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Re: Utilities: a current review


@retiredat48 wrote:

 

Bruce.

I have been surprised at the relative poor showing of utilities in this market run.

I'll leave with you the following, that I am not "pushing", but has caused me to add another negative re utilities:

I have heard two guru's (among many I casually follow) state that a game-changer (negatively) for utilities is the upcoming announcement of Tesla re significant improvements in batteries and power storage.  The announcement is a few months away.

Now, one may ask what does this have to do with utilities.  The postulation is that, if we get much better power storage in batteries, consumers may become their own utility generators.  Such as from solar.  You buy batteries; you  add solar power...you generate...you store...you use as needed; residual is sold back to power companies (which they are now required to buy).

Longer term, this could adversely affect utilities as a business.

R48

 


You are ignoring the obvious.

how many car owners want to spend $10K -30k more for a TSLA or another EV And then thousands more for the home solar system To generate electricity. Mainstream auto co like GM sell their EVs at a loss because it raises the cafe average which allows GM to sell more SUVs and pick up trucks which have higher profit margins than EVs.

Problem with selling power back to the utility is that the rate the utility pays to the customer For excess power will be adjusted down if too many customers sell excess power because the regulators still have to provide a minimum profit to the utility co. Utility regulators understand that rates have to be maintained at an acceptable level in order to provide electricity to the vast majority of customers who cannot afford the cost of home solar power and provide a profit margin to utility investors.

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Re: Utilities: a current review


@retiredat48 wrote:

 

Hi bizman.

I don't disagree with your comments.  Surely it would take some time.  Although I don't consider this would put utilities out of business per se...just a negative impact.

So bizman, I would appreciate your take on the following two concerns re Utilities:

1.  The dividends are unsafe, politically

That is, utilities are regulated.  With the strong moves to socialism of varying degrees that may be coming, coupled with fed zero interest rate policies, one can make a case that utilities dividend yields now are way too high.  If the fed 10 year is at 0.55%, then utilities shareholders yield should be comparable...plus perhaps a little.  In the extreme, utilities should pay no dividends...use that money to convert to clean energy.

2.  Utilities are in the "easy" category to nationalize.  

Similar argument...same trend to socialism.  Like, the "peoples" rationale is: why should we pay for pipelines crossing "our land" to make money for others--nationalize and take them.  Ditto power generation.  Nationalize them...and shareholders, don't expect a very fair or good price in the taking...if any price.  Look at what happened to PG&E in california.  Partly nationalized, no?  California will end up owning this utility, by various means.

Thanks in advance...

R48

 



@retiredat48 wrote:

 

Hi bizman.

I don't disagree with your comments.  Surely it would take some time.  Although I don't consider this would put utilities out of business per se...just a negative impact.

So bizman, I would appreciate your take on the following two concerns re Utilities:

1.  The dividends are unsafe, politically

That is, utilities are regulated.  With the strong moves to socialism of varying degrees that may be coming, coupled with fed zero interest rate policies, one can make a case that utilities dividend yields now are way too high.  If the fed 10 year is at 0.55%, then utilities shareholders yield should be comparable...plus perhaps a little.  In the extreme, utilities should pay no dividends...use that money to convert to clean energy.

2.  Utilities are in the "easy" category to nationalize.  

Similar argument...same trend to socialism.  Like, the "peoples" rationale is: why should we pay for pipelines crossing "our land" to make money for others--nationalize and take them.  Ditto power generation.  Nationalize them...and shareholders, don't expect a very fair or good price in the taking...if any price.  Look at what happened to PG&E in california.  Partly nationalized, no?  California will end up owning this utility, by various means.

Thanks in advance...

R48

 


Regarding #1 comparing utility dividends to the fed interest rate makes as much sense as comparing CVX 5.8% dividend rate to the fed 10 year treasury rare of 0,6%.

