Heating up

Question: What is the outlook for dividends in the Energy sector?

The focus for dividends within energy, it remains pretty consistent. What we saw as we went through the pandemic is that a lot of the energy companies had high debt levels, commodity prices came down, uncertainty was very, very high with respect to the commodity price. As we've gone into this environment, obviously prices have improved with demand increasing as we came through the pandemic. At the same time, supply was very, very constrained. We saw very, very high prices. Our outlook is for continued sustained prices, we're maybe not as bullish as what some of the other market participants are because we do see weaker demand in the U.S. given the high prices at the pump. China, with all their lockdowns, has purchased less oil. Russia, and despite all the sanctions, their barrels are still making it onto the market. So there is a little bit weaker demand, supply is still there. But in general, if you look at the large global, integrated energy companies or the pipeline companies, they sit in very good positions.

Question: What are other noteworthy sectors?

Other areas within the dividend space obviously would be utilities. We still need to power up our homes, heat our homes, despite whatever is going on within the overall economy. And the outlook for U.S. utilities in general has been steadily improving. Over the last several years, those companies have got their balance sheets in order. Also, the spending environment with respect to renewables, you've continued to get more and more visibility over time as states want to continue to invest in renewable energy. So their outlooks for investment have continued to improve, and you've seen dividend growth not only be steady, but in some cases you're starting to see dividend growth actually improve as we look into the out years.