoring” of investment in the US, general lack of exposure to Russia, business resilience and yields 2 to 3 times the average stock as catalysts for utility stocks’ “quiet rally.” And together, these factors should continue to provide a tailwind for the sector in coming weeks, along with possible tax cuts and more M&A.

The past month’s rally, however, has pushed prices for 27 Portfolio members above my highest recommended entry points. And several are now actually trading at levels where my  “Portfolio Holdings Trading Above Target” table (see Portfolio section) identifies them as ripe for taking a partial profit.