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Post by chang on Feb 23, 2024 12:03:51 GMT
Ugh. Is there any point in holding a utilities fund? Why was your reason for buying? If it was TR or income and it is not providing either to your satisfaction, then move on. Personally I see no reason to own one since there are too many other options for income. RTTM (hence TR) plus some potential upward drivers, noted in links earlier in this thread. Not income; it yields ( 2.86%) less than a MM fund.
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Post by bigseal on Feb 23, 2024 16:35:56 GMT
FSUTX is down -3.12% YTD. fundresearch.fidelity.com/mutual-funds/performance-and-risk/316390509I’ve held this in my IRA for a few years. Within its category it’s a standout fund, but I’m wondering whether it makes sense to maintain a permanent allocation to utilities. My intent was to achieve some diversification, a little income, and inject a little stability and anti-volatility to balance some of the quirkier holdings in the account. I actually moved a few dollars from LCG to FSUTX a little while ago. Just a tweak. Anyone else holding utils as a permanent fixture? How does the future look? We own BRK-A and BRK-B shares that are largest portion of our net worth. Berkshire does have a large energy business with a utility company. But generally, utility businesses are highly capital intensive and regulated, both of which are things I try to avoid. We’ve been retired for many years and have never been particularly attracted to businesses because they pay dividends. Really great businesses can find better ways to deploy capital. Never believed in making “tweak(s)”. If I understood something well, I’d take a big position. Otherwise, just buy the S&P500 index or some other very broad index.
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Post by chang on Feb 23, 2024 17:58:38 GMT
FSUTX is down -3.12% YTD. fundresearch.fidelity.com/mutual-funds/performance-and-risk/316390509I’ve held this in my IRA for a few years. Within its category it’s a standout fund, but I’m wondering whether it makes sense to maintain a permanent allocation to utilities. My intent was to achieve some diversification, a little income, and inject a little stability and anti-volatility to balance some of the quirkier holdings in the account. I actually moved a few dollars from LCG to FSUTX a little while ago. Just a tweak. Anyone else holding utils as a permanent fixture? How does the future look? We own BRK-A and BRK-B shares that are largest portion of our net worth. Berkshire does have a large energy business with a utility company. But generally, utility businesses are highly capital intensive and regulated, both of which are things I try to avoid. We’ve been retired for many years and have never been particularly attracted to businesses because they pay dividends. Really great businesses can find better ways to deploy capital. Never believed in making “tweak(s)”. If I understood something well, I’d take a big position. Otherwise, just buy the S&P500 index or some other very broad index. Actually, that tweak out of LCG in July 2023 turned out to be smart (in retrospect), as LCG plunged from July to October 2023. Occasionally I blunder into a good move. (I later added to growth.) Berkshire is irrelevant to my post. I was asking about utilities, not general portfolio design advice. I am talking about a small "mad money" sliver of my portfolio. I don't mind making a small "mad money" bet, but I don't want it to be a "stupid money" bet. That's what I'm asking -- does anybody like utilities, and if so, why (or why not)?
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Post by bigseal on Feb 23, 2024 20:10:19 GMT
We own BRK-A and BRK-B shares that are largest portion of our net worth. Berkshire does have a large energy business with a utility company. But generally, utility businesses are highly capital intensive and regulated, both of which are things I try to avoid. We’ve been retired for many years and have never been particularly attracted to businesses because they pay dividends. Really great businesses can find better ways to deploy capital. Never believed in making “tweak(s)”. If I understood something well, I’d take a big position. Otherwise, just buy the S&P500 index or some other very broad index. Actually, that tweak out of LCG in July 2023 turned out to be smart (in retrospect), as LCG plunged from July to October 2023. Occasionally I blunder into a good move. (I later added to growth.) Berkshire is irrelevant to my post. I was asking about utilities, not general portfolio design advice. I am talking about a small "mad money" sliver of my portfolio. I don't mind making a small "mad money" bet, but I don't want it to be a "stupid money" bet. That's what I'm asking -- does anybody like utilities, and if so, why (or why not)? I stated my opinion, actually a fact, that utilities are very capital intensive and regulated which I generally make every effort to avoid. Plus, I’m rarely ever interested in companies that pay higher dividends. Never understood the attraction to those businesses. If the business can’t find other uses for their capital, I’m not that interested. I wouldn’t buy a sector fund, but rather an individual utility stock if I thought one was very attractively priced and has good fundamentals.
