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Quarter-End Insights

Utilities: Surging Sector Could Keep Its Rally Going

If interest rates keep heading toward zero, utilities could benefit.

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Utilities and their investors have little reason to complain. The sector is up 25% year to date, outstripping the broader U.S. equity market (up 20%) and all sectors except communication services, technology, and real estate. Falling rates mean ample cheap capital for a sector that has the second-largest debt appetite behind financials. Nearly all U.S. utilities have good three-year growth prospects, secure dividends, and sound balance sheets.

Utilities just keep going and going and going. - source: Morningstar

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