There is plenty to like about the business models of utilities. Regulated utilities, for one, are monopolies in their operating regions, providing an essential service to businesses and customers. This, coupled with the fact that the returns of regulated utilities are set by a regulatory body within a defined ratemaking process, causes the sector to be full of operators that boast steadily-growing earnings that appear to be materially dependable. As we note in this article, however, a surprisingly large number of utilities in our coverage universe have cut their dividends in the past. Are the dividends of utilities as safe as many make them out to be? Let’s dig in.
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