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Utilities versus Broader Markets’ Total Returns

Vincent Kruger
Utilities versus Broader Markets’ Total Returns

Analyzing Utilities in the Week Ending January 4(Continued from Prior Part)## Total returnUtilities played out well last year amid broader markets’ volatility. The utilities, including dividends, returned more than 6%, while the S&P 500 returned -6% last year.Utilities generally have stable earnings due to their low-risk and regulated operations. Investors usually turn to utilities during uncertainties due to their slow and stable stock price movements and high dividend payments. Currently, utilities yield 3.3%, which is notably higher than broader markets.Utilities (XLU) (IDU) didn’t just beat broader markets last year. They have outperformed the S&P 500 in the past three and five years as well. In the last five years, utilities returned 68%, while the S&P 500 returned 52%. The total return considers the capital appreciation and dividends paid in a particular period.Regulated utilities Southern Company (SO) and PPL (PPL) offer a dividend yield of 5.4% and 5.9%, respectively. Both of the utilities lagged their peers in terms of total returns in the last few years. To learn why these top-yielding utilities failed, read Southern Company’s Total Returns Compared to Its Peers.Continue to Next PartBrowse this series on Market Realist: * Part 1 - Utilities: Gains and Losses Last Week * Part 2 - XLU: What to Expect from Utilities in 2019 * Part 4 - Comparing Utilities and Treasury Yields