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S&P Capital Senior Industry Analyst Christopher Muir on the outlook for utilities and the pros and cons of investing in the sector.
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One sector out there is not only on track to finish as the strongest sector of the year but it also pays great dividends they get paid the -- stock has appreciate -- value.
We're talking about utilities so how can -- get in on the action.
Well joining us right now for a Fox Business this is Christopher here that's -- -- capital senior industry analyst who covers utility stocks boy Christopher tell you what.
They're boring often times and they're there -- your your grandparents portfolio but they've been working here recently they have to continue work.
Well I think that's gonna be a question on -- how the economy does over the next -- obviously if the economy takes off there could be.
You know pressure on are rising interest rates which would then pressured the stocks little bit -- -- sensitive.
And also you know the economy takes off we expect there's other sectors are probably going to outperform utilities and the S&P market strategists has a market -- opinion on utilities for that reason.
Yeah is there a fear about a billion over crowded trade because it seems like Christopher we talk about it every day did into it it's gonna pay dividends it's safe at some point time.
You know the 52 week highs that that that -- hits and some of these other companies -- doesn't get overcrowded.
I don't.
I don't know I would phrase a quite like that I think for certain people are looking for income oriented investors are looking for a safe dividend.
Utilities are certainly the place to be the average yield right now is three point 7%.
The utilities only have about a 58% payout ratio on average so they're they're safe territory to be.
Again if if there is a -- -- very strong economy that takes off in the next year which you know I think most people probably don't see that happening union.
You're probably going to see utilities performed just.
A little bit worse in other sectors -- These.
If the economy doesn't take off and we kind of ramble along in a market like we did in the past year utilities should perform fairly well.
You know it seems that -- hundreds -- not then we're putting some of the ones up that she'll buy ratings for give a strong buy rating for UGI equipment Pennsylvania.
How do you pick some of them and not others if like you are saying most of them almost all them raise their dividends every year and they're all pretty much safe place.
So I like to number one look good you know some of the trends are happening in the industry with UGI they're located in the heart of the Marcellus -- They're building up pipelines.
To help bring that gas into the natural gas pipeline network -- RC.
Longer term.
Earnings growth it's going to be above industry average for them going forward.
And you have a handful that should sell ratings for as well why do you have -- raised for these in particular we're gonna put them up on the screen.
And a case of dominion man my source I just think their a little bit overvalued.
And my sources case -- not gonna -- dividend for.
My guess would be five years or so he.
And yield is is fairly low considering that there's going to be other utilities you can invest -- like -- court for instance search has four point 3% -- And they're probably gonna be raising their dividend annually over the the next five years.
Christopher -- thank you so much as always we appreciate utilities are very hot topic right now Christopher's from S&P capital senior.
Industry he's -- senior industry.
