Tuesday

Utilities

Buying Utilities

Further to the previous post on utilities, I have purchased today APA, SKI, and SPN. They are all trading at 10%+ yields with guaranteed income in a regulated environment. Just as we can’t stop eating, we can’t stop using gas and electricity. As I believe interest rates will be kept very low for the foreseeable future these utilities will become very attractive to income-seeking investors, especially super funds. What’s more, they’re not trading all that far off their 52 week lows. Obviously there are some risks involved as in any investment. The slowing economy may mean less commercial usage and possibly less household revenue as more people gain access to discounts (more people on pensions, unemployment benefits etc). However I think at these levels these concerns are already priced into the share price.

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