2024-02-06 20:25:50 ET
Summary
- Duff & Phelps Utility and Infrastructure Fund is trading at a steep 13% discount to NAV with an attractive 9.4% distribution yield.
- However, DPG has historically underperformed passive ETFs focused on utilities and midstream companies.
- The fund's high distribution yield appears unsustainable, and investors should seek utility exposure elsewhere.
Since late September , I have had a positive view of the utilities sector, as their relative valuations have gotten more attractive, with the S&P 500 Utilities Index trading at 15x Fwd P/E while the S&P 500 Index itself is closer to 20x (Figure 1).
While combing through investment funds focused on utilities, I came across the Duff & Phelps Utility and Infrastructure Fund Inc. ( DPG ), trading at a steep 13% discount to NAV. Buying assets on sale is usually a good idea, especially if they sport an attractive 9.4% distribution yield. So is the DPG fund a good buy?...
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DPG: Amortizing Return Of Principal Fund