UTG - UTG: Despite The Run I Still Expect This 8.46% Yielding CEF To Appreciate More
2024-04-02 09:00:00 ET
Summary
- Reaves Utility Income Trust is a stable income investment that focuses on the regulated utility industry.
- UTG shares have remained relatively flat but have acted as a proxy for fixed-income investments due to their distributed income.
- I believe that UTG will benefit from a lower rate environment and I am bullish on its potential for income investors.
The Reaves Utility Income Trust ( UTG ) focuses on one of the most stable industries for generating income, as utilities are regulated by the Federal Energy Regulatory Commission (FERC). Any entity that wants to participate in the interstate transmission of electricity, natural gas, or oil would be regulated by FERC. To an extent, this keeps the free markets from eroding the earnings power from many utilities, allowing them to generate predictable EPS and return capital to shareholders in the form of dividends. UTG is an interesting Closed-End Fund ((CEF)) that invests at least 80% of its total assets in common and preferred stocks and debt instruments of dividend-paying companies within the utility industry. Shares of UTG are relatively flat as they have declined by -1.10% over the past year, but they have acted as a proxy to other fixed-income investments such as CDs and T-bills due to the large amount of distributed income they produce. The Fed hasn't started the rate-cutting cycle yet, and when they do, I believe that the underlying assets within UTG will appreciate, which should correlate to the increase in the value of UTG shares. I think UTG is still an interesting investment for income investors as it has provided stable income for the past two decades....
UTG: Despite The Run I Still Expect This 8.46% Yielding CEF To Appreciate More