Summer is notoriously tough for equity investors. So, it shouldn't come as a surprise utilities are among Q3's top performing stocks.
Thanks to data from The Seasonal Investor, we can see just how strong traditionally defensive utilities are next quarter.
Over the past 10 years, the utilities ETF (XLU) has finished Q3 higher 7 times. In the past 5 years, it's finished higher 4 times.
ETF | # Up | Q3 | Q3 | Q3 | Q3 | Q3 | Q3 |
|---|---|---|---|---|---|---|---|
(Past 5) | 2007 | 2008 | 2009 | 2010 | 2011 | Average | |
XLU | 4 | 1.29% | -17.63% | 6.24% | 12.17% | 1.46% | 0.71% |
For comparison, the S&P 500 (SPY) and the S&P 400 (MDY) have finished the quarter higher 6 and 4 of the past 10 years, respectively.
ETF | # Up | Q3 | Q3 | Q3 | Q3 | Q3 | Q3 | Q3 | Q3 | Q3 | Q3 | Q3 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Past 10) | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | Average | |
SPY | 6 | -16.97% | 2.78% | -2.02% | 3.67% | 5.41% | 1.91% | -8.84% | 15.38% | 11.17% | -13.81% | -0.13% |
MDY | 4 | -16.90% | 6.63% | -2.27% | 4.78% | -0.85% | -1.07% | -11.15% | 19.44% | 12.94% | -19.77% | -0.82% |
For investors looking to improve returns beyond the ETF, the following utilities boast the best individual seasonal trends for the coming three months.
Company | Symbol | INDUSTRY | # Up | # Up | Q3 | Q3 | Q3 | Q3 | Q3 | 10 Year Q3 | 5 Year Q3 |
|---|---|---|---|---|---|---|---|---|---|---|---|
(Past 5) | (Past 10) | 2007 | 2008 | 2009 | 2010 | 2011 | Average | Average | |||
E Q T Corp. | GAS UTILITIES | 4 | 9 | 5.11% | -46.65% | 22.71% | 0.34% | 1.96% | 1.29% | -3.30% | |
Southern CO. | ELECTRIC UTILITIES | 5 | 9 | 7.02% | 9.22% | 3.05% | 13.31% | 6.17% | 5.75% | 7.75% | |
Xcel Energy | ELECTRIC UTILITIES | 5 | 9 | 6.35% | 0.70% | 5.82% | 12.71% | 2.69% | 0.45% | 5.66% | |
American Electric | ELECTRIC UTILITIES | 4 | 8 | 3.17% | -6.99% | 8.74% | 13.50% | 2.20% | 1.19% | 4.12% | |
California Water | WATER UTILITIES | 4 | 8 | 3.48% | 18.48% | 6.54% | 4.39% | -4.55% | 4.60% | 5.67% | |
Consolidated Edison | DIVERSIFIED UTILITIES | 5 | 8 | 3.89% | 11.46% | 11.02% | 13.29% | 8.32% | 5.84% | 9.59% | |
Laclede | GAS UTILITIES | 4 | 8 | 2.44% | 21.12% | -1.79% | 5.09% | 3.48% | 3.86% | 6.07% | |
P G & E | DIVERSIFIED UTILITIES | 4 | 8 | 6.30% | -4.69% | 6.41% | 11.60% | 1.73% | 1.74% | 4.27% | |
Progress Energy | PGN | ELECTRIC UTILITIES | 5 | 8 | 4.12% | 4.68% | 4.98% | 15.00% | 9.09% | 2.49% | 7.58% |
Piedmont | GAS UTILITIES | 4 | 8 | 2.76% | 23.15% | 0.41% | 15.78% | -3.60% | 5.20% | 7.70% | |
Scana Corp | DIVERSIFIED UTILITIES | 5 | 8 | 2.36% | 6.49% | 8.96% | 14.09% | 4.03% | 3.11% | 7.19% |
For those interested in dividend investing, here are the current dividend yields for each of these utilities too.
Symbol | Dividend Yield |
|---|---|
EQT | 1.70% |
SO | 4.20% |
XEL | 3.90% |
AEP | 4.80% |
CWT | 3.50% |
ED | 3.90% |
LG | 4.30% |
PCG | 4.10% |
PGN | 4.10% |
PNY | 3.70% |
SCG | 4.20% |
Average | 3.85% |
Given markets typically stumble in summer, sprinkling some utilities into portfolio's may offset some risk next quarter.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