Regarding #2 who is going to nationalize utilities and why would voters want it. Average utility bill is less than 2% of household expenses and Utilities employ millions of workers in well paying jobs. Public take over of utilities is a failure. In 1985/NYS took over the Long Island lighting Co Because of high rates and dismal service for 1.1 million customers and turned it into a government entity called LIPA . Under LIPA service failures and black outs got worse and rates were highest in the US. In 2014 LIPA subcontracted the operations of LIPA to PSEG a NJ utility to manage the electrical system and Maintain it.

 

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Re: Utilities: a current review

 

Bruce, intruder, et al.

I'm not providing these views as mine; I'm stating what very liberal/progressive current thinking is.

Who ever thought we would have police not engaging; or defunding/eliminating them.  Point is, if the current trend in this country towards socialism of varying degree continues, utilities may be under great threat.  I easily envision a zero or no-growth in dividend policy for utilities...almost by edict.

I like to wear my "investor hat" to see which way the winds are blowing in this country; it has served me well.  The progressive's numbers, especially when adding in the young each day, as elders die off, means their agenda will likely prevail.  Just a matter of when.  Recent events show a speed-up in the process; not a slowdown.

To the youth, utilities as capitalist entities, staying that way,  have a half-life of a Robert E. Lee statue.

And BTW don't fight the tape.  Utilities keep showing very poor performance; there are underlying reasons for this.  They may provide a decent yield, now, for retirees, but are they "value traps?"

R48

 

 

 

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Re: Utilities: a current review


@retiredat48 wrote:

 

Bruce, intruder, et al.

I'm not providing these views as mine; I'm stating what very liberal/progressive current thinking is.

Who ever thought we would have police not engaging; or defunding/eliminating them.  Point is, if the current trend in this country towards socialism of varying degree continues, utilities may be under great threat.  I easily envision a zero or no-growth in dividend policy for utilities...almost by edict.

I like to wear my "investor hat" to see which way the winds are blowing in this country; it has served me well.  The progressive's numbers, especially when adding in the young each day, as elders die off, means their agenda will likely prevail.  Just a matter of when.  Recent events show a speed-up in the process; not a slowdown.

To the youth, utilities as capitalist entities, staying that way,  have a half-life of a Robert E. Lee statue.

And BTW don't fight the tape.  Utilities keep showing very poor performance; there are underlying reasons for this.  They may provide a decent yield, now, for retirees, but are they "value traps?"

R48

 

 

 


Let’s see how long this trend to defund/eliminate police forces last as the violent crimes increase . There were 47 shootings in NYC last week a 176% increase over the same week in the prior year, including 14 murders. My bet is that there will be a radical change in leadership when the next mayor is elected next year because I don’t know anyone in NYC who likes the increase in crime since January 1. I have nothing to do with NYC and no interest in visiting it. NYC is no longer the center of finance, corporate activity and media that it was 20 years ago and there are fewer businesses left to Pay the enormous taxes and fees imposed by the city and state. It will take a tough law and order mayor to bring down crime rates.

If the NYC government cannot protect its citizens from violent crime how will It operate the 125 year old infrastructure of Con Edison which will need $1T to keep its Aging electricity, gas and steam systems operating? Lets see what happens next year when 1 of the 2 Indian point nuke reactors that provide NYC with 25% of its electricity closes down because the governor doesn’t like nuke power. Second reactor will  close in 2022.

Its not my problem.

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Re: Utilities: a current review

Sad to see what’s happened to NYC. We lived there from 2002-2005. The post-9/11 years were actually a great time to be in NYC. We lived right on top of the old Fulton Street Fish Market, and watched as the entire area developed around us into a thriving community.

I wouldn’t dream of going back there now. Deblasio has restored it to the Dynkin period.

Who’d have imagined so many mayors would have abandoned their own cities to anarchy and violence.

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Re: Utilities: a current review


@Intruder wrote:

@retiredat48 wrote:

 

Bruce.

I have been surprised at the relative poor showing of utilities in this market run.

I'll leave with you the following, that I am not "pushing", but has caused me to add another negative re utilities:

I have heard two guru's (among many I casually follow) state that a game-changer (negatively) for utilities is the upcoming announcement of Tesla re significant improvements in batteries and power storage.  The announcement is a few months away.

