3 Utilities Stocks That May Weather the Storm
Inflation and other factors dim the allure of this dividend-rich sector today, but these stocks may be resilient.
The following is an excerpt from the video series Dividend-Stock Deep Dive, hosted by Morningstar DividendInvestor editor David Harrell. Watch the full interview.
Harrell: In your report, you highlighted a handful of the companies under your coverage--three that you thought were somewhat well insulated, at least relative to the rest of your coverage list from higher inflation and then three that seemed particularly vulnerable to you right now. Can you discuss these?
Miller: In terms of those best protected--and again, I've to say, no utilities are well protected from inflation. This is across the board and negative, right? But if you are looking for utilities and you want to look for something that might weather the storm, so to speak, better than others, look for utilities with constructive regulatory environments, places where regulators have supported policies that allow utilities to pass through those higher costs to customers. Look for places where they have low energy costs. There's a wide range of energy costs across every state, region in the U.S., places where energy costs are very high for various reasons, very low for various reasons. Look for utilities in places with low energy costs. Those, all else equal, will keep customer bills lower.
David Harrell does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.