Utilities sector stocks are among the biggest Toronto Stock Exchange (TSX) components. Over the years, some utilities have outperformed the TSX year after year, while paying high dividend income. They have provided satisfactory returns with low volatility.
However, there is more to this story than it appears at first glance. Although some well-known utilities have outperformed the TSX, the sector as a whole hasn’t done that well. The TSX Index is up 37% over five years, while the S&P/TSX Capped Utilities Sub-Index is only up 12.3%. Although the TSX utilities index has a high average yield (4.15%), the TSX index overall has a fairly respectable 2.8% yield. That 1.35% yield differential appears unlikely to make up for utilities’ poor price return, which is about one-third that of the index.
Nevertheless, these outperforming individual utilities do exist. What’s more, they’ve been pretty consistently the same companies over…
