Utilities Select Sector SPDR® ETF
Investors Should Avoid Defensive Sectors If Rates Rise
Valuations are at the higher end of their historical range. Investors should avoid defensive sectors, which are highly sensitive to interest rate changes.
A Look at Analysts’ Views and Price Targets on Southern Company
According to Wall Street analysts, Southern Company (SO) has a price target of $51.22 compared with its current market price of $51.53. This implies an estimated downside of 0.6%.
Are These Utilities’ Earnings Enough to Attract You?
US utilities (XLU) are targeting average annual earnings growth of 4%–6% for the next few years.
Will Southern Company Beat Its Q3 EPS Estimates?
Southern Company’s management has given an EPS guidance of $1.05 for the third quarter.
Why Exelon’s recent quarterly earnings were positive
Exelon Corporation (EXC) reported a net income of $440 million in its 2Q14 earnings. The quarterly net income was $14 million lower year-over-year (or YoY).
Dominion Resources’ Higher Debt Confirms Its Stretched Financials
Dominion Resources (D) depends upon both internal and external sources of financing for its capital expenses and dividend payments.
A Look at Institutional Investors’ Holdings in Exelon
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.
What Stretched Utility Sector Valuation Means
Utility sector valuation appears stretched. 2014 was a great year for utilities, which gained 26.62% ex-dividends and were the best-performing sector.
What Could Impact PPL’s Dividends in the Future?
PPL’s (PPL) management expects fair annual earnings growth of 5%-6% through 2020, which will likely facilitate its dividend growth.
How Top Utility Stocks Fared in the First Half of 2018
The utility sector, among the most vulnerable to interest rate hikes, seems strong despite the rate hike in mid-June.
A Look at American Electric Power’s Healthy Credit Profile
American Electric Power (AEP) has an attractive debt profile, with the company’s debt making up just 7% of its consolidated debt.
Key ADP Highlights: 135,000 Jobs in September
The ADP National Employment Report for September 2017 showed some weaker improvement in private sector employment to 135,000 in September compared to the market’s expectation of 125,000.
How Utilities Are Likely to Get Impacted by Higher Interest Rates
US utilities have been one of the main beneficiaries of the near-zero interest rate environment for the past ten years.
How Higher Interest Rates Hamper Utilities
The expected rise in US interest rates later this year may dent the profitability of utilities, given their higher outflows toward debt servicing.
How Dominion Energy’s Dividend Profile Compares to Peers
Dominion Energy (D), the third-largest utility, declared a per share dividend of $0.84 per share for 1Q18 last month.
Generation Capacity Additions: Which Source Will Lead in 2016?
New power generation capacity additions in 2015 were mainly contributed by wind, natural gas, and solar. This trend is expected to persist in 2016 as well.
Southern Company and Duke Energy’s Payout Ratios
For the last 12 months, Southern Company’s (SO) payout ratio was ~76%, while Duke Energy’s (DUK) ratio was close to 97%.
Is Xcel Energy Poised for Long-Term Growth?
Xcel Energy’s (XEL) capital spending plan and actions to reduce regulatory lags could improve its earnings growth significantly during the next few years.
These Big Utilities Are Paying Higher Dividends Now
Sempra Energy paid annual dividends totaling $3.02 per share in 2016, while EIX and PCG paid per-share dividends of $1.98 and $1.93, respectively, in 2016.
NextEra Energy Stays Strong in Q2, Profit Rises 13%
Renewables giant NextEra Energy (NEE) has once again shown its mettle, continuing its strong quarterly earnings streak.
Berkshire Hathaway’s BHE Benefits from Power Stations in 2Q16
BHE’s earnings before taxes rose to $666 million in 2Q16, as compared to $649 million during the same quarter last year.
Utility Sector: Will Investors Continue Their Defensive Positions?
The Utilities Select Sector SPDR ETF (XLU), which tracks the performance of the utility sector, rose 2.7% in November 2017.
What Could Drive NextEra Energy’s 1Q17 Earnings?
NextEra Energy (NEE) is estimated to report earnings of $1.53 per share for 1Q17. It reported earnings of $1.55 per share in 1Q16.
Top Utilities’ Total Returns in the Past Year
NextEra Energy (NEE) leads the pack with total returns of 21% in the past year. NextEra Energy increased its dividend per share 13%.
Analyzing Southern Company Stock
Southern Company reported adjusted earnings of $0.88 per share for 1Q18 and exceeded the consensus estimates.
Figuring Out Which Is Better: Utility Stocks or ETFs?
Though electric sales have shown flattish growth in the last few years, US utilities have managed to distribute stable or increasing dividends.
Why Are Utilities Not Stocking Cheap Coal Aggressively?