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Post by archer on Feb 23, 2024 22:48:17 GMT
We often see EVs as a demand stress on current and future electricity production and associated infrastructure. I recently read that Google used 22.29 Terrawatt hours in 2022, double that of 2019. Ansd, Google isn't the only game in town.
With AI, the need will increase exponentially.
If you are like me and a terrawatt doesn't mean a whole lot as a unit of measurement, 22.29 TW is what some small countries use in a year.
So are Utilities going to become growth companies? Because so much generating and transmission infrastructure was built ages ago, the ratio of growth to capitalizing on past investment has allowed them to be more of an income investment for us, and to fit among the ranks of other large stalwarts the Dow has been known for (which seems to be changing in recent years). Now with aging infrastructure to replace, and increased need to grow more infrastructure, it seems the Utility industry will be encountering financial needs unprecedented in the past. This is kind of a repeat of the 1930's and the REA days, but perhaps too long in the past for meaningful comparisons. Regulators will allow the utilities to finance their operations, but how profitably?
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Post by Chahta on Feb 23, 2024 23:48:04 GMT
We often see EVs as a demand stress on current and future electricity production and associated infrastructure. I recently read that Google used 22.29 Terrawatt hours in 2022, double that of 2019. Ansd, Google isn't the only game in town. With AI, the need will increase exponentially. If you are like me and a terrawatt doesn't mean a whole lot as a unit of measurement, 22.29 TW is what some small countries use in a year. So are Utilities going to become growth companies? Because so much generating and transmission infrastructure was built ages ago, the ratio of growth to capitalizing on past investment has allowed them to be more of an income investment for us, and to fit among the ranks of other large stalwarts the Dow has been known for (which seems to be changing in recent years). Now with aging infrastructure to replace, and increased need to grow more infrastructure, it seems the Utility industry will be encountering financial needs unprecedented in the past. This is kind of a repeat of the 1930's and the REA days, but perhaps too long in the past for meaningful comparisons. Regulators will allow the utilities to finance their operations, but how profitably? Minor correction. 22.29 TW is the power or rate at which electricity is consumed. tWh (terra watt hours) would be the amount of energy consumed.
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Utilities
Feb 24, 2024 0:00:43 GMT
via mobile
Post by chang on Feb 24, 2024 0:00:43 GMT
“Plus, I’m rarely ever interested in companies that pay higher dividends. Never understood the attraction to those businesses. If the business can’t find other uses for their capital, I’m not that interested.”
That’s a novel point of view. Interesting, though, and you have a point.
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Post by archer on Feb 24, 2024 1:03:53 GMT
We often see EVs as a demand stress on current and future electricity production and associated infrastructure. I recently read that Google used 22.29 Terrawatt hours in 2022, double that of 2019. Ansd, Google isn't the only game in town. With AI, the need will increase exponentially. If you are like me and a terrawatt doesn't mean a whole lot as a unit of measurement, 22.29 TW is what some small countries use in a year. So are Utilities going to become growth companies? Because so much generating and transmission infrastructure was built ages ago, the ratio of growth to capitalizing on past investment has allowed them to be more of an income investment for us, and to fit among the ranks of other large stalwarts the Dow has been known for (which seems to be changing in recent years). Now with aging infrastructure to replace, and increased need to grow more infrastructure, it seems the Utility industry will be encountering financial needs unprecedented in the past. This is kind of a repeat of the 1930's and the REA days, but perhaps too long in the past for meaningful comparisons. Regulators will allow the utilities to finance their operations, but how profitably? Minor correction. 22.29 TW is the power or rate at which electricity is consumed. tWh (terra watt hours) would be the amount of energy consumed. Good catch! My mistake in leaving off the H n paragraph 3. Paragraph 1 is correct assuming the article was accurate.
