Seeing and Believing in Utility Stocks
Investing is often unduly complicated, and even those who recognize this fact are apt to make comments such as “easy in theory, but hard in practice.” What is easy is staying diversified. Believing and seeing the benefits, like a visual illusion, can be hard to process. We venture few are aware that earnings from Utility stocks are now valued at comparable multiples to Technology stocks.
The ascension of Utility stocks is perhaps related to plummeting yields in the United States, where the 10-year Treasury now yields just 2.08%. After starting the year near 2.75%, not a single economist surveyed at the start of the year forecasted the 10-year yield to go below even 2.50%. Diversification supports all outcomes. Some may view the unanticipated plunge in yields to support an orientation towards Contrary Analysis, an orientation we will explorer further in a future piece.
Dividends are Looking Better
Yields of any kind are increasingly hard to find in any asset that might considered safe. Among major European sovereigns, one must venture out to a maturity of 5 years in Italy in to find a positive return. Those looking for an almost, that is almost as in still less than, 3% return must venture to a 10-year government bond in Greece.
Yields from dividends, and particularly those emanating from places from which they will get paid, are looking increasingly attractive.
To review previous market perspectives, click the following links:
• Another way to lose money in auto stocks
• Forecasting Future Oil Prices & New Economy Stocks
• Mega Health Insurers and Signals from The Global Bond Market
• Searching for Value in Front of a Recession