Utilities’ Ups and Downs Last Week

Utility stocks fall

Utility stocks continued to underperform broader markets last week. The Utilities Select Sector SPDR ETF (XLU) fell 1.6% while broader markets closed flat. Ten-year Treasury yields gained two basis points last week and closed at 2.57%. Treasury yields and utility stocks usually trade inversely.

Utilities’ Ups and Downs Last Week

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Performance last week

Almost all top utility stocks trended lower last week after recently touching multiyear highs. Valuation concerns and profit booking may have brought them down. Renewables giant NextEra Energy (NEE), set to report its first quarterly earnings this week, fell 0.8%, while top regulated utility Duke Energy (DUK) fell 1.4% and Dominion Energy (D) fell ~2%.

Southern Company (SO), which has gained the most among utilities this year (~18%), fell 1%. Last week, Southern declared a dividend of $0.62 per share, 3.3% higher than its previous quarterly dividend. It marked its 18th consecutive year of dividend increases. Southern subsidiary Southern Power agreed to sell its Nacogdoches wood-fired biomass facility last week to Austin Energy for $460 million.

PG&E (PCG), which is seeking Chapter 11 bankruptcy protection, fell the most last week, by 9%. Top yielding utility PPL (PPL) fell 2.8% and FirstEnergy (FE) fell ~2% during the week. FirstEnergy is set to release its first-quarter earnings on April 24.