June 5, 2018. UTF is in the Core Portfolio and pays almost 8%
We saw a very positive article in seekingalpha.com today which talks about this holding. We bought at a lower price and would NOT be buying at this point as it has already increased 5% in price. HOLD.
UTF is a solid CEF which trades at a discount to NAV while paying a high and growing dividend yield of 8.5%. With infrastructure stocks set to see a boom from an increase in infrastructure spending, investors buying into UTF may see strong capital appreciation in addition to highly attractive monthly distributions.
As we have noted here on numerous occasions, we do NOT expect interest rates to continue much higher, despite all the hysterical stories in the financial media. We follow several financial ‘gurus’ and they are all telling us to expect rates to remain relatively low.
Interest rates are set to remain low: While the Federal Reserve is set to increase rates by another 0.25% this month, Fed officials have signaled that going forward they will tolerate a slightly higher inflation rate. The reason for this move is that the Fed is worried that a flattening yield curve and rising Treasury bond yields may derail economic growth, and rightly so. The current economic growth is fragile due to the negative effect of demographics coming from an aging global population and due to political and economic risks coming from Europe. Therefore, I expect future interest rate hikes to be more muted than what the Fed has previously forecasted earlier. This isn’t surprising, because the Fed has a history of overestimating how much it will raise rates. If you recall back in 2016, the Fed said that they would raise rates 4 times, but they were able to only implement one rate hike that year. The most important point to note here is that the Fed will continue to be cautious and maintain a dovish policy. With less interest rate hikes on the horizon, investors’ appetite for high-yield stocks should rise and translate into higher prices. About the rate hike in June, the market is expecting it, so it’s already baked into the prices of equities.
United Way has done a study on a group of Americans they call ALICE: Asset Limited, Income Constrained, Employed. The study found that this group does not make the money needed “to survive in the modern economy.” Between families living below the poverty line due to unemployment or disability, and ALICE, the study discovered that 43% of Americans were struggling to cover basic necessities like rent and food.
But even for those who are making ends meet, they aren’t saving either. Northwestern Mutual’s 2018 Planning & Progress Study, which surveyed 2,003 adults, found that 21% of Americans have nothing saved at all for their golden years, and a third of Americans have less than $5,000. To put that into perspective, it means that 31% of U.S. adults could last only a few months on their savings if they had to retire tomorrow