The Globe and Mail reports in its Tuesday, Sept. 27, edition that BCV Asset analyst Tony Demarin says, "Utilities can be a good source
of dividend income." The Globe's Joel Schlesinger writes that Mr. Demarin, however, says utility stocks can be hurt by rising
interest rates. Mr. Demarin says larger firms such as
Fortis, Emera and Canadian
Utilities "are well managed,
diversified companies with
long track records of dividend
growth and share price appreciation."
However, as the long run of falling
interest rates continues, INK Research analyst Ted Dixon
says the risk builds.
He says: "We're in the early innings. There is still time for people
to slowly position their
portfolio for the risk of rising
rates."
Still, rising rates themselves
may not be enough to negatively
affect the industry, says Conrad's
Utility Investor editor Roger Conrad. During the last tightening
period
in the U.S., "the Fed rate went
from 1 per cent to 5.25 per cent, but utilities
averaged a return of about
60 per cent, about four times
what the S&P 500 did."
Mr. Conrad recommends investors
scale back their positions
and return to the market when
prices are more reasonable, just
as his advisory firm has done.
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