Utilities
This is not your grandparents' utilities sector. With the massive shift away from fossil fuels to renewables, this industry is going to undertake a seismic capital expenditure effort that will last at least throughout this decade. With some of the best income generators in the market, investors will now have an opportunity for growth as well.
The Utilities Sector is comprised of five different industries and two sub-industries, as follows (along with their GICS® codes):
The Utilities Sector is comprised of five different industries and two sub-industries, as follows (along with their GICS® codes):
- Electric Utilities (551010)
- Gas Utilities (551020)
- Multi-Utilities (551030)
- Water Utilities (551040)
- Independent Power Producers and Renewables (551050)
- Independent Power Producers (IPP) and Energy Traders (55105010)
- Renewables (55105020)
Buy utilities? Now? In a rising rate environment, why we are adding a utility to our portfolio.
(18 Dec 15) Utilities. The grand old dame of the investment universe. If you had a wise grandparent who liked to impart their stock picking prowess on anyone who would listen, they probably told you to put your money in safe, secure utility stocks.
To be sure, as interest rates were bleeding down to zero, income investors had to search for yield where they could get it. Utilities were generally the first tranche that got filled up, based on the high average yields and lower general risk of the main players in the industry.
And that made sense. After all, as Eugene and Gladys Crosspatch witnessed their monthly investment income stream dwindling down due to called bonds and bare-bones rates, what safer place to turn than the gas and electric companies that provide power to their house?
But what happens to utility stocks when interest rates rise? In theory, it would make sense that fixed-income investors would begin to dump them and move back into “safer” bond vehicles when yields began to look decent again. However, it is not quite as simple as that…
(Read the rest of the story, including what utility investment we just added to the Penn Dynamic Growth Strategy, in next Sunday’s Journal of Wealth & Success, Vol. 3, Issue 52.)
(OK, got it. Take me back to the Penn Wealth Hub!)
(18 Dec 15) Utilities. The grand old dame of the investment universe. If you had a wise grandparent who liked to impart their stock picking prowess on anyone who would listen, they probably told you to put your money in safe, secure utility stocks.
To be sure, as interest rates were bleeding down to zero, income investors had to search for yield where they could get it. Utilities were generally the first tranche that got filled up, based on the high average yields and lower general risk of the main players in the industry.
And that made sense. After all, as Eugene and Gladys Crosspatch witnessed their monthly investment income stream dwindling down due to called bonds and bare-bones rates, what safer place to turn than the gas and electric companies that provide power to their house?
But what happens to utility stocks when interest rates rise? In theory, it would make sense that fixed-income investors would begin to dump them and move back into “safer” bond vehicles when yields began to look decent again. However, it is not quite as simple as that…
(Read the rest of the story, including what utility investment we just added to the Penn Dynamic Growth Strategy, in next Sunday’s Journal of Wealth & Success, Vol. 3, Issue 52.)
(OK, got it. Take me back to the Penn Wealth Hub!)