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The Toronto Stock Exchange Broadcast Centre in Toronto. (MARK BLINCH/Mark Blinch/Reuters)
The Toronto Stock Exchange Broadcast Centre in Toronto. (MARK BLINCH/Mark Blinch/Reuters)

Streetwise

Boring utilities have become the sexy stocks Add to ...

When markets really took a turn for the worse in early August, the Toronto Stock Exchange plummeted to 11,670. It’s almost exactly that value again today.

Likewise, most TSX sub-indices have performed more or less the same since the August crash, gaining or losing only a few per cent since that time. But there are a select few that have shone, and the leader of the pack may surprise you.

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Outpacing all of its ‘peers,’ the S&P/TSX utilities index is up a big 13 per cent since August 8. That’s a big difference for a sector that is often considered to be rather sleepy and bought more for its yield than its capital gains.

Yet that may be the whole point. After utilities, the S&P/TSX Capped Real Estate Index is the next best performer, up 8 per cent over the same period. What do REITs have in common with utilities? Yield.

In fact, when the market nosed dived, stories were written in support of scooping up REITs because they offered such juicy yields at that time. Utilities didn’t get as much exposure, but it isn’t a far stretch to connect them to the trend. When the market crashed, people wanted some safety but also a payout, and that sent these stocks soaring.

Just look at Fortis Inc. and TransAlta Corp. , up 14 per cent and 19 per cent, respectively, since August 8.

 
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