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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.

 

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