Retirement: Buy UTG While The Price Is Low, Yield 7%

Seeking AlphaDividend Ideas | Utilities Retirement: Buy UTG While The Price Is Low, Yield 7%Sep. 10, 2020 8:37 AM ET|| About: Reaves Utility Income Fund (UTG), Includes: ED, QQQ, SPY, TU, UTF, XLE, XLUby: Rida MorwaRida Morwa High Dividend OpportunitiesThe #1 Service for Income Investors and Retirees, 9-10% dividend yield.SummaryOur screens are revealing more and more bargains in one sector: Utilities.
Utilities currently comprise only about 3% of the S&P 500 and you need to really overweight them today.
We show the numbers behind our thinking and our favorite closed-end fund, UTG.
UTG yields 7% and is an undervalued investment with great returns potential.
Co-produced with Trapping Value
Sectors go hot and sectors go cold and the cycle repeats. Today it is technology that is the "flavor du jour", with new IPOs coming out at 30X sales, and analysts making predictions that pretty much everything will be built on tech and nothing else. There is nothing new in financial markets, but human emotions make you think otherwise. That change from euphoria to despair and vice versa is what creates opportunities. As we dissect the landscape for our recently launched Options Income Portfolio, we found one thing that kept coming up in our screens, again and again – Utilities are exceptionally cheap. We make the case for them below and then show you how you should play it.
Where We Are
Over the last year the Utilities Select Sector SPDR ETF (XLU) has lagged the broader indices like SPDR S&P 500 ETF (SPY) and Invesco QQQ ETF (QQQ) by a rather substantial amount.
Data by YCharts
In fact there are very few sectors that have underperformed Utilities.
Data by YCharts
Only Energy (XLE) has fared worse, for obvious reasons. But is the performance of XLU justified in relation to the markets? We have to give a resounding "no" to that. The Q2-2020 broader EPS was horrible (negative 33%) and certainly financials (negative 49%) and energy (negative... Read more