Utilities Powering Up

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The Utilities Sector continued its advance yesterday, gaining over 1% while the Dow and S&P fell for the third day in a row. The sector has been on a run since hitting a low in early March and has been one of best performing sectors in the past three months. Since its March low, the S&P Utilities Sector is up nearly 10%.

Utilities are often seen as a defensive play, with steady cash flows and solid dividends. What is impressive is the fact that this seems to be holding true even with record fossil fuel prices. Rising commodity prices increase the cost of producing electricity and regulated pricing on the transmission and distribution end make it hard (or at least slower) to pass the cost increases onto end customers. Interestingly, it is not the Nuclear leaders (a cheaper alternative to fossil) like Exelon and Entergy that have had the biggest gains.

Yesterday's jump was partly driven by the recent slide in crude prices. AES Corp jumped 3.3% followed by PSEG up 2.9% and Constellation Energy up 2.7%.

Here are the biggest gainers in the S&P Utilities Sector over the past three months:

  • TECO Energy is up 30.6% and boosted its dividend in April
  • Nicor is up 24.9% and has 4.5% dividend yield
  • CenterPointEnergy is up 18.9% and has a 4.4% dividend yield.
  • AES is up 18.1% in the past 3 months
  • Dynegy is up 16.6% in the past 3 months