Sep. 18, 2013, 6:39 PM
- EPA chief Gina McCarthy and Energy Secretary Ernest Moniz defended the Obama administration's climate change plans before a contentious House energy committee today, saying coal-fired power (KOL) will continue but economic growth and environmental protection go "hand in hand.”
- The first step is for the EPA to issue rules for new plants, which are set to be released this week; McCarthy told the panel the agency will issue the rules for existing plants by June 2014.
- Carbon capture and storage technology "is feasible and it is available today," McCarthy says, but critics say it is unproven, expensive and nonviable.
- The EPA reportedly will use Southern Co.'s (SO) $4.7B Kemper plant in rural Mississippi as an example that CCS technology is ready, but so far the project is most noteworthy for a $1B cost overrun, legal battles, a revolt by ratepayers and a credit downgrade for the local utility.
- ETFs: XLU, IDU, PUI, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Sep. 18, 2013, 11:27 AM
- The sector may be ready to be a defensive favorite again, writes analyst Michael Lapides, as declines have left utilities trading at 13.5x-14x 2015 EPS estimates, inline or even slightly below the average of the past 5-10 years.
- It's a tepid endorsement and Lapides and team aren't yet ready to turn bullish on the overall sector, but did raise ConEd (ED +0.1%) to a Buy while removing NRG Energy (NRG -2.4%) from Goldman's Conviction Buy list. After underperforming NRG by 12% YTD, Calpine (CPN -1.9%) now represents Goldman's preferred way to get exposure to the tight Texas power market.
- Other favorites include NextEra Energy (NEE +1%) and American Water Works (AWK +0.5%).
- Utility ETFs: IDU, PUI, XLU, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Sep. 12, 2013, 1:39 PM
- Dividend payers may be a good place to hide out from rising interest rates, but those stocks sporting the highest yields - telecoms and utilities - tend to have slow payment growth, making them less-attractive as rates rise. Checking back to the 1994 bond bear market, telecoms and utilities were among the market's worst performers.
- Better to shop for modest payers, but above-average payment growth. Barron's screens for those characteristics combined with reasonable overall valuation and turns up three names: Boeing (BA), CVS Caremark (CVS), and GE.
- Certain dividend ETFs employ this strategy as well, with Vanguard's Dividend Appreciation (VIG) - almost zero exposure to telecoms and utilities - and WisdomTree's U.S. Dividend Growth ETF (DGRW) coming to mind. Others include DGRS, DNL, EMDG, DGRE.
- Other dividend ETFs: FDL, FVD, MDIV, QDF, QDYN, QDEF, DIV, CVY, DVY, HDV, IYLD, PEY, PFM, SCHD, SDY, SDYL, DVYL, VYM, DHS, DTD, SYLD, KBWD, SPHD, DLN, DON, HILO.
- Telecom and utility ETFs: IYZ, XTL, VOX, LTL, TLL, IDU, PUI, XLU, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Sep. 11, 2013, 12:52 PM
- The Obama administration is considering banning new coal plants without increased emission standards, Bloomberg reports.
- Revised EPA rules are under White House review and could be reworked before a scheduled Sept. 20 release, but it appears new coal plants would need to install expensive equipment to limit climate-change emissions.
- The revised standard would retain a provision letting utilities phase-in the capture technology over time, a source says.
- ETFs: KOL, XLU, IDU, PUI, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Sep. 11, 2013, 12:19 PM
Aug. 16, 2013, 4:25 PM
Jul. 24, 2013, 1:29 PMUtilities (XLU -1.7%) lead the way lower today as interest rates shoot higher. Also taking a hit are basic materials (XLB -1.2%) and energy (XLE -1.5%) as most commodities, including oil (USO -1.8%), are lit up bright red. Bank of America, AIG, and Berkshire Hathaway are among the financial sector (XLF -0.6%) stocks taking a breather after big runs for most. | Comment!
Jul. 10, 2013, 4:41 PMUtility (XLU, IDU) dividends grew at an annual clip of 5%-8% during 2008-12, but 2013 is shaping up to be much different. Continued dividend expansion requires "earnings growth, which is becoming harder to generate for utilities, given the sales trend," a Deutsche Bank analyst says, seeing dividend growth rates likely to be capped by earnings growth rates of 4%-5% for the next few years. | 4 Comments
Jul. 5, 2013, 10:58 AM
Jun. 26, 2013, 8:49 AM
Jun. 25, 2013, 10:43 AM
Jun. 18, 2013, 9:11 AMBAML private clients bought the dip last week, with the flows going via ETFs into large-cap and dividend plays like Utilities (XLU, IDU) - which saw the greatest buying since November 2011. Another favorite of the dividend crowd, Telecoms (IYZ) saw the biggest inflows since February. After buying through the spring, hedge funds turned sellers last week, and are now net-sellers YTD - just like 2012. | Comment!
Jun. 17, 2013, 12:56 PMMore from Zulauf at Barron's: Taking issue with the gathering consensus of a stronger economy and the Fed pulling back, Zulauf suggests bond yields (TLT, TBT) may have stopped rising and could be set to fall. In conjunction with that view, noncyclical names (XLU, XLV) could be set for a comeback at the expense of cyclical sectors (XLV, XLB, XLE). | Comment!
May. 31, 2013, 2:49 PMStocks turn lower (DIA -0.5%) 90 minutes ahead of the bell as Treasury prices tumble anew (TLT -1.2%), the 10-year yield gaining another 9 bps to 2.20%. The levered Treasury short ETF (TBT +2.5%) hits a 52-week high. Again hardest hit are the previously hot defensive sectors whose yields no longer stand so tall over Treasurys. Health care (XLV -1.1%), Consumer staples (XLP -1.1%). Utilities (XLU +0.1%) however, get a respite from an ugly month. | 6 Comments
May. 30, 2013, 4:58 PMThe utilities sector (XLU +0.2%), up as much as 2% early after NV Energy (NVE +22.5%) agreed to be acquired by Berkshire Hathaway at a hefty premium, wound up surrendering the bulk of its gains. Utilities remain May's weakest performer, down 8.5%, as rising interest rates, optimism over economic growth and a downbeat reading on future electricity prices send yield-seekers rotating into cyclicals. | Comment!
May. 30, 2013, 3:22 PMThe Utilities Select Sector ETF (XLU) - which outpaced the broader averages for much of the year - is on pace for its worst month since the dark days of February 2009, off 7.9% thus far. The steady dividend payers have been sought-after commodities for some time, but a 50 bp rise to 2.12% in May has the 10-year Treasury offering a bit of competition. | 2 Comments
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