I t’s been a tough year so far for utility stocks. No surprise there, since interest rates are widely expected to start heading higher soon, and that’s generally not good news for utilities that are known for their heavy debt loads.
On the other hand, utilities are often a safe haven for investors during periods of market tumult. And with nine distribution days on the S&P 500, the health of the underlying market is certainly in question.
Has all the bad news been priced into the sector? It’s too early to say, but two names in today’s Utility Leaders screen have been under accumulation lately.
After surging 15% in the week ended July 17, shares ofTeco Energy ( TE ) are trading just below a cup-with-handle buy point of 22.12.
Renewed chatter that Teco could be a takeover target ofDuke Energy ( DUK ) fueled the stock’s big move.
Teco gets Utility Leader status because of a stable track record of earnings and consistent dividend payouts. Earlier this month, the Florida-based utility reported profit of 26 cents a share, down 7% from a year earlier, but revenue rose 12% to $680.6 million. Teco currently pays a dividend of 22.5 cents a share, giving it an annualized yield of 4.1%.
The diversified utility operates Tampa Electric, which serves more than 700,000 customers in West Central Florida; Peoples Gas System, which boasts than 350,000 customers across Florida; and New Mexico Gas, which caters to more than 510,000 customers across New Mexico.
Meanwhile, several above-average volume gains forWestar Energy ( WR ) in recent weeks have helped lift its Accumulation/Distribution Rating to A+, the highest possible.
Kansas’ largest electric utility, Westar is seeking higher rates in the state to help pay for power plant upgrades.
Westar currently pays a quarterly dividend of 36 cents a share, good for an annualized yield of 3.6%.