NEE, DUK, SO, and D: How Top Utility Stocks Fared in November



Duke Energy stock outperformed

Among the top utilities, Duke Energy (DUK), the second-biggest utility by market cap, stock beat its peers in November. The stock rose more than 8%, while NextEra Energy (NEE) stock rose 6%. Southern Company (SO) and Dominion Energy (D) gained 5% and 2%, respectively, in November. Utilities rose more than 2%. The SPDR S&P 500 ETF (SPY), an indicator of broader markets, rose marginally last month.


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What drove utility stocks?

Investors turned to relatively safer utility stocks during market turmoil. The defensive sectors, like utilities, tend to outperform broader equities amid market uncertainty due to their stable stock movements and higher dividend paying abilities.

All four of the top utilities by market cap reported better-than-expected earnings in the third quarter, which supported their market performance. Last week, the Fed’s minutes suggested that there’s a strong possibility of another rate hike in 2018. Even though utilities rallied after the last rate hike in September, we’ll have to see how these defensives react to the expected rate hike.

So far, utilities (XLU) have outperformed broader markets in terms of total return in 2018. Broader utilities, including dividends, have returned ~10% in 2018, while the S&P 500 has returned 2.6% during the same period.

Next, we’ll analyze these utility stocks in terms of their current valuation and chart indicators in this series. We’ll also discuss the target prices and analysts’ views.


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