Now, one may ask what does this have to do with utilities.  The postulation is that, if we get much better power storage in batteries, consumers may become their own utility generators.  Such as from solar.  You buy batteries; you  add solar power...you generate...you store...you use as needed; residual is sold back to power companies (which they are now required to buy).

Longer term, this could adversely affect utilities as a business.

R48

 


You are ignoring the obvious.

how many car owners want to spend $10K -30k more for a TSLA or another EV And then thousands more for the home solar system To generate electricity. Mainstream auto co like GM sell their EVs at a loss because it raises the cafe average which allows GM to sell more SUVs and pick up trucks which have higher profit margins than EVs.

Problem with selling power back to the utility is that the rate the utility pays to the customer For excess power will be adjusted down if too many customers sell excess power because the regulators still have to provide a minimum profit to the utility co. Utility regulators understand that rates have to be maintained at an acceptable level in order to provide electricity to the vast majority of customers who cannot afford the cost of home solar power and provide a profit margin to utility investors.


Having slept on it I'm sort of lining up with Intruder, but based on the idea of division of labor.  Everyone can spend $10-$50 k to have their own solar plant and storage, but only enthusiasts will likely think it's worth it.  Just as some people want to have a chef's kitchen and cook elaborate dishes, but many would rather farm it out to packaged food companies or restaurants who do it all day, have economies of scale, and/or are just more efficient at it.

Convenience is a huge thing.  Most people aren't going to want to bother with that stuff.  And what if something breaks?  I'd rather call the 800# for the utility company than have to become an electrical engineer or arrange for one to come service my apparatus.

Everyone could also have their own personal cloud.  But they know AWS and Azure have the expertise and economies of scale.  So why?

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Re: Utilities: a current review

@retiredat48 

"Point is, if the current trend in this country towards socialism of varying degree continues, utilities may be under great threat. I easily envision a zero or no-growth in dividend policy for utilities...almost by edict."

I understand your concern, but let's not let the media spin us into too much of a whirlwind.

Radical ideas and views have always been with us...always....primarily perpetuated by youth who have no life experiences to measure their ideology against. What is different today is social medial. What used to exist at the fringe has gotten itself into the mainstream of the media, which can reach out to touch everyone.

Wanting to nationalize utilities was done in Venezuela. Most have seen how that went.

As I've said before, dividends are the lowest cost of capital. Utilities are capital intense. Radicals generally cannot connect these dots, although I'm confident most adults can, at least when it is given some level of thought.  The question is, will the immature continue to win seats in congress....both at the state level and Federal....as this is where socialization will fester and spread. If those numbers increase following this next election, then I'd agree, there will be cause for growing concern. But just from the local feedback I'm getting, I'm hoping it will go the other way. Just finished our ballots yesterday, and several of the candidates for State Rep and Senate are running on anti-radicalism + law and order. Something Nixon called..."The Great Silent Majority"

We'll see

BruceM

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Re: Utilities: a current review


@BruceM wrote:

@retiredat48 

"Point is, if the current trend in this country towards socialism of varying degree continues, utilities may be under great threat. I easily envision a zero or no-growth in dividend policy for utilities...almost by edict."

I understand your concern, but let's not let the media spin us into too much of a whirlwind.

Radical ideas and views have always been with us...always....primarily perpetuated by youth who have no life experiences to measure their ideology against. What is different today is social medial. What used to exist at the fringe has gotten itself into the mainstream of the media, which can reach out to touch everyone.

Wanting to nationalize utilities was done in Venezuela. Most have seen how that went.

As I've said before, dividends are the lowest cost of capital. Utilities are capital intense. Radicals generally cannot connect these dots, although I'm confident most adults can, at least when it is given some level of thought.  The question is, will the immature continue to win seats in congress....both at the state level and Federal....as this is where socialization will fester and spread. If those numbers increase following this next election, then I'd agree, there will be cause for growing concern. But just from the local feedback I'm getting, I'm hoping it will go the other way. Just finished our ballots yesterday, and several of the candidates for State Rep and Senate are running on anti-radicalism + law and order. Something Nixon called..."The Great Silent Majority"

We'll see

BruceM


Bruce...I didn't intend to take this thread down political roads...then Ryan blocks it.

