Utilities - Industry

The utility services sector is fundamental to modern society as quality utilities are a prerequisite for effective poverty eradication. This sector is a category of company stocks that provide basic services including electricity, natural gas, and water. Utilities earn a profit but are a public service and have substantial regulation as it tends to do well as a defensive play against macroeconomic downturns. The industry’s primary goal is to meet the power and energy demands of their clients, anticipate the highs and lows of demand, and provide energy as efficiently and affordably as possible.

  • Utilities (or electric) stocks act like stocks when markets are rallying
  • Utilities (or electric) stocks can still rally when markets are falling
    • This is because they can act like bonds due to their consistent dividends
    • falling markets = falling rates = rising bond prices
  • Can be a good bond substitute
    • do have more risk
    • 2 key advantages
      • often the dividend exceeds the yield on 10 year treasury notes
      • utilities can (and often do) raise their dividends -often grow with inflationv