After a robust first half of 2026, it’s fair to say utility stocks have hit a wall since. I see three major headwinds hurting returns. But I also believe Avista Corp. (AVA) is a low-to-moderate-risk bet on closing its wildfire stock discount, writes Roger Conrad, editor of Conrad’s Utility Investor.
The State Street Utilities Select Sector SPDR ETF (XLU) is up just 2.5% year-to-date, including dividends. We’re well off this year’s highs and trailing the S&P 500 Index’s (^SPX) 12.4% return.
(Editor’s Note: Conrad will be speaking at the 2026 MoneyShow/TradersEXPO Orlando, scheduled for Oct. 5-7. Click HERE to register.)
Avista Corp. (AVA)
Persistent inflation and higher-for-longer interest rates are pushing up the cost of debt finance. Near-term they’re depressing investor interest in dividend stocks in general. Backlash against data centers has raised doubts about planned levels of utility capex, too. Wildfires are also back in the news, as California failed to pass meaningful liability reform legislation.
But best-in-class companies are coping with the headwinds and executing on growth. That’s why I’m treating pullbacks as an opportunity to buy quality stocks, including the companies sold off last month on wildfire liability fears.
Avista yields north of 5% and sells for barely 14X expected 2026 earnings, well above utilities in non-wildfire-prone areas. It also continues to harden its system against wildfires, including those now affecting its eastern Washington service territory.
Recommended Action: Buy AVA.
