Utilities: Running in Place, but Hurdles Ahead
Utilities continue trading near fair value with only a few high-quality dividend payers trading at attractive prices.
Utilities appear to have hit a valuation plateau, but we still think downside risks outweigh upside catalysts. After reaching peak valuations in November 2017, U.S. utilities have underperformed the S&P 500 by 17 percentage points. Since the sector reached our fair value midyear, performance stalled. But regulated U.S. utilities still trade at 19 price/earnings, 13% higher than their 10-year average.
Travis Miller does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.