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.
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.
-
Zoopla: House prices slows to 1.4% in May as rate of sales at four year high
The average UK property now costs £268,400, Zoopla says, but some areas of the country are experiencing much higher price growth than others.
-
FCA reveals 'once in a generation' advice changes - what the reforms mean for you
Consumers to get free access to financial advice type help for pensions and investment following proposed changes from the regulator