I have simply identified RISKS re utilities, and apparently other investors/money managers are viewing same, as utilities lag along in performance.

And yes, it formerly was for the youth: this mantra: "If you are not a flaming liberal at age 20, and a staunch conservative by age 40, something is wrong with you."  Today, this age 40 change is not happening.

So from an investor viewpoint, the "numbers"...voters...are clearly heading in the direction of socialism (gvt takes over means/control of production, etc); it 's only a matter of degree and severity.

Heck, we just saw the fed control Banks in terms of 1) share buybacks (prohibited)...and 2) dividends...could not increase, and reduced for some.

Utilities are "monopolies"...regulated...I sure can envision limitations on dividends...and much more severe restrictions.

R48

 

 

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Re: Utilities: a current review

Random thoughts:

Most of the discussion has been on electric utilities so I started to look at some water utes (AWK, AWR, WTRU, CWT, MSEX, YORW so far). Most only pay 1 - 2% dividend so they don't meet my needs, but they seem to have had spectacular capital appreciation - at least in the year prior to covid 19. I think water will become increasingly costlier as the world warms up.

On storing grid electricity in car batteries: I'm picturing climbing into my car and and finding the battery drained by dear old So Cal Edison. The only way I can see this working is if I can tell them in advance the exact dates and times they can take my electricity AND be confident they won't screw it up AND be confident I won't need the car for some sudden emergency.

On socialism: By the time it gets as bad as some of you have said, utility investments will be the very LEAST of our concerns. What to invest in over time is ever-changing. Set it & forget it is a long term pipe dream.

Flute     

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Re: Utilities: a current review


@chang wrote:

Sad to see what’s happened to NYC. We lived there from 2002-2005. The post-9/11 years were actually a great time to be in NYC. We lived right on top of the old Fulton Street Fish Market, and watched as the entire area developed around us into a thriving community.

I wouldn’t dream of going back there now. Deblasio has restored it to the Dynkin period.

Who’d have imagined so many mayors would have abandoned their own cities to anarchy and violence.


Chang 

you are going to love this. Lead story on 6Pm NYC news onCBS is that a company that offered moped rides in NYC Has shut down because 2 moped riders Were killed. Is the best news the media can offer? NYC has become a joke.

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Re: Utilities: a current review

Deleted my post,,,, utilities thread... somehow it got turned into a NYC thread.

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Re: Utilities: a current review


@BruceM wrote:

@retiredat48 

"Point is, if the current trend in this country towards socialism of varying degree continues, utilities may be under great threat. I easily envision a zero or no-growth in dividend policy for utilities...almost by edict."

I understand your concern, but let's not let the media spin us into too much of a whirlwind.

Radical ideas and views have always been with us...always....primarily perpetuated by youth who have no life experiences to measure their ideology against. What is different today is social medial. What used to exist at the fringe has gotten itself into the mainstream of the media, which can reach out to touch everyone.

Wanting to nationalize utilities was done in Venezuela. Most have seen how that went.

As I've said before, dividends are the lowest cost of capital. Utilities are capital intense. Radicals generally cannot connect these dots, although I'm confident most adults can, at least when it is given some level of thought.  The question is, will the immature continue to win seats in congress....both at the state level and Federal....as this is where socialization will fester and spread. If those numbers increase following this next election, then I'd agree, there will be cause for growing concern. But just from the local feedback I'm getting, I'm hoping it will go the other way. Just finished our ballots yesterday, and several of the candidates for State Rep and Senate are running on anti-radicalism + law and order. Something Nixon called..."The Great Silent Majority"

We'll see

BruceM


More politics, Bruce?  Even after you previous rant was removed by the moderator?  This one is reported too.

