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Quarter-End Insights

Our Outlook for Utilities Stocks

With interest rates rising, will dividend yields keep utilities afloat?

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  • Rising interest rates sent utilities into a tailspin in May, bringing many closer to what we think is fair value.
  • Utilities' average 4% dividend yield still looks historically attractive compared with U.S. Treasuries; we think this offers a downside cushion if interest rates continue to rise.
  • Despite a rally in gas prices this spring, a bleak outlook for power demand continues to depress power prices.


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