Utilities at an all-time high
Almost all utility stocks are trading close to their respective peaks right now. Many are offering dull upside potentials for the near future largely due to their recent strength.
In this series, we’ll take a look at what Wall Street analysts currently think of some of the big utility names. We’ll also look at these utilities’ price targets, valuations, and yields.
Among these utilities, Wall Street analysts seem relatively positive on Sempra Energy (SRE) based on their number of “buy” recommendations on its stock. It doesn’t have any “sell” recommendations, and almost 75% of analysts tracking it call it a “buy.”
Investors have turned to relatively safe utility stocks amid broader market uncertainty driven by geopolitical tensions. Utility stocks, which are usually seen as bond substitutes due to their higher dividend-paying capabilities, have rallied significantly lately. Continued geopolitical tensions and the Fed’s expected pause in raising interest rates this year could keep boosting utilities going forward.
Utility stocks have had a terrific start to 2019. They have proved not only to have been a shelter amid market uncertainty but also to have significantly beaten the broader markets.
Over the past 12 months, utilities (XLU) (IDU) at large have returned 22%, while the S&P 500 has returned a mere 3%. Along with their healthy market performances, utilities’ dividends have also contributed to their total returns. On average, utilities are yielding 3.2% right now, higher than the broader markets and the benchmark Treasury yields.