Coal is an important commodity for railroad companies such as Union Pacific (UNP) and CSX (CSX). However, coal’s importance in freight is falling due to the emergence of shale oil.
Southern Company Stock Remains Weak amid Vogtle Worries
Southern Company (SO) stock has continued to show weakness recently amid increasing uncertainty regarding the fate of Plant Vogtle.
How Has Duke Energy Performed Recently?
Duke Energy stock is currently trading at an EV-to-EBITDA valuation multiple of 12.5x against its five-year historical average of 11.0x.
These US Utilities Are Trading at Towering Valuations
Dominion Energy’s (D) five-year average valuation multiple is around 14x, while the industry average is near 10x.
Why NextEra Energy Seems Attractive Right Now
According to Wall Street analysts, the top constituent of the S&P 500 Utilities Index, NextEra Energy (NEE), has a price target of $149.08 against its current market price of $141.07.
What’s Ahead for Duke Energy Stock?
Duke Energy rallied 9% in 2016, roughly tracking the Utilities Select Sector SPDR. Dominion Resources rose 12% in 2016, while Peer NextEra Energy rose 15%.
Rising Natural Gas Inventory Makes Coal Producers Sweat
The change of 94 Bcf in the underground natural gas inventory during the week of August 28 came in higher than Wall Street analysts’ expectation of 84 Bcf.
Huge Rise in FirstEnergy’s Short Interest: What It Means
Short interest in FirstEnergy rose more than 17% on March 15, 2017. Total shorted shares in the company were 8.7 million on February 28, 2017.
Analyzing Top Utilities’ Current Valuation
Currently, utilities are trading at a PE (price-to-earnings) multiple of 13x—compared to their historical average valuation of ~14x–15x.
Analysts Expect Huge Upside Potential in PPL Stock
According to analysts’ consensus, PPL (PPL) stock offers a handsome potential upside of ~22% in a year with a mean target price of $33.5.
Highest Dividend Growth: Comparing NEE, EIX, and AWK
Utilities have been weak compared to the broader markets this year largely due to the strength in the Treasury yields.
A Closer Look at Southern Company’s Kemper Power Plant
Southern Company (SO), one of the largest regulated utilities, finished 2016 on a decent note.
NRG Energy’s Valuation Compared to Its Peers
Currently, NRG Energy (NRG) stock is trading at a forward PE ratio of 8.5x based on its estimated EPS in 2019.
Dominion Energy’s Target Prices and Growth Outlook
Dominion Energy (D) has a target price of $79.31—compared to its current market price of $77.86, which implies an estimated gain of 2%.
Must-know: Many investors fear stocks—is this good for markets?
Currently, the S&P 500 is giving year-to-date (or YTD) returns of more than 8%. It posted gains for seven consecutive quarters. The S&P 500 Index (SPY) closed at a new high 34 times in 2014.
A Look at Dominion Resources’s Price Targets and Growth Outlook
Of the 22 analysts tracking Dominion Resources on February 23, 2017, four recommended it as a “strong buy,” while four recommended it as a “buy.”
Southern Company Stock Surges after Its 2Q17 Earnings
At 4.8%, Southern Company is currently the highest-yielding utility among the top utilities in the sector.
Dominion Energy or Sempra Energy: Which Could Be Stronger?
Dominion Energy (D) announced its agreement to buy SCANA (SCG) on January 3, 2017. The deal is expected to accelerate Dominion Energy’s earnings growth.
What to Expect From NextEra Energy and Its Peers in Q2
NextEra Energy (NEE) will likely report its second-quarter earnings on July 24. The utility is expected to report an EPS of $2.28 for the quarter ended June 30.
Why Duke Energy is the largest electric utility in the US
Duke Energy Corporation (DUK) is a heavyweight in the U.S. electric utilities industry. It mainly operates in the U.S. and Latin America. In 2013, its operations had $24.6 billion in revenue.
Looking for Dividends? Stay Away from the Utilities and REITs
What makes the utilities unattractive is the fact that interest rates will likely be rising soon. The utilities require a huge amount of infrastructure.
NRG Energy’s Price Targets and Analyst Recommendations
According to Wall Street analysts, NRG Energy’s (NRG) price target for the next year is $20.36. That implies an estimated rise of nearly 12.0%.
American Electric Power’s Dividend Yield Compared to Peers
American Electric Power (AEP), one of the largest utilities in the country, has declared a dividend of $0.59 per share for the third quarter of 2017.
Comparing NRG Energy’s Valuation to Its Peers
Currently, NRG Energy (NRG) is trading at an EV-to-EBITDA valuation of ~12x—compared to its five-year historical average valuation of 11x.
