Regulated utilities have long served as well-regarded anchor positions in conservative dividend portfolios. Being part of a regulated industry, these companies typically lack meaningful competition and the predictable profits enable the payment of consistent dividends.
In principle, the investment thesis is still valid today. However, it appears that regulatory pressure is increasing, thus possibly rendering these stocks riskier than anticipated with inadequate returns. In addition, the transition to zero-emission power plants involves significant capital expenditures that could further jeopardize shareholders’ returns.
