Rising interest rates and inflation are typically a circuit breaker for richly valued utility stocks, but these are unusual times.
The sector is the second-best performing one in the U.S. behind energy year to date, trouncing the S&P 500 by 15 percentage points through Friday. That leaves utility stocks trading at almost 20 times forward 12-month earnings on average—close to an all-time high and nearly a fifth richer than the S&P 500. The last time utilities fetched such a large premium was during the Covid-19 market panic in March 2020. The staid sector has typically traded at a slight discount to the broader index over the past decade.