Utility stocks are the ultimate investment for risk-averse investors seeking to create passive income streams via reliable dividends. Utility stocks can be an essential component of your portfolio as they will not only keep your income steady during dangerous economic times, they are usually the first to soar out of recessionary times.
The Utility Stocks archive below includes the latest commentary and analysis on the most important developments affecting the essential services sectors, including water, communications, energy, and other key infrastructure industries. Find out which utility stocks are poised to benefit from ongoing developments in the utility sector and which to avoid.
Be sure to also check out our free report, Dividend Blacklist: 6 Utility Stocks You Should Sell Today to find out if your dividend is in danger.
Being on the right side of government action is, therefore, absolutely essential to successful investing. In fact, with an unabashedly activist government now ruling both ends of Pennsylvania Avenue, it’s more critical than ever.
The market always looks ahead, never behind. The worst sin is always uncertainty, particularly when it affects literally every investment across the board as it has over the last nine months or so. What many forget is that getting out of such a funk doesn’t always take real, honest-to-goodness positive news. In fact, in the worst crises, all it may take is just a little certainty about where the bottom may be. Real good news is a major bonus.
Shares of Atlantic Power Corp (TSX: ATP-U, OTC: ATPWF) have been on a wild ride since the credit crisis ratcheted up last summer. However, that’s a stark contrast with the rock-steady business results of the owner of 14 power plants and California’s Path 15 power line.
From Three Mile Island to the Enron meltdown, utilities have always recovered from disaster by cutting debt and operating risk and repairing regulatory relations. CMS Energy’s (NYSE: CMS) road back from near bankruptcy in 2002 has been a rocky one.
First quarter earnings aren’t all in yet, but indications are utilities are still weathering the worst recession in decades. One reason is having their strongest balance sheets since the 1960s, enabling companies to roll over debt at reasonable interest rates. Even at the height of the fall financial crisis, utilities with credit ratings of A- and higher were issuing bonds.
The telephone has been essential for decades. Even in the toughest times, service demand has continued to rise, and consumers and businesses have stayed connected and paid their bills, right along with electricity, heat and water.
Utes’ strong balance sheets kept their access to credit open even during the worst of the financial crisis, and at some of the best interest rates seen in a generation. In fact, they’ve been able to issue a record volume of new debt, even as companies in other industries have had difficulty rolling over credit lines.
Three bellwethers have reported first quarter 2009 numbers that are just as strong, if not stronger, than those posted in prior quarters. That doesn’t guarantee they’ll continue to put up high-quality numbers as long as this recession lasts, particularly if conditions should worsen. But as long as they do continue to buck this downturn, they’re in the game for an explosive recovery when conditions turn, particularly from today’s low prices.
Given the carnage of the past 21 months of market history, it’s tempting to buy into the line from the rock industry spoof This Is Spinal Tap. That is, that one can get “too much bloody perspective.” But given the financial media’s almost complete lack of it, a little now can go a very long way.
The market is now focused on demand, which is weak because of the recession and its impact on heavy industry. But that won’t last forever. And when demand revives, the supply won’t be there to meet it. In fact, producers are likely to be extremely conservative ramping up efforts to boost output and highly skeptical about how long any boost in prices will last. That’s the legacy of the disaster of the last six months, and it will be hard to erase.