In the last five years, utilities on average returned 70% and beat the S&P 500 marginally. With their slow but stable earnings and dividend growth, utilities outperformed broader markets. Total returns consider stock appreciation and dividends paid in a particular period.
The total returns from broader utilities came in at 22% over the past 12 months, while the S&P 500 returned 4% during the same period. Investors shifted to defensives like utilities amid uncertainty in broader markets due to the US-China trade war last year. The Fed’s probable intentions of pausing interest rate hikes in 2019 continued to fuel utility stocks.
Even though utilities (VPU) (IDU) beat broader markets in the last one-year and five-year periods, they have significantly underperformed the latter for an even a longer period. In the last ten years, after the financial crisis, the S&P 500 returned 350% and utilities returned 266%.
NextEra Energy (NEE), the biggest utility by market cap, significantly outperformed utilities at large and the broader markets in terms of total returns in the last several years. To learn more, read There Three Utilities Have Delivered Maximum Long-Term Returns.