Utilities Sector

DEFINITION of 'Utilities Sector'

A category of stocks for utilities such as gas and power. The utilities sector contains companies such as electric, gas and water firms and integrated providers.

BREAKING DOWN 'Utilities Sector'

Because utilities require significant infrastructure, these firms often carry large amounts of debt. With a high debt load, utilities companies become sensitive to changes in the interest rate. As interest rates rise or drop, the debt payments will increase or decrease. The utilities sector performs best when interest rates are falling or remain low.

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RELATED FAQS
  1. To what extent do seasonal factors influence the utilities sector?

    Seasonal factors have a large impact on the utilities sector, with a significant increase in demand during the summer and ... Read Full Answer >>
  2. Why is the utilities sector popular among value investors?

    The utilities sector is popular among value investors due to the dividends paid by utility companies as well as the traditionally ... Read Full Answer >>
  3. Why have utility stocks become more volatile investments than they were historically?

    Two primary factors driving increased volatility in utilities stocks are recent large advances in the stock prices of utilities ... Read Full Answer >>
  4. What is the average return on equity for a company in the utilities sector?

    The average return on equity (ROE) for the utilities sector is approximately 11%. This is a little below the overall market ... Read Full Answer >>
  5. At what stage of the economic cycle should I invest in the utilities sector?

    Later stages of the economic cycle, as the economy moves from expansion to recession, are the best time to invest in the ... Read Full Answer >>
  6. What are the most popular mutual funds that give exposure to the utilities sector?

    Some of the most popular mutual funds that provide exposure to the utilities sector include American Century Utilities, Prudential ... Read Full Answer >>
  7. What is the long-term outlook of the utilities sector?

    The long-term outlook for the utilities sector is much the same as it has always been; utilities continue to be regarded ... Read Full Answer >>
  8. What is the average annual dividend yield of companies in the utilities sector?

    The average annual dividend yield for the utilities sector, as of January 2015, is approximately 4.8%, making it, along with ... Read Full Answer >>
  9. What emerging markets are best positioned to benefit from growth in the utilities ...

    Emerging market economies expected to benefit the most from growth in the utilities sector include China, India, Brazil and ... Read Full Answer >>
  10. What has been the trend for growth in nuclear power in the utilities sector?

    Although new construction of nuclear power facilities has seen a slight upturn since 2005, following a 30-year decline, the ... Read Full Answer >>
  11. What are the main factors that drive share prices in the utilities sector?

    Two of the main drivers in share prices for companies in the utility sector are interest rates and the amount of dividends ... Read Full Answer >>
  12. What debt/equity ratio is typical for companies in the utilities sector?

    In the utilities sector, for companies providing general utilities such as gas and electricity, the average debt/equity ratio, ... Read Full Answer >>
  13. How does the risk of investing in the utilities sector compare to the broader market?

    The risk of investing in the utilities sector is less than the broader market. The two main reasons are the high dividends ... Read Full Answer >>
  14. What options strategies are best suited for investing in the utilities sector?

    There are a number of option strategies an investor can use to take a position in the utility sector, depending on whether ... Read Full Answer >>
  15. What level of return on assets should an investor look for in the insurance sector?

    Marketing plays an important role to a company in the utilities sector. Many people fail to understand why utility companies ... Read Full Answer >>
  16. In what way is credit risk analysis beneficial when trading in the stock market?

    Some investors use credit risk in analyzing individual stocks to determine whether a company might be in danger of defaulting ... Read Full Answer >>
  17. What is the average annual return in the utilities sector?

    As of January 2015, the average annual return in the utilities sector for the past 10 years has been approximately 11%, outperforming ... Read Full Answer >>
  18. How does weather impact the share prices of utility stocks?

    The utilities sector is a popular addition to an investor’s asset allocation due to the industry’s above average dividend ... Read Full Answer >>
  19. What ETFs should I buy to track the utilities sector?

    The utilities sector has long been a space for investors looking for dividend-paying investments, especially in a lower interest ... Read Full Answer >>
  20. Are there leveraged ETFs that track the utility sector?

    A couple of leveraged exchange-traded funds, or ETFs , track the utilities sector. One is the ProShares Ultra Utilities (UPW). ... Read Full Answer >>
  21. What is a utility stock?

    A utility stock is a stock for a company that is found in the Utilities Sector. These companies include water, gas, electric ... Read Full Answer >>
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