Dow Jones Utility Average (DJUA)

What Is the Dow Jones Utility Average (DJUA)?

The Dow Jones Utility Average (DJUA) is one of the Dow Jones index groups that tracks the performance of a small group of prominent utility companies. It is a price-weighted average of 15 utility stocks traded in the United States.

Dow Jones previously made the DJUA back in 1929 in the wake of eliminating all utility stocks from the Dow Jones Industrial Average. The DJUA is at times alluded to as the Dow Jones Utilities.

Figuring out the Dow Jones Utility Average (DJUA)

The Dow Jones Utility Average (DJUA) right now incorporates major utility companies like Consolidated Edison, Inc., Duke Energy Corporation, FirstEnergy Corp, American Water Works Company, Inc., and NextEra Energy, Inc.

$990 billion

Total market cap for the DJUA as of May 2022.

Other investing platforms that explicitly center around utilities incorporate the Vanguard Utilities Index Fund and the Utilities Select Sector SPDR Fund.

The DJUA and the Dow Jones Transportation Average are assigned their own separate categories in the national investment tracking landscape. The pair is detached from every one of different industries in the U.S. equities market that are remembered for the Dow Jones Industrial Average.

In the U.S. economic landscape, the utility sector incorporates companies and public substances that produce and deliver some sort of utility resource, which could incorporate electricity and natural gas, as well as cooled air or steam. This is unique in relation to the energy sector, albeit the two might sound basically the same, and a few companies might conduct activities that fall into the two categories. The energy sector covers companies that are taken part in exploration and development connected with natural resources like coal, natural gas, and oil.

Requirements for the DJUA

To make a Dow Jones index, qualitative and quantitative factors are inspected and estimated. The most important phase in this cycle is to recognize which stocks to remember for the index; then, in view of the price per share, stocks are weighted.

The Dow Jones Utility Average incorporates stocks of notable utility companies with strong notorieties and sustainable growth strategies. They must be based and incorporated in the United States and generate a large portion of their incomes from U.S. operations. Furthermore, these companies must be appealing investment opportunities, accumulating interest from numerous investors.

There are no rules for keeping stocks in the Dow Jones indices. The selection committee may, voluntarily, make changes in view of new developments and corporate activities.

The DJUA as an Economic Indicator

Economic analysts will generally pay close thoughtfulness regarding developments and trends in the utility sector since they can be indicative of trends in the economy as a whole. With their major infrastructure and high overhead, utility companies commonly carry a ton of debt. This characteristic can make them a solid early indicator to foresee general economic trends sooner rather than later. Via carefully noticing developments in this sector, business analysts can draw decisions about forthcoming market trends and interest rate changes.

The utility average will in general decline when investors expect rising interest rates. Utilities will generally borrow truckload of cash and, thus, are more sensitive to changes in interest rates.

Utility stocks are high-yield investments that are subject to interest rate risk. These companies and the sector as a whole are likewise powerless against environmental regulations and government developments that can fundamentally affect their operations and profit potential.

Instances of the DJUA

The Dow Jones Utility Average (DJUA) is a price-weighted index that tracks the performance of the best 15 U.S. utility companies.

American Electric Power (AEP)

American Electric Power is quite possibly of the biggest electric utility company in the United States, with a transmission network crossing in excess of 40,000 miles. AEP serves in excess of five million customers in 11 states through its many operating partners, for example, Public Service Company of Oklahoma, AEP Ohio, and AEP Texas.

For 2021, AEP kept $16.79 billion in incomes — generally credited to its upward integrated utilities — and a net income of $2.48 billion. The company posted a gross profit of $11.32 billion, more than a 7% increase over the previous year. The increase in net income is mostly due to diminished fuel expenses. As of May 3, 2022, its market capitalization was $50.39 billion.

Consolidated Edison (ED)

Consolidated Edison (ED), commonly known as conEdison, is one of the biggest energy companies in the U.S. Laid out as New York Gas Light company in 1823, conEdison gives electric, gas, and steam utility services for the 10 million occupants of New York City and Weschester County. They likewise state they offer in excess of 9,000 worker hours a year and have effectively changed more than 5,000 structures from oil over completely to natural gas.

For 2021, Consolidated Edison reported operating incomes of $13.67 billion, a critical increase from the 2020 operating incomes of $12.24 billion. Its net income from common stock was $1.34 billion, up from $1.1 billion of every 2020. Its market capitalization was $33.1 billion as of May 4, 2022.

The Bottom Line

The Dow Jones Utility Average (DJUA) tracks the stocks of 15 of the most noticeable U.S. utility companies. Trends in this index are indicative of trends in the economy, which is the reason the stocks are carefully and reliably assessed to be part of the index.

Highlights

• The utility sector ought not be mistaken for the energy sector, which incorporates companies that investigate and foster natural resources.
• The Dow Jones Utility Average (DJUA) is a Dow Jones index group that tracks the performance of several deep rooted utility companies.
• DJUA companies must be U.S.- based and incorporated with a large portion of their incomes generated inside the U.S.
• The DJUA selection committee chooses stocks in view of qualitative and quantitative criteria.
• Analysts monitor developments and trends in the utility sector as they can be recounting other economic trends.

FAQ

What Is the Implied Opening of the DJUA?

At market close, 4 p.m. ET, estimates are made about the price the Dow Jones Utility Average will open the next day. These implied openings or conjectures vacillate until the market resumes.

What Is the Average Dividend Yield for the DJUA Stocks?

As of Q1 2022, the average dividend yield for the Dow Jones Utility Average stocks was 2.81%.

What Are DJUA Index Options?

Dow Jones Utility Average index options are option contracts that depend on the value of the Dow Jones Utility Average.