Why Credit Suisse Sees Limited Upside in High-Dividend Utilities

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Markets are reaching all-time highs, with the Dow just crossing 20,000 for the first time ever. It seems that more investors are finding their returns in equities than ever, but perhaps in a slightly different way. High-dividend stocks have been a staple of many portfolios to hedge against downturns with their guaranteed yield. But the question is, are these really necessary now that the markets are screaming higher? One analyst gave some insight into the sector.

Credit Suisse initiated coverage of the utility sector with a fairly neutral view on the space, but some stocks are expected to outperform. The brokerage firm noted quite a few names, representing a diverse mix of large and mid-cap utilities that span the sector.

24/7 Wall St. has included Credit Suisse’s calls, as well as some color on each stock, such as a recent trading history and the consensus price target.

Exelon Corp. (NYSE: EXC) was initiated coverage with an Outperform rating and a price target of $39, compared to a prior close of $35.13, implying upside of 11%. Shares of Exelon were trading at $35.26 on Wednesday, with a consensus analyst price target of $38.47 and a 52-week trading range of $27.64 to $37.70.

Dominion Resources Inc. (NYSE: D) also was started at an Outperform rating, along with an $81 price target. That implies upside of 11% (versus a $75.47 close). Shares were trading at $75.65, in a 52-week range of $67.58 to $78.97. The consensus analyst target is $79.19.

The Outperform rating for Black Hills Corp. (NYSE: BKH) came with a $69 price target, implying an upside of 11.5% from Tuesday’s close at $61.87. Shares of Black Hills were last seen at $62.53, with a 52-week range of $47.32 to $64.58 and a consensus price target of $68.00.

Credit Suisse initiated Duke Energy Corp. (NYSE: DUK) with a Neutral rating and an $81 price target. That suggests upside of 5% from Tuesday’s close of $77.18. Duke was trading at $76.97. The consensus price target is $79.71, and the 52-week range is $71.66 to $87.75.

CMS Energy Corp. (NYSE: CMS) also was started at a Neutral rating, as well as a $44 price target, Compared to the most recent close at $41.97, this implies upside of 4.8%. Shares were trading at $41.92, with a 52-week range of $36.74 to $46.25 and a consensus price target of $44.33.

The rating for DTE Energy Co. (NYSE: DTE) is Neutral at Credit Suisse. Shares were trading at $97.59, with a consensus price target of $101.50 and a 52-week range of $81.04 to $100.45.

Eversource Energy (NYSE: ES) was started at a Neutral rating and a $57 price target, implying upside of 4.5% from Tuesday’s close of $54.55. The shares recently traded at $54.28, in a 52-week range of $50.56 to $60.44. The consensus price target is $58.20.

Credit Suisse initiated NorthWestern Corp. (NYSE: NWE) with a Neutral rating and a $60 price target. This target implies an upside of 4.6% from Tuesday’s close at $57.38. NorthWestern traded at $57.19, with a consensus price target of $57.50 and a 52-week range of $52.81 to $63.75.

Spire Inc. (NYSE: SR) was started with a Neutral rating at Credit Suisse as well. The firm issued a $68 price target, which implies an upside of 5.3% from the most recent closing price of $64.60. Shares of Spire were trading at $64.80, with a 52-week range of $59.54 to $71.21 and a consensus price target of $68.89.