None of your mutual funds made money last quarter
Utilities funds were among the only gainers as the stock market rout gathered steam. Here are 5 utility stocks that led the sector.
By Frank Byrt, TheStreet
U.S. stock mutual funds that invest in a diverse array of companies turned in a shameful performance last quarter, as none -- that's right, none -- made money.
Among funds that buy mainly U.S. stocks and use no leverage or short positions, only three sector-specific funds eked out gains from the beginning of July to the end of September, according to research firm Morningstar: Icon Telecommunications & Utilities (ICTUX), up 1.9%; Franklin Utilities (FKUTX), up 1.7%; and Invesco Utilities Investor (FSTUX), up 0.3%.
The stock market rout gathered steam last month on concerns that the U.S. economy is slipping into another recession and Europe's debt burden will sink more banks and lead to a further decline in global corporate profits. In September, materials stocks fell the most, by 13%, followed by energy at 10% and financial services at 8.3%, according to Capital IQ. Utilities shares were the sole sector to rise, by 1%.
The utility stocks that helped the winning funds last quarter have historically been categorized as the turtles of equity investing because of their slow, albeit steady, share-price returns.
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But now they're seen as attractive investments for people seeking dividends and the preservation of money in volatile markets.
Here's a snapshot of the five companies that were the top gainers in the utility sector in the third quarter:
One of the nation's largest regulated utilities, Progress shares are up 20% this year, including 8% in the third quarter. It has a projected dividend yield of 4.75%.
Progress Energy is a holding company with a market value of $15 billion that provides electricity generation, transmission, and distribution throughout the Southeast, principally in North Carolina, South Carolina and Florida.
Progress and Duke Energy (DUK) have announced plans to merge in a $14 billion deal that will create the largest electric power utility in the U.S. They aim to close the deal by year-end.
The Duke merger, which faces several regulatory hurdles before it gets approved, would give Progress' shareholders an immediate premium to the pre-deal stock price and a 3% dividend increase. But the company has agreed to make $650 million in rate concessions to its customers through 2016.
Analysts are unanimous on their view of the stock, giving it 15 "hold" ratings, according to TheStreet Ratings.
Duke shares are up 17% this year, including 8.5% in the third quarter. It has a projected dividend yield of almost 5%.
Duke, with a $27 billion market value, is one of the largest electric and gas regulated holding companies with operations in the Carolinas, Indiana, Ohio and Kentucky. It sells electricity to about 4 million customers and delivers natural gas to another 500,000.
Analysts are unanimous on Duke as well, giving it 15 "hold" ratings, according to TheStreet Ratings.
Con Ed was up 7% in the third quarter and has gained 13% this year, giving it a $17 billion market value. It has a projected dividend yield of 4.2%.
Con Ed is a holding company for two regulated utilities: Con Ed of New York, and Con Ed of Orange & Rockland counties.
The companies provide steam, natural gas and electricity to customers in southeastern New York, including New York City, as well as parts of New Jersey and Pennsylvania.
Analysts give it 13 "hold" ratings and one "moderate sell," according to TheStreet Ratings.
Southern shares are up 16% this year, including 7% in the third quarter, giving it a market value of $36 billion. It has a projected dividend yield of 4.4%.
Southern owns four electric utilities: in Alabama, Georgia, Florida and Mississippi. The utilities generate power primarily from coal-fired plants but that is about to change.
Southern said last week it has moved a step closer toward getting federal approval to build a new nuclear power plant at an existing nuclear facility in Georgia.
The U.S. hasn't approved the construction of new nuclear power plants for three decades, but a nuclear plant approved before that freeze was allowed to power up in 1997 in Tennessee and now several other such plants are under construction.
Southern is one of the most widely held stocks in the U.S. Analysts give the company five "strong buy" ratings, one "moderate buy," and 12 "holds," according to TheStreet Ratings.
Shares of NiSource are up 27% this year, including 8% in the third quarter, resulting in a market value of $6 billion.
The shares have a 4.25% projected dividend yield.
NiSource is an energy holding company with subsidiaries in seven states that provide natural gas and electricity to 3.8 million customers from the Gulf Coast to New England and into the Midwest.
The company has made a significant investment in production and storage facilities in the Marcellus Shale natural gas project in Appalachia which should pay off by providing relatively cheap natural gas resources within the next few years.
Analysts give it a unanimous eight "hold" ratings, according to TheStreet Ratings.
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Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
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