Utility Stocks Are Losing Power

INCOME INVESTING - IF A RECESSION PRODUCES ANOTHER SHARP DOWNTURN IN 2023, UTILITIES ARE LIKELY TO SUFFER IN FULL.

- Jeffrey R. Kosnett

When a stock sector crushes the S&P 500 index by 15 percentage points over a full year, it’s normally cause for euphoria. But utilities, which are both regulated and sensitive to interest rates, are not your typical industry. And that massive 15-point outperformance translates to just a 1.5% total return over the past 12 months. Now the category confronts several perils. If you are a longtime utility investor, there’s no urgency to quit, particularly if you enjoy a fine dividend yield on the original or average cost. The group’s 10-year annualized total return of 11% is excellent. But the bright lights are flickering.