When opting for investment in the equity markets, one of the first decisions you will have to make is which stock market sectors offer you the most confidence, and therefore are more sensitive to formalize your purchases in the markets. It is true that the offer is very wide, but among all of them one stands out due to its special characteristics. They are called utilities, and what you have probably heard about them more than once, especially if you are an investor with some experience.
Well, utilities are linked to companies in the electricity sector, with a very important specific weight, not only in the Spanish stock market, but in almost all international squares. They will generate benefits that other equity segments suffer from. And that in any case it is convenient that you know now in case in the next few dates you opt for any of its values.
In the first place, you will find one of the most influential sectors of the Spanish continuous market, even as members of the influencers blue chip. And that is represented by large-cap companies such as Iberdrola, Endesa or Gas Natural, among the most important. You will certainly be familiar with their names, as well as their lines of business. Not in vain, with all certainty that you are a client of one of these utilities, being the marketers of the electrical supply of your home.
Its main features
The members of this select stock market club that are the utilities develop different contributions that will make them unmistakable in the eyes of any small or medium investor, as is the case in your case. These are securities that provide great stability to the investment portfolio you are building. Do not expect large revaluations in its evolution in the stock markets, but at the same time, you will not go bankrupt with them either. They do not tend to drive large swings in their prices, and the differences between its daily highs and lows in its price are generally not very appreciable.
They provide the investment with greater security since they are companies with a fully established line of business, generating significant benefits every year. Consequently, distribute dividends among their shareholders. And one of the highest in the Spanish stock market, with annual returns between 4% and 8%. This fact makes thousands of small savers choose this option when developing their investment portfolio. Especially given the low profitability offered by traditional banking products for savings (deposits, promissory notes, bonds, etc.), which rarely exceed the 1% barrier.
Generally their revaluations (or depreciations) in recent years have not been very spectacular, but rather driven with some moderation. From this general context, they are formed as a very suitable vehicle to channel investment in the medium and long term. Being the most defensive investors who are inclined by their choice. Not surprisingly, some of them do their operations to import a savings bag for several years in sight.
Of course, they are not recommended for speculative operations, since they do not offer the minimum guarantees required by this very special profile of investors. Nor for very short terms, where the profitability that can be obtained is not very high, or at least lower than that generated from other stock market sectors.
How can you invest in utilities?
To take positions in these securities, there will be no choice but to subscribe for shares in some of the companies listed on the Spanish stock market, even in other international markets. They are large capitalization companies, where many titles are exchanged daily between investors. They happen to be one of the most traded in the current supply of equities. Likewise, they offer a similar trend in their price to that shown in their respective stock indices.
Large fund managers, and even the most important brokers, on the other hand, constantly look at these companies to make their investment portfolios, but also investment funds. With a timely monitoring of their evolution in the markets, to the point of regularly reviewing the target price they assign to their shares. In other words, have the support of the markets, which provides greater security to the operations that you can formalize from now on.
But there are other alternatives to invest in these securities, adding greater plurality to the utility proposal. One of them comes from investment funds or ETFs, whose composition is based exclusively on securities of the electricity sector. And that will allow you to diversify your investment, and even protect your assets from the poor performance of a single company in the stock market.
Even if you think that in the next sessions it may lower its price, you can opt for inverse operations, or even warrants, although in this case under a greater risk in the process to open positions. But in any case, it will be a warning that you can invest in this sector beyond the stock markets. It is enough to have the decision to channel your desires, nothing more.
You can even subscribe term deposits that are linked to this share class as a way to increase the profitability of these fixed income products. And that are driven by banks to promote them among their customers.
What do you earn with your purchases?
- Much tranquility, without you having sudden changes in your wealth, and without normally having to suffer a lot with its evolution in the stock market. Not surprisingly, they will not cause you many sleep losses at night.
- The possibility of creating a saving bag for a long time, boosted with the dividend payments that you will receive every year or semester, according to the remuneration policy of each company.
- During recessive times in financial markets your depreciations will be more limited, that if instead you choose other sectors of the variable income: banking, telecos, new technologies, or even companies linked to consumption.
- The opportunity to balance your investment along with other more aggressive positions that will come from segments more linked to economic growth. And that they are suitable to contract their shares at any time, and under all profiles as a retail investor.
- You will not be conditioned by strong fluctuations in their prices, since normally make small advances or falls in each of the equity sessions.
Eleven keys to invest in these values
If after having analyzed the advantages and disadvantages that utilities provide youIf you opt for this model, it would be highly recommended that you let yourself be carried away by lines of action that help to channel your investment correctly. Starting from the special characteristics that the entire electricity sector presents, don't forget it, although with certain differences over the other segments of the stock market.
Likewise, they will not only encourage you to make your savings profitable, but also to protect them against the appearance of scenarios that are certainly unfavorable for your personal interests. Taking into account that it is one of the most contracted securities by Spanish savers, whatever their profile. Ultimately, leading you to channel your goals of taking advantage of your open positions in the stock market.
- Do not try to make very profitable operations in a few trading sessions since they are not the most suitable values ​​for this, and it will be more prudent for you to opt for others that take on this possibility with greater security. Opportunities will not be lacking, for sure.
- You can get one fixed income through the variable, through the dividends distributed every year among its shareholders, and which can reach 8%. Much more than what banking products offer you right now.
- They are not highly recommended values ​​to perform intraday operations, that is to say, in the same session, and before this you will have other listed companies that serve to satisfy this demand that may be presented to you on any occasion.
- Utilities are very solid companies, both business and in its behavior in the equity markets. And that in any circumstance they will be essential to make up the investment portfolio for the next few years.
- Is countercyclical options, which do not depend on the economic cycle to show a better evolution in their prices. Rather, they depend on seasonal data, such as the price of electricity, state aid, or even the regulation of the electricity sector.
- If you want strong emotions, with significant revaluations, they will not be the most desirable for you to order purchase operations in the stock markets, since they can drive you to boredom regarding the growth expectations of their prices.
- The offer that the Spanish stock market presents to you is not very extensive, but at least they are incorporated companies of great specific weight in the main equity indices, although with very similar characteristics among all of them.
- It is one of the sectors more responsive to user demand, and that you rarely forget to take positions in them, although in the end you complement it with others of great importance in the markets: banks, telecommunications, oil companies, etc.
- Any news about him increase your rates encourages prices to show a positive evolution in their prices, although without showing excessively spectacular revaluations, far from it.
- If you want to give a hit of some importance in the bag, you should bear in mind that they are not the most recommended values for this stock market strategy, even at the cost of losing stability in the positions taken.
- You will not be hooked on their actions at any time, since due to their great liquidity you will be able to leave and enter its shareholding without great difficulties, and whenever you feel like it.