My utility holdings are making me nervous. First, utility stocks like Southern Co (SO), FirstEnergy (FE), Dominion Resources (D) and American Electric Power (AEP) have hit recent 52-week highs, with some even hitting all-time highs. Second, market analysts have become more bullish on the sector, making me more concerned the sector is too popular.
The main reason for the recent strong performance of the sector is that high-dividend-paying stocks are in favor with government bond yields at historical low rates. Combine the yield with the relative security of the sector, and the stocks have held up in this weak market.
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Disclosure: Long FE. Please read the disclaimer page for more details.