As we noted the other day, for the first half of 2014, the best-performing industry sector among the ten sectors in the S&P 500 was the utilities. Utility stocks have risen by nearly 16 percent so far this year.
One of the more interesting things about that rise is that it caught a lot of analysts by surprise. According to the research firm FactSet, analysts who cover utilities recommended their clients buy stocks at the beginning of the year just 34 percent of the time. That's the lowest percentage of recommendations for any of the industry sectors.
Why have the utilities performed so well? One reason is because the yield on the ten-year Treasury note has fallen, and investors have looked elsewhere for a stream of income, which is what utilities provide. Utilities companies in the S&P 500 index pay an aggregate annual dividend of 3.6 percent.
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