For dividend seekers, utilities are often a great place to find them.
After all, we’ll always need to keep the lights on and heat our homes. Due to that demand, the sector typically produces steady cash flows, which, in turn, come back to investors as high dividend payments. But that always isn’t always the case, especially when the Federal Reserve is ratcheting up interest rates.
So, why has the sector continued to see high returns in 2017?
One reason could be the mounting wall of risk the markets are facing. For investors, particularly those seeking dividend income, the current gains in the utility sector could just be the beginning.
The Ultimate Widows & Orphans Sector…Sort Of
Historically, the utility industry has been one of the traditional widows and orphan-styled sectors with steady revenues that fuel stable cash flows. Those cash flows are then paid out like clockwork to their investors. Nobody gets rich fast owning a steady-eddy utility like Duke Energy (DUK ). Instead, it’s all about slow accumulation and income.