BlackRock Utility and Infrastructure Trust (BUI) was added to the portfolio in January, 2013. This is a closed-end fund (CEF) that writes call options on the securities in the trust's portfolio. It does not use leverage, or debt.
At the end of the third quarter, 2012, BUI holdings included 29.3% electric utilities, 19.2% multi-utilities, 13.6% diversified telecommunication services, 11.0% water utilities and 8.2% oil, gas and consumable fuels.
This is from the BUI website: "The Trust considers the 'Utilities' business segment to include products, technologies and services connected to the management, ownership, operation, construction, development or financing of facilities used to generate, transmit or distribute electricity, water, natural resources or telecommunications and the 'infrastructure' business segment to include companies that own or operate infrastructure assets or that are involved in the development, construction, distribution or financing of infrastructure assets."
BUI now represents 4.9% of the portfolio. Together with two individual stocks, Southern Company (SO) and PPL Corp (PPL), the utility sector comprises 14.9% of the portfolio, just under the 15% target.
The BUI market price at this writing (near the close on January 22) was $18.92. The quarterly dividend is $.3625. The yield at this price is 7.66%. According to Morningstar, the net annual expense ratio reported for 2012 was 1.12%, and as of January 18, 2013, BUI's market price of $18.63 was a 7.73% discount to its net asset value (NAV) of $20.19.
This investment was made as a way of diversifying the utility segment of the portfolio and as a way of capturing a higher yield through the sale of call options.
Everyone's situation is different. This is not a recommendation to buy BUI, but a recommendation for a closed-end fund to study. Do your own due diligence.
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