Skip to Content
Quarter-End Insights

Our Outlook for Utilities Stocks

With interest rates leveling off and power markets stalled, utilities face a tough near-term outlook.

Mentioned: , , , , , , , , ,

  • Since June, forward power prices in most of the Eastern U.S. regions have retreated 5%-10%, keeping pressure on the near-term earnings outlook for utilities with wholesale power generation. 
  • The spread between utilities' 4.1% average dividend yield and 10-year U.S. Treasury yields remains near its 20-year high, suggesting that some utilities with 4%-5% yields still have room to run.
  • We think valuations for many regulated utilities are stretched, given the risks of regulatory rate cuts, higher interest rates, and dividend tax hikes.

To view this article, become a Morningstar Basic member.

Register for Free

Travis Miller does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.