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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 (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.