Okay, how about I conclude the opposite.
"People are attracted to utilities because the dividend". Of course, the yield is a consideration too. If somebody bought a utility that paid $4 on an $80 purchase, and the stock went to $120 with the dividend rising to $4.40, they might be very happy. Especially if they look at current dividend on purchase price ($4.40/$80). Now that the yield current yield though is $4.40 on $120 or $3.6%, is that the point where maybe new purchases and new investors might better consider non-utility dividend Aristocrats that pay in excess of 4%?
Employment pickup will benefit utilities. Okay. What about though the current glut (I assume) of natural gas. Utilities are switching over to nat gas. What happens if or when the populace realizes input costs to the utilities may be, or are, going down and utility profits are going up -- maybe too much up? Regulators and/or politicians pushing for rate decreases? Is this a possibility or maybe even a real risk?
As I imply, after selling some, I still hold several utilities. I am cautiously holding on . So far, stockholders in so many, many of these companies (I'd say almost all, but I don't have enough knowledge of the subset) have done well with buying and holding and reinvesting. That is so. Whether it continues and for how long, I do not know. The higher the p/e's get though and the lower the dividend yield becomes, the more the risk. Imo. |
