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Quarter-End Insights

Our Outlook for Utilities Stocks

Pegging the direction of utilities stocks in 2013 is not for the faint of heart.

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  • Utilities are on track to be the worst-performing sector in 2012 with 2% year-to-date total returns through November compared with 15% for the S&P 500.
  • Utilities' average 4.1% dividend yield still looks historically attractive compared with sub-2% U.S. Treasury yields. Recent history suggests this could mean 20% upside is still available.
  • Power prices have stabilized and 2013 will be a key year as forward markets start pricing in 2015 environmental regulations.

 

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