Utilities Select Sector SPDR® ETF

Valuations are at the higher end of their historical range. Investors should avoid defensive sectors, which are highly sensitive to interest rate changes.

Southern Company’s management has given an EPS guidance of $1.05 for the third quarter.

In the past couple of months, institutions have increased their positions in Exelon by nearly 2%, from 85.6% to 87.2%, as of October 3, 2016.

Utilities have been weak compared to the broader markets this year largely due to the strength in the Treasury yields.

Currently, NRG Energy (NRG) stock is trading at a forward PE ratio of 8.5x based on its estimated EPS in 2019.

NextEra Energy (NEE) beat its peers in terms of returns in the last few years. NextEra Energy returned 14% in 2018.

Industrials, utilities, and telecommunications have much higher leverage, as these sectors have massive capital needs.

Utility ETFs have performed well in the last one year. The Vanguard Utilities Fund ETF (VPU) has been no exception to this.

Dimensional Fund Advisors’ top buys are Apple (AAPL), AT&T (T), Microsoft (MSFT), L3Harris Technologies (LHX), and Verizon Communications (VZ).

NextEra Energy (NEE) has one of the cleanest generation mixes among peers.

So far, US utilities have had a decent run this year. The Utilities Select Sector SPDR ETF (XLU) has risen more than 14%.

The power sector is the backbone of any economy. All of the other industries depend on it. In the U.S., the power utilities business is characterized by steady dividends and stable earnings.

The US electric utility industry is mostly regulated. The Public Utilities Regulatory Policies Act (or PURPA) was passed in 1978, beginning the deregulation of the utility industry.

NextEra Energy is one of the fastest-growing utilities in the country. In this series, we’ll discuss its operational and financial metrics and see whether it’s attractive from a long-term investment perspective.

February US crude oil (UWT) (USL) futures contracts rose 0.5% to $61.73 per barrel on January 8. Prices are near the highest level since December 2014.

Exelon (EXC) stock has corrected nearly 2% in the last year. Including dividends, its returns have come in at ~3%.

Exelon Corporation’s (EXC) stock has been hammered in the last six years. In 2008, the stock was trading at ~$90 per share. Early this year, the stock was available at less than $27 per share.

PPL (PPL), the top-yielding stock among the S&P 500 Utilities, has underperformed its peers in terms of total returns in 2018.

The benchmark ten-year Treasury yield trended lower and changed from 2.68% to 2.66% last week.

Over the past few years, utility stocks have given enormous returns and have largely followed broader markets.

Given the sharp rally during the past six months, major water utilities are trading at huge premiums compared to their historical valuation multiples.

The Utilities Select Sector SPDR ETF (XLU), which tracks the S&P 500 Utilities Index, is currently trading at a dividend yield of 3.5%.

Fortis (FRTSF) is buying ITC (ITC) in the largest Canadian purchase of a US utility. Fortis intends to sell a 19% stake in order to help finance the transaction.

It’s important to note that higher real yields, not rising inflation, are driving today’s higher nominal yields as investors are demanding more compensation for holding bonds

In recent years, Duke Energy (DUK) made its intent very clear. It concentrates on its regulated utilities—its core business—instead of other areas. The regulated utilities business is Duke’s strength.

NextEra Energy’s adjusted earnings have risen 13% year-over-year. The company reported an EPS of $2.35, which beat analysts’ consensus estimates.

Dividend yields of Southern Company (SO) and Duke Energy (DUK) currently stand at multi-year lows because utility stocks had a solid run this year.

On October 18, CNBC reported Bill Gross top picks. His top stock picks were Annaly Capital (NLY), Invesco (IVZ) and Allergan (AGN).

In today’s Get Real market newsletter, we took a closer look at a potential Tesla takeover and at Trump’s part in US steel. Plus, a rebound for Boeing. 

The US is divided into nine divisions. The Pacific and New England divisions had the highest year-over-year, or YoY, growth in electricity prices in September 2014.

NextEra Energy (NEE) is the second-largest power company in the US after Duke Energy (DUK) in terms of market capitalization.

Southern Company manages its regulated utility business through the following four subsidiary companies: Alabama Power, Georgia Power, Gulf Power, and Mississippi Power. These subsidiaries have a combined power generation capacity of 37,000 megawatts (or MW).

Fuel costs per kWh can be used to evaluate the efficiency of a power producer to produce electricity. Southern Company’s fuel cost per kWh is lower than its competitors’ in the regulated utility business.

Given the nature of its business, AES Corporation (AES) faces risks relating to currency fluctuations, fuel prices, interest rates, and a scattered business model.

Institutional investors hold most of Dominion Resources’ (D) outstanding shares. As of June 30, 2014, a total of 351.2 million shares were held by 1,069 institutions.

Electricity is the backbone of a nation’s progress. All of the industries need electricity to operate—directly or indirectly. When a business flourishes, the electricity consumption increases.

Capacity is defined as the potential power output that power plants can generate. Each power plant has a shelf life. After the shelf life, they’re replaced with new power plants.

Power generation is a significant segment for Exelon, generating more than 60% of its total revenue. The energy delivery business provides the other 40% of the company’s revenues.

NextEra Energy is a Florida-based power company. Its subsidiaries are Florida Light & Power and NextEra Energy Resources.

Southern Company (SO), the top regulated utility, declared a quarterly dividend of $0.62 per share last month. The ex-date for the dividends is Friday.

PG&E gained for the sixth straight day amid increased uncertainty. The stock has gained more than 80% during this period and closed at $8 on Tuesday.

Bankrupt utility PG&E lost more than 25% last week. The fall came after the bankruptcy court allowed a bondholder group to pitch their restructuring plan.

Despite valuation concerns, utility stocks seem relatively well placed at the moment, especially going into October, compared to broader markets.

PG&E (PCG) shares are trading more than 25% lower on Monday. A federal judge ruled that the utility must face victims of the Tubbs Fire.

Investors turned to defensive utilities intensified yesterday after President Trump announced 10% tariffs on another $300.0 billion worth of Chinese goods.

Joe Biden has proposed a climate change framework that aims to zero down on carbon emissions and create millions of new jobs by 2050.

The defensives and utilities sector fell more than 2% last week while broader markets fell just 0.3%. Here’s why.

Many top utility stocks’ price targets were changed last week.

The benchmark ten-year Treasury yields closed at 2.5% last week. Treasury yields and utility stocks usually trade inversely to each other.

Currently, the Utilities Select Sector SPDR ETF (XLU) is trading at $58.2 after hitting an all-time high of $58.7 last week.