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Post by FD1000 on Feb 24, 2024 2:30:55 GMT
Actually, that tweak out of LCG in July 2023 turned out to be smart (in retrospect), as LCG plunged from July to October 2023. Occasionally I blunder into a good move. (I later added to growth.) Berkshire is irrelevant to my post. I was asking about utilities, not general portfolio design advice. I am talking about a small "mad money" sliver of my portfolio. I don't mind making a small "mad money" bet, but I don't want it to be a "stupid money" bet. That's what I'm asking -- does anybody like utilities, and if so, why (or why not)? I stated my opinion, actually a fact, that utilities are very capital intensive and regulated which I generally make every effort to avoid. Plus, I’m rarely ever interested in companies that pay higher dividends. Never understood the attraction to those businesses. If the business can’t find other uses for their capital, I’m not that interested. I wouldn’t buy a sector fund, but rather an individual utility stock if I thought one was very attractively priced and has good fundamentals. +1 The 3 Cs = concise, correct, clear.
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Post by rhythmmethod on Feb 24, 2024 4:04:25 GMT
chang, Okay - I'll play a quick round. I hold utilities in the form of UTG. I know some here with far greater intellect than I don't like dividend-paying companies. I do. I like having a reliable income every month. There is no need to go into seed corn debate here. Utes will never be a growth component but will offer SOME reliable income. That is why I own and add some on dips. I'm down ~1.15% on price and have collected several grand in income. Close enough for jazz.
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Post by chang on Feb 24, 2024 9:17:09 GMT
chang , Okay - I'll play a quick round. I hold utilities in the form of UTG. I know some here with far greater intellect than I don't like dividend-paying companies. I do. I like having a reliable income every month. There is no need to go into seed corn debate here. Utes will never be a growth component but will offer SOME reliable income. That is why I own and add some on dips. I'm down ~1.15% on price and have collected several grand in income. Close enough for jazz. Hmm, I don't see the attraction. It trades at a slight premium, so you're not getting any dividend boost that a discount would drive. Overall ER is 2.32% including 1.39% interest (I assume this pays for 20.6% leverage) -- that's OK I guess; the management fees are roughly in line with FSUTX. I don't buy leveraged funds unless we're talking CEF bloodbaths at steep discounts, like munis at the Whitney 🍑.
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Post by bigseal on Feb 24, 2024 11:01:32 GMT
“Plus, I’m rarely ever interested in companies that pay higher dividends. Never understood the attraction to those businesses. If the business can’t find other uses for their capital, I’m not that interested.” That’s a novel point of view. Interesting, though, and you have a point. My thought process regarding higher dividend paying companies is nothing new, but rather something that I’ve learned from Warren Buffett through decades of attending annual shareholder meetings. Really good companies should be able to reinvest the capital and make more over time than the shareholder would if they received the dividend and invested it. Warren and Charlie gave a lot of thought to this and structured Berkshire in a way that takes advantage of this.
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Post by FD1000 on Feb 24, 2024 13:12:43 GMT
Slow morning. I looked at PRWCX since Giroux likes utilities and it's close to 9%. He bought AEE on 6-30-2020 at 1.2% ( schrts.co/ChzkRrFw) XEL on 12-31-2022 at 1.2% ( schrts.co/bkMqyiQE) Looks like mighty Giroux didn't do well either
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Post by chang on Feb 24, 2024 14:31:18 GMT
Interesting; it’s 7% for TCAF vs 2% for the LB category.
That reminds me of one of those absurd investment sayings, “he wasn’t wrong, he was just early.” (Translation: he was wrong.) Right up there with “You haven’t lost anything until you sell.” (Translation: you lost money.)
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Post by bizman on Feb 24, 2024 15:59:18 GMT
Just thought I'd mention that I no longer own VPU and am getting my utility exposure mainly through TCAF. Long story, but I decided that on individual utility and dividend stocks I didn't really have an edge or strong conviction about management, etc., so why be so arrogant to think I know better on everything, as I surely don't.
Plus, my focus on the details of so many individual stocks where I had no real edge at least partially caused me to miss real opportunities like NVO and LLY with the GLP-1 breakthroughs, even given my personal experience with Ozempic.
The stock part of my portfolio is fairly broadly diversified, although I am open to taking an occasional swing where I feel I have real knowledge and conviction, as in MSFT.
Not a recommendation for anyone else, just thought I should disclose my current disposition.
