BlackRock Utilities Infrastructure & Power Opportunities Trust (BUI) Stock

The BlackRock Utilities, Infrastructure & Power Opportunities Trust offers a 6.92% yield, higher than utility indices, appealing to income-seeking investors despite underperforming peers in yield. The fund's diversified portfolio includes traditional utilities, renewable energy, and infrastructure companies, balancing performance amid fluctuating interest rates and regulatory changes. Despite recent underperformance, the fund's consistent distribution history and recent increase suggest sustainability, making it attractive for income-focused investors.

BlackRock Utilities, Infrastructure & Power Opportunities Trust is a Utility and Infrastructure sector-specific closed-end fund that invests globally in a fairly diversified portfolio of common stocks of utilities and infrastructure companies. The BUI CEF currently provides a reasonable yield of 6.50% without using any leverage; however, it offers almost no discount, which is currently at -1.15%. BUI has a decent long-term record of over 12 years for a utility-focused fund. However, it has performed poorly recently, which is in line with the performance of the utility sector. Going forward, there are certain tailwinds that should help utilities in general.

BlackRock Utilities, Infrastructure & Power Opportunities Trust is a closed end fund that focuses on investing in Utility, Infrastructure, and Power companies worldwide. BUI has exceeded the performance of DNP Select Income Fund in terms of total return on NAV over the past ten years without leveraging. Considering utilities have outperformed the NASDAQ 100 so far this year, we are reevaluating our recommendation to buy BUI.

BlackRock Utilities, Infrastructure & Power Opportunities Trust is being considered as an investment opportunity at its current market value. The fund is trading below its net asset value, making it an appealing purchase. BUI offers exposure to European utility and power firms that may see gains from Europe's robust economic growth.

BlackRock Utilities, Infrastructure & Power Opportunities Trust aims to provide high current income by investing in utilities and infrastructure companies and writing covered call options. BUI has underperformed the U.S. utility sector but has seen its share price appreciate by 11.01% over the past six months. The fund offers a yield of 6.82%, outperforming other utilities and many infrastructure index funds in terms of yield.

Utilities remain attractive as long-term investments, and the headwind of higher rates is quickly turning into a tailwind for the sector that could continue through 2024. BlackRock Utilities, Infrastructure & Power Opportunities Trust and abrdn Global Infrastructure Income Fund are two conservative utility-oriented funds that do not employ leverage. Outside of each fund's material utility sleeve, they also carry some broader diversification through additional infrastructure exposure primarily related to the industrial sector.

The utilities sector is down more than 11% in 2023, but certain utility stocks and funds have outperformed the S&P 500 in the past month. BlackRock Utilities, Infrastructure & Power Opportunities Trust is up 6% in the past month. BUI pays a monthly dividend with a yield of 6.86% and covered its distributions by a factor of 1.26X in Q1-2 '23.

We had rated DNP a Strong Sell, as the fund had a toxic combination of leverage and premium to NAV. DNP has dropped sharply and thesis has been validated. We compare this with another fund, BUI, and tell you why we prefer the latter.

The BlackRock Utility & Infrastructure Trust (BUI) is currently undervalued and sitting in correction territory. BUI's discount to NAV has expanded to over 8%, suggesting that investors have disproportionately sold off the fund. Despite a 12% loss in share price, the widening discount is a positive sign and indicates that BUI may start moving upward soon.