These S&P 500 Utility Stocks Offer the Most Potential Upside
NRG Energy (NRG), the leading merchant power player stock and one of the smallest components of the S&P 500 Utilities Index (XLU), has a mean price target of $36.50 against its current market price of $31.20.
Which Utility Will Pay Higher Dividends in 2017?
NextEra Energy (NEE) paid dividends of $3.48 per share in 2016. In 2017, it’s expected to pay dividends of $3.93 per share.
Will US Water Utilities See the Early-2016 Days Again?
US water utilities saw a big stock rally 1H16, rising more sharply than electric utilities. But they’ve lost most of those gains so far in 2H16.
How Hurricane Irma Affected Duke Energy’s 3Q17 Earnings
Duke Energy reported total revenues of $6.5 billion in 3Q17 against its revenues of $6.8 billion in the corresponding quarter last year.
How NRG Energy Is Valued Compared to Its Peers
NRG Energy (NRG) stock seems to be trading at a fair valuation compared to the industry average and its historical average.
Which Utility Delivered the Highest Total Returns This Year?
Although utilities’ total returns were dominated mostly by stock appreciation this year, stable and increasing dividends were also an important factor.
Do You Own Analysts’ Favorite Utility Stocks?
Utilities witnessed an even harsher fall amid broader markets’ sell-off. However, utilities outperformed the S&P 500 in 2018.
NRG Energy Stock: Analysts’ Recommendations
Among the ten analysts tracking NRG Energy, four recommended a “strong buy,” five recommended a “buy,” and one recommended a “hold.”
Institutional Investment in PEG in 4Q17
The Vanguard Group added net 0.46 million shares of Public Service Enterprise Group (PEG) in 4Q17.
Where NextEra Energy Stock Could Go in the Short Term
Broader utilities (XLU) have witnessed notable weakness recently mainly due to the strength in Treasury yields.
Analysts Are Cautious on FirstEnergy but Expect a Robust Gain
Of the 18 analysts tracking FirstEnergy (FE), eight recommend “buy,” six recommend “hold,” and four recommend “strong buy.”
Southern Company’s Dividend Outlook for 2017
Southern Company stock underperformed utilities at large and the broader markets in the last five years. Southern Company stock rose 1% in the past year.
NEE, DUK, SO, and D: Comparing Top Utilities’ Total Returns
NextEra Energy (NEE) beat its peers in terms of returns in the last few years. NextEra Energy returned 14% in 2018.
NRG Energy Stock Rose 30% Due to Its Transformation Plan
There was a tsunami in NRG Energy (NRG) shares on July 12, 2017. NRG Energy stock opened 19% up and maintained the uptrend throughout the day.
Are Analysts Still Positive about NextEra Energy?
Wall Street analysts still seem positive about NextEra Energy (NEE), particularly because it’s risen so much compared to last year’s levels, resulting in its premium valuation.
How a Rate Hike Could Affect High-Leverage Sectors
Industrials, utilities, and telecommunications have much higher leverage, as these sectors have massive capital needs.
Utility Stocks Slipped, Treasury Yields Raced to a Record High
US utility stocks slipped 0.8% on May 15 after ten-year Treasury yields peaked at 3.1%—a seven-year high. Broader markets also corrected 0.7%.
Utilities Sector: Stock Market Update for Week Ended July 17
Of the 41 utilities stocks we track, 30 gained during the week ended July 17. A positive Greek deal cheered markets globally, and dovish comments by the Fed pushed mid-to-long-term bond yields down.
SO on the Street: Analyst Recommendations and Price Targets
The consensus analyst price target for Southern Company (SO) is $50.76. Its current market price is $49.78, implying a rise of 2% over the next year.
American Electric Power’s Total Returns Compared to Its Peers
In the last year, American Electric Power returned 21%—compared to broader utilities’ average returns of ~11%. During the same period, SPY returned 22%.
VPU Versus XLU: Which Utility ETF Is Better?
Utility ETFs have performed well in the last one year. The Vanguard Utilities Fund ETF (VPU) has been no exception to this.
DUK, SO, and PPL: How Are Top US Utilities Valued Currently?
Duke Energy (DUK) has corrected more than 12% since July 2016. The Utilities Select Sector SPDR (XLU) has also witnessed similar weakness during this period.
Dimensional Fund Advisors’ Major Holdings in Q3
Dimensional Fund Advisors’ top buys are Apple (AAPL), AT&T (T), Microsoft (MSFT), L3Harris Technologies (LHX), and Verizon Communications (VZ).
NEE Has One of the Cleanest Generation Mixes in the US
NextEra Energy (NEE) has one of the cleanest generation mixes among peers.