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Post by rhythmmethod on Feb 24, 2024 16:00:06 GMT
chang , Okay - I'll play a quick round. I hold utilities in the form of UTG. I know some here with far greater intellect than I don't like dividend-paying companies. I do. I like having a reliable income every month. There is no need to go into seed corn debate here. Utes will never be a growth component but will offer SOME reliable income. That is why I own and add some on dips. I'm down ~1.15% on price and have collected several grand in income. Close enough for jazz. Hmm, I don't see the attraction. It trades at a slight premium, so you're not getting any dividend boost that a discount would drive. Overall ER is 2.32% including 1.39% interest (I assume this pays for 20.6% leverage) -- that's OK I guess; the management fees are roughly in line with FSUTX. I don't buy leveraged funds unless we're talking CEF bloodbaths at steep discounts, like munis at the Whitney 🍑. I'm recommending it to anyone. It is a small holding of 1.38%. The leverage allows me to tie up a smaller amount of dollars in the sector and collect monthly dividends (somewhat tax-advantaged) that I redeploy as situations unfold. I know some are not into diversification, but I am, and this suits my needs. It's small potatoes, but the reason for holding (diversification and monthly income) suits me and hasn't changed. FWIW - Capecod is not a fan of utes and would put the whole load in leveraged FI for a higher payout. This works for me. Butt I'm always looking for another.🍑 chang,
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Post by kathiel on Feb 24, 2024 19:20:30 GMT
I own a number of utilities (Duke, Southern Co, Nat. Grid.).. The utilities have not moved up with the S&P, so prices are reasonable and all pay dividends.
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Post by chang on Feb 24, 2024 20:31:57 GMT
Warren Buffett in his 2024 letter to shareholders, released today: "Whatever the case at Berkshire, the final result for the utility industry may be ominous: Certain utilities might no longer attract the savings of American citizens and will be forced to adopt the public-power model. Nebraska made this choice in the 1930s and there are many public-power operations throughout the country. Eventually, voters, taxpayers and users will decide which model they prefer.
"When the dust settles, America’s power needs and the consequent capital expenditure will be staggering. I did not anticipate or even consider the adverse developments in regulatory returns and, along with Berkshire’s two partners at BHE, I made a costly mistake in not doing so."
(Click to enlarge.) You might want to read the paragraphs preceding this. Buffett seems to have a lot of concerns about utilities, and possibly regrets and recriminations about BH's past investments. www.nbcwashington.com/news/business/money-report/read-warren-buffetts-2024-annual-letter-to-shareholders/3551235/Attachments:
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Post by FD1000 on Feb 24, 2024 21:25:31 GMT
Interesting; it’s 7% for TCAF vs 2% for the LB category. That reminds me of one of those absurd investment sayings, “he wasn’t wrong, he was just early.” (Translation: he was wrong.) Right up there with “You haven’t lost anything until you sell.” (Translation: you lost money.) +1 Another great one.
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Post by anitya on Feb 24, 2024 21:57:31 GMT
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Post by rhythmmethod on Feb 24, 2024 21:57:36 GMT
chang, Thanks for sharing. It may be one of my many mis-shapes. Good food for thought.
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Post by archer on Feb 25, 2024 0:51:56 GMT
Perhaps when interest rates fall utilities will do better. For those who are into income, 5% low vol money market holds up well against many utility stocks which have more volatility.
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Post by bigseal on Feb 25, 2024 12:48:55 GMT
Warren Buffett in his 2024 letter to shareholders, released today: "Whatever the case at Berkshire, the final result for the utility industry may be ominous: Certain utilities might no longer attract the savings of American citizens and will be forced to adopt the public-power model. Nebraska made this choice in the 1930s and there are many public-power operations throughout the country. Eventually, voters, taxpayers and users will decide which model they prefer.
"When the dust settles, America’s power needs and the consequent capital expenditure will be staggering. I did not anticipate or even consider the adverse developments in regulatory returns and, along with Berkshire’s two partners at BHE, I made a costly mistake in not doing so."
(Click to enlarge.) You might want to read the paragraphs preceding this. Buffett seems to have a lot of concerns about utilities, and possibly regrets and recriminations about BH's past investments. www.nbcwashington.com/news/business/money-report/read-warren-buffetts-2024-annual-letter-to-shareholders/3551235/Precisely. This is why I mentioned Berkshire Hathaway, which you quickly stated was irrelevant. It is very relevant….and maybe now you understand why.
