With May coming to a close, I want to share a few thoughts with you on some of the volatility we are seeing as written by Burt White, Chief Investment Officer of LPL Financial.
“I remain convinced that the economy is poised for growth and that the financial markets have become overly pessimistic about the prospects for growth. As the economy transitions from recovery to sustainable, moderate growth, it normally exhibits some volatility and the recent deceleration – much like the alternating cool and warm days of spring leading to summer – are part of the natural ebb-and-flow of an economic expansion.”
The Japan earthquake and tornadoes have undoubtedly contributed to deceleration but will “likely prove transitory.” Many of the economic reports being released now are for April and were impacted by the disasters in Japan.
Keep those chins up,
Susan R. Linkous
Investors have often viewed the utility sector as a place to turn for reliable income and fairly stable share prices. Our recent recession taught us that isn’t always the case. The sector may still be a place to look when dividend income with potential for growth is desired. Just remember that, like all stock investing, volatility and a potential loss of principal are risks. “I look for utilities that can return 10-13% per year through a combination of earnings growth and dividends. Power prices have been steadily increasing for years in the United States.” ~Douglas Simmons
The utility sector includes electric, gas and water companies like those named below. Please review as educational material only not a recommendation to buy:
NextEra Energy, Inc. (NEE)
-holding company for Florida Power & Light
Duke Energy (DUK)
-franchised electric and gas, commercial power
Oneok, Inc. (OKE)
-natural gas distributor
Dividends are an important factor in the selection of an investment; however, they are not guaranteed. The utility sector can be impacted by government regulation, financing difficulties and natural resource conservation. Investors should remember this when looking at these firms.
All in all, the utility sector can be valuable to investors seeking both income and growth and one I am reasonably comfortable with at this time.
Until next week,