Utilities
Utilities are companies involved in providing electricity, gas, water and similar services to consumers and businesses.
Utilities are companies involved in providing electricity, gas, water and similar services to consumers and businesses. The sector includes firms that produce these services (such as companies that operate power plants) and those that deliver it (such as companies that operate electricity transmission networks).
"Upstream" energy companies (such as those that extract gas from the ground) are not utilities. Demand for the services offered by utility companies is generally not greatly affected by the state of the economy, so profits tend to be relatively stable. Consequently, this sector is usually considered a fairly steady, defensive investment.
However, utility companies need to invest in and maintain infrastructure, such as water treatment plants and gas pipeline networks, which may require significant capital expenditure. This is sometimes funded through high levels of debt, meaning that utility profits can be sensitive to changes in interest rates.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Companies in other industries that also have predictable demand for their services, steady cash flows and slow growth may be referred to as "utility-like" to imply that they are similarly unexciting but safe investments.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Paying the grandkids’ school fees could generate a shock IHT bill
Private school fees have soared as a result of the government’s VAT policy, meaning more grandparents are helping out – but what are the tax implications?
-
Number of savings deals hits record high – as interest rates slump to two-year low
Savers have more choice than ever when it comes to choosing a savings account or cash ISA. But, the interest rates on offer continue to fall. What’s next for the savings market?