Utilities: Stable growth adds to their appeal

Article Excerpt

As a group, higher-yielding stocks, such as utilities, have lagged the broader indexes over the past decade. Part of that was due a preference by many investors for faster growing tech stocks such as Netflix, Apple, Alphabet, Facebook and so on. Moreover, utilities and other other high-yield stock, such as REITs, typically suffer when interest rates rise as they did in 2018. That’s in part because those stocks compete with fixed-income instruments for investor interest. However, the prices for most utility stocks have moved up strongly since the start of this year. That’s because growth remains steady—and at the same time, central banks around the world have for the most part put their rate increase plans on hold. Despite the underperformance of utility stocks over the past 10 years, they have generated strong investment returns over the long term. Utility stocks have also been less volatile than the broader market and most have provided investors with a steadily increasing stream of rising dividends. Perhaps this is…

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