Ignoring technology stocks, if you had to guess what the next-best-performing sector of the market was last year, odds are, you would not have said utilities. After all, power producers and natural gas suppliers are boring by nature. Demand for electricity and water tends to be stable in good times and bad, producing ample cash flows and steady dividends. These are “widow-and-orphan” stocks after all.
Nonetheless, the broader utility sector managed to post double-digit returns last year.
The best part is that the sector could do the same this year. New sources of demand are lighting a fire under the broader utility sector, making them appear undervalued. Meanwhile, growing earnings and cash flows are boosting their dividend payments. For investors, the sector is quickly casting off its “widows-and-orphans” moniker, becoming one of the best places to find growth and income.