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Re: Utilities: a current review


@BruceM wrote:

@retiredat48 

"Point is, if the current trend in this country towards socialism of varying degree continues, utilities may be under great threat. I easily envision a zero or no-growth in dividend policy for utilities...almost by edict."

I understand your concern, but let's not let the media spin us into too much of a whirlwind.

Radical ideas and views have always been with us...always....primarily perpetuated by youth who have no life experiences to measure their ideology against. What is different today is social medial. What used to exist at the fringe has gotten itself into the mainstream of the media, which can reach out to touch everyone.

Wanting to nationalize utilities was done in Venezuela. Most have seen how that went.

As I've said before, dividends are the lowest cost of capital. Utilities are capital intense. Radicals generally cannot connect these dots, although I'm confident most adults can, at least when it is given some level of thought.  The question is, will the immature continue to win seats in congress....both at the state level and Federal....as this is where socialization will fester and spread. If those numbers increase following this next election, then I'd agree, there will be cause for growing concern. But just from the local feedback I'm getting, I'm hoping it will go the other way. Just finished our ballots yesterday, and several of the candidates for State Rep and Senate are running on anti-radicalism + law and order. Something Nixon called..."The Great Silent Majority"

We'll see

BruceM


@BruceM this is not the place to discuss political ideologies. I kindly ask you to refrain from such commentary. Please consider this a warning, as the next instance will result in a suspension.

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Re: Utilities: a current review


And yes, it formerly was for the youth: this mangtra: "If you are not a flaming liberal at age 20, and a staunch conservative by age 40, something is wrong with you."  Today, this age 40 change is not happening.

R48

 

 


I never thought it about but feels very true. People do tend to get more conservative and religious as they age. But that does not seem to apply to the newer generation. I heard newer generations are getting more and more atheist as well. I am not arguing which is better, that is purely matter of opinion and faith and cannot be debated, just what we are observing happening.

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Re: Utilities: a current review


@waffle wrote:

And yes, it formerly was for the youth: this mangtra: "If you are not a flaming liberal at age 20, and a staunch conservative by age 40, something is wrong with you."  Today, this age 40 change is not happening.

R48

 

 


I never thought it about but feels very true. People do tend to get more conservative and religious as they age. But that does not seem to apply to the newer generation. I heard newer generations are getting more and more atheist as well. I am not arguing which is better, that is purely matter of opinion and faith and cannot be debated, just what we are observing happening.


I did the opposite, when I was younger all I cared about was money and why can't everyone take care of themselves.  Now I care more about people and the environment than money.

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Re: Utilities: a current review

@RyanM 

What I discuss on the potential for a growing Socialist occupancy of Congressional seats by those who function at the intellectual level of teenagers and the effect this can have on the future of regulated utilities as an income investment has nothing to do with politics and everything to do with the future of this industry.

I have no intention of truncating this kind of discussion.

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Re: Utilities: a current review


@BruceM wrote:

@RyanM 

What I discuss on the potential for a growing Socialist occupancy of Congressional seats by those who function at the intellectual level of teenagers and the effect this can have on the future of regulated utilities as an income investment has nothing to do with politics and everything to do with the future of this industry.

I have no intention of truncating this kind of discussion.


Discussing Socialism and Congress is political and could easily lead to a partisan debate I would end up having to break up. 

I’ve suspended you for 24 hours. 

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Re: Utilities: a current review

Thank you Bruce M for your insights into finance and investing.

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Re: Utilities: a current review

This was a good topic until politics were introduced. Glad the moderator stepped in. 

I own most of the big utilities - recently I purchased some AVA which seems a reliable regional provider with a good dividend. 

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Re: Utilities: a current review

Agree with GreenMnt1, lets AVOID all the political comments/ bickering.

I own the following utilities- DUK, SO, D, and AEP. All look fairly strong here, although I was disappointed with the recent dividend cut at Dominion (D). Planning on holding all four, and will add if they come down some more- DUK at $75, D at $68, AEP at $&0, SO at $47. 

Win
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