Utilities have fallen sharply on fears of rising rates. If the Fed moves slowly, the stocks could rebound. Also, a backlash against buybacks.
Source: Utility Stocks Are Undervalued
I would not be a blanket buyer of utility stocks like Barron’s suggests but we do have a large position in Dominion Resources which I look at like a blue chip dividend paying stock with a very strong balance sheet. If Dominion should drop to $65 (current price Thursday July 2nd $67.90) it would yield 4%. The Company has repeatedly said it intends to grow its dividend at 8% per annum. That would be an outstanding investment in this low growth fully priced market. Dominion is unlike most utilities as it has a couple of unique high growth opportunities. It will have the first LNG export facility on the East Coast at Cove Point. Cove Point has access through Dominion’s gathering system of low cost natural gas from the lowest cost producing region in the U.S, the Marcellus shale. This will be an enormous growth asset for decades to come.