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Post by mnfish on Feb 25, 2024 13:14:52 GMT
Interesting tidbit regarding BHE - Berkshire Energy Two good friends owned 60 acres of land near my town and were approached by a subsidiary of BHE in 2014 to lease it for a solar farm. They declined the lease offer but said they would sell it to them for $10k per acre as it had value as a gravel mining pit. BHE declined. One friend worked for the County and knew there was a moratorium on any new gravel mining but thought the land was worth that in the future. A year later BHE agreed to the purchase price of $600k.
A little research produced this "As a general rule, 1 acre of solar panels produces about 351 MWh of electrical energy per year. The actual profit depends on the Country and State/location irradiance (Peak-sun-hours), but the average is approximately $14,000. Installation cost for 1 acre of solar panels is about $450,000."
$600k land purchase, $27M install ($450k x 60 acres) = $27.6M / $840k per year ($14k x 60) = 32.8 years to recoup initial investment. Interested?
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Post by archer on Feb 25, 2024 15:40:47 GMT
mnfish, $600k land purchase, $27M install ($450k x 60 acres) = $27.6M / $840k per year ($14k x 60) = 32.8 years to recoup initial investment. Interested? On the downside there are also maintenance and other operational costs. Upside, ther $840/yr isn't fixed forever. Wholesale rate for generation will increase. But, I'm still not interested.
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Post by oldskeet on Feb 25, 2024 15:51:10 GMT
Hi guys. For me, utilities play an important role in my asset allocation plus they generate a good income stream. Currently, a good number of my mutual funds that hold utilities have throttled back on the amount held in them and, with this, my overall utility allocation now bubbles at about 5%. I have seen it in the past bubble upwards toward the 7 & 8 percent range. Perhaps, in the near future, they will again bubble towards their past high water mark as they become more attractive assets for fund managers to hold.
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Post by chang on Feb 25, 2024 17:02:21 GMT
Hi guys. For me, utilities play an important role in my asset allocation plus they generate a good income stream. Currently, a good number of my mutual funds that hold utilities have throttled back on the amount held in them and, with this, my overall utility allocation now bubbles at about 5%. I have seen it in the past bubble upwards toward the 7 & 8 percent range. Perhaps, in the near future, they will again bubble towards their past high water mark as they become more attractive assets for fund managers to hold. Just curious oldskeet which MFs (other than utilities funds) have a high % of utilities? It's been noted that TCAF/PRWCX has 7-9%. I'm not aware of any others...?
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Post by oldskeet on Feb 26, 2024 1:05:56 GMT
Hi Chang. Thank you for your question on which funds I own have a healthy allocation to utilities. The below listed funds that I own all have some utility exposurer. And, they are held mostly in my hybrid income sleeve, my domestic equity income sleeve, my global equity income sleeve, my domestic hybrid sleeve, and my world allocation sleeve. Some of the ticker symbols would be FKINX, CFIAX, DIFAX, INPAX, ISFAX, IDIVX, SVAAX, GIZAX, AMECX, FBLAX, LABFX, CAIBX, PQIZX and TIBAX. I probably missed a few ticker symbols that hold utilities as currently my portfolio has seven investment sleeves plus a cash management sleeve. All total there are 48 funds held in three investment and two retirement accounts.
This should provide those interested a start in a fund review process for those seeking utility along with and other types of income generating equities.
Thanks again for your question. I hope my answer is helpful.
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Post by catdog on Feb 26, 2024 1:40:37 GMT
I used to own FUTY. It is a fidelity utility ETF. While I owned it I often complained to myself about the low dividend. Most utility ETF's pay +/- 3.75 % dividends. I was also paying an ER but only .08. Bouncing around my feeble mind was an idea to build my own Little basket of ute's.
My first pick might be BKH to take advantage of the growth of the South Dakota area. (good entry point three weeks ago, I blew it)
Second pick would be NEE. Lower Dividend, but you can't argue with growth of Florida area.
Third and fourth picks would be DUK and SO. This might be a play on the fast growing area of North/South Carolina and area.
My fifth pick would be AEP although they have a newer CEO
Not sure if I dare do this as buying five companies might require more cajones than I currently possess. At least I have it in print now.
catdog
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Utilities
Feb 27, 2024 2:02:27 GMT
via mobile
Post by oldskeet on Feb 27, 2024 2:02:27 GMT
X LF took it on the chin today, down 1.96
Correcting post. Should have read XLU took it on the chin today, down 1.96%.
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