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The Housing Recovery Bodes Well for Utilities


As the nascent recovery in the housing market gains momentum, it will boost demand for utilities, which will flow through to their rate base -- and eventually their stocks

That means a rising housing market will play a major role in helping utility stocks generate future returns. The good news is the companies have their strongest balance sheets in many years and are arguably better prepared to handle a recovery and customer growth than at any time since the 1950s. Moreover, that same financial strength is also the best possible protection if the bears are right and a catastrophic event of some sort is on the horizon.

Throw in high yields and traditional seasonal strength -- utilities have rallied in the fourth quarter of the year 36 times since 1969 -- and that's all the reason anyone should need for buying and holding these stocks for the rest of the year and beyond.

This article by Roger Conrad was originally published on Investing Daily.

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Twitter: @investingdaily
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