It always makes sense to me to look at out of favor sectors. Utilities did not do well in 2020 on an absolute and relative basis. The sector was down -0.8% in 2020 compared to robust positive returns of the broader market indices. To put this in perspective, the NASDAQ-100 (QQQ) was up almost +49%, the S&P 500 was up over +18% as measured by SPDR S&P 500 ETF Trust (SPY), and the Dow Jones 30 (DIA) was up +9.5%. This underperformance has carried over into 2021. Utilities are flat year-to-date. Some utilities have done far worse and are still down -20% or more in the trailing 1-year. I discuss three (3) utilities that are yielding over 4% that I view as long-term buys for post COVID-19. These utilities are Consolidated Edison (ED), NorthWestern Corporation (NWE), and Spire (SR).

Much of the problem for utilities in aggregate is that they have been hit by lower demand caused by local government restrictions, social distancing, and commercial and industrial business closures. Granted, residential demand is up but not enough to offset lower demand elsewhere. This is an opportunity in my opinion. Vaccines for COVID-19 are being distributed and the number or people receiving it is rising. Demand will eventually return as businesses return to more normal operations. Furthermore, utilities can be solid dividend growth stocks.

3 Utilities Yielding Over 4%

Consolidated Edison

Consolidated Edison is the first utility that I view as a buy. Consolidated Edison provides electricity, gas, and steam in New York City and the surrounding areas…

NorthWestern Corporation

The next utility that I view as a buy is NorthWestern Corporation. NorthWestern supplies gas and electricity to consumers and businesses in Montana, South Dakota, Nebraska, and Yellowstone National Park…

Spire

Spire is the last utility that I view as a buy. Spire was initially known as the Laclede Gas Company. One interesting historical footnote was that Laclede was one of the original 12 companies in the Dow Jones Industrial Average but was removed in 1899…

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