Other Utilities
TradingKey Investment ResearchUpdated：2026-03-28Risk Warning: The information on this page is based on publicly available data from the securities market or historical data of investment products. The dimensions of the indicators have limitations and do not represent the future performance of the products. This information is for investors' reference only and does not constitute investment advice. Any actions taken based on this information are at your own risk.
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Current Holdings
How We Select Other Utilities Stocks
In the utilities sector, risk diversification is often achieved through diversified business operations. This strategy generally follows a defensive and resilient investment approach, aiming to identify multi-sector utility companies with stable earnings and moderate growth momentum. By operating across multiple sub-sectors—including water supply, natural gas distribution, electricity services, and environmental treatment—these companies can effectively hedge against sector-specific risks. They often serve as the “ballast” of a portfolio during periods of market volatility, providing highly predictable cash flows and steady dividend growth.
1. Cross-Industry Diversification of Business Portfolio
We prioritize utilities that avoid excessive reliance on any single energy source or service segment. By building balanced portfolios across electricity, natural gas, and water services, these companies can significantly mitigate the impact of sector-specific disruptions—whether caused by seasonal climate fluctuations or regulatory policy changes. We carefully evaluate the balance of profit contributions across business segments, seeking operators capable of maintaining overall earnings stability even in complex macroeconomic environments. Such companies qualify as truly all-around utilities.
2. Base Growth of Regulated Assets
The essence of a defensive utility strategy lies in the "legitimized" nature of earnings. This approach emphasizes the scale and growth trajectory of regulated asset bases. By analyzing government-authorized rates of return on invested capital and the company’s planned capital expenditures for infrastructure modernization, we identify firms positioned to deliver steady earnings progression through legally protected rate increases—thereby providing investors with reliable underlying returns even amid broader economic volatility.
3. Continuity and Coverage of Dividend Distribution
As a classic income-oriented strategy, this strategy places significant weight on dividend policy strength. We evaluate free cash flow coverage of dividends and review historical records of uninterrupted payouts spanning decades, targeting companies with clear potential to achieve dividend aristocrat status. The goal is to select high-quality operators that consistently return cash to shareholders while preserving operational integrity, with dividend growth rates aligned with inflation over extended periods.
FAQs
Are natural gas utilities at risk of disappearing in a fully electrified future?
From the perspective of the energy transition in 2026, natural gas utilities are not heading toward extinction; rather, they are undergoing a “foundation-level restructuring.”
Peak-balancing support: As the share of renewable energy continues to increase, its inherent intermittency requires natural gas to remain the most flexible source of peak-balancing power over the long term, helping ensure grid stability and reliability.
Infrastructure premium: Existing natural gas pipeline networks represent a natural infrastructure backbone for the future transportation of hydrogen or renewable natural gas (RNG). Leading companies within this strategy are upgrading traditional pipeline systems through technological modifications, transforming them into distribution networks for zero-carbon energy. This transition allows the long-term value of these assets to be preserved and extended.
Dual-energy synergy: During extreme cold weather or periods of peak electricity demand, natural gas remains an irreplaceable safeguard for heating and industrial thermal energy. This “dual-backup” role ensures that natural gas will continue to serve as an essential and reliable source of cash flow for decades to come.
What is the roll-up growth strategy in this industry?
The roll-up strategy is a key driver of superior growth for multi-sector utility leaders, particularly in the water and natural gas industries.
Fragmented market consolidation: Utility markets (especially water) remain highly fragmented, with many small, often inefficient local operators.
Scale-driven transformation: Large, diversified platforms acquire these assets at attractive valuations, leveraging low-cost capital to implement standardized operating systems, automation, and best-practice management, significantly reducing unit costs.
Valuation accretion: By integrating underperforming local assets into a mature, publicly listed platform, companies can generate sustained, compounding returns through higher returns on equity (ROE) and steady expansion of the regulated asset rate base.
Why are water utility stocks referred to as "blue gold"?
Water utility assets are honored with the reputation of "blue gold" because of their extremely rare long-term certainty.
Absolute necessity and exclusivity: Unlike electricity or fuels, water has no substitutes. Demand is virtually inelastic, and utilities often operate under exclusive, region-specific franchises, giving them near-monopoly status in their service areas.
Asset security: Water infrastructure, such as treatment plants and distribution networks, has an extremely long useful life and is tightly regulated and protected by governments. While returns tend to be moderate, rate increases are generally allowed to keep pace with inflation, effectively covering rising costs.
ESG premium: With global water scarcity becoming increasingly pronounced by 2026, utilities that deploy advanced water-treatment technologies and efficiently control losses are viewed as high-value, socially responsible, and financially resilient defensive assets.