Why NextEra Energy Could Be a Sensible Dividend Option
NextEra Energy’s (NEE) utility and non-utility segments have flourished in the past couple of years.
How Wall Street Views NRG Energy Stock
Among the total eight analysts covering NRG Energy (NRG), three recommend the stock as a “strong buy,” four recommend it as a “buy,” and one recommends it as a “hold.”
Top Utilities’ Historical Dividend Growth
On average, utilities increased their dividend per share ~4% compounded annually in the last five years.
How Dominion Energy Stock Is Valued versus Peers
Dominion Energy (D) stock currently looks attractively valued. It’s trading at a forward PE of 17.5x against its five-year historical average PE of 24x.
Exelon’s Price Targets and Wall Street’s Opinion
In this series, we’re analyzing analysts’ favorite stocks from the S&P 500 Utilities Index (XLU). We’ll look at Exelon (EXC) in this part.
What’s NRG Energy’s Current Valuation?
NRG Energy (NRG) stock was trading at an EV-to-EBITDA valuation of 13x—higher than its five-year historical valuation.
XLU: How US Utilities Are Currently Valued
So far, US utilities have had a decent run this year. The Utilities Select Sector SPDR ETF (XLU) has risen more than 14%.
A Look at Southern Company’s Expected Dividend Growth
US utilities (XLU) plan to increase their per share dividends 4.0%–6.0% annually going forward. That’s in line with their target earnings growth for the next few years.
Why Dividend Stocks Have Underperformed This Year
Dividend stocks have underperformed this year so far. The dividend yield measures dividends payed by a company in the last 12 months relative to its share price.
Why Exelon Could Rally Even after Gaining 35% in 2016
Exelon (EXC) is currently trading at a 4% and 13% premium to its 50-day and 200-day moving averages, respectively. The strong premium indicates the strength of Exelon stock.
Cal Fire Blames PG&E for Deadly Camp Fire Last Year
The California Department of Forestry and Fire Protection (or Cal Fire) has blamed PG&E (PCG) for causing the most devastating wildfire in state history last year.
XLU in Context: What If the Fed Sticks to Its Ambitious 2017 Target?
US utilities continue to trade higher as they approach a second and highly probable 2017 interest rate hike next week.
Must-know: US power sector and its indicators
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.
How’s Duke Energy Placed for Its 2Q16 Earnings?
Duke Energy forecasts its earnings to grow annually by 4%–6% in the long term. It has given an earnings guidance range of $4.50–$4.70 per share for 2016.
Coal Prices Remained Steady in the Week Ending September 9
For the week ending September 9, 2016, PRB spot coal prices came in at $10.50 per ton, which is marginally lower than the previous week’s $10.65 per ton.
Institutional Investors Changed Their Holdings in XLU in 3Q17
During 3Q17, there was lots of action for institutional investors in the Utilities Select Sector SPDR ETF (XLU).
Breaking Down the Regulated and Deregulated US Electric Markets
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.
Analyzing the 10 Top-Yielding SPX Utility Stocks
The Utilities Select Sector SPDR ETF (XLU), which represents the S&P 500 Utilities Index, currently yields 3.5%. In this series, we’ll discuss the top ten highest-yielding utility stocks from the S&P 500 Utilities Index.
Why Hybrid Utilities’ Yields Might Be Misleading
Hybrid utility FirstEnergy (FE) is presently trading at one of the highest dividend yields of 4.9%.
Analyzing Dominion Energy’s Valuation and Dividends
Currently, Dominion Energy stock is trading at an EV-to-EBITDA valuation multiple of 14.5x, while utilities at large have a valuation multiple near 10.0x.
Utility Stocks and Treasury Yields: A Key September Comparison
The ten-year Treasury yield fell from a high of 2.28% to 2.16% in August 2017.
Southern Company Delays Its Kemper Power Plant
According to Southern Company’s SEC filing on March 16, 2017, it doesn’t expect the Kemper County power plant to be operational by mid-March.
NEE, DUK, SO, and D: Largest Utilities’ Dividend Outlook
Dominion Energy (D) and NextEra Energy’s (NEE) stronger earnings growth potential could facilitate their dividend growth.
BlueMountain Capital Attacked PG&E Again, PG&E Fell 4%
In a letter to shareholders, BlueMountain said that it plans to launch a “slate board” by February 21 to replace PG&E’s existing board.
Southern Company’s Dividend Profile before Its Ex-Dividend Date
Georgia-based Southern Company (SO) declared a dividend of $0.58 per share on July 18, 2017. Its ex-dividend date is August 17, 2017.
Southern Company Beats Q3 Estimates, Maintains Vogtle Schedule
Southern Company (SO), the fourth-biggest utility by market capitalization, released its third-quarter earnings on November 7.