Small, Hardy and Diversified
Utilities provide investors with both a margin of safety and the chance to build income over time through stable, predictable dividend increases. For investors concerned with achieving a growing stream of income - utilities are often very popular. However, in the current economic environment where investors are receiving low, no or even negative total returns by investing in government treasuries - there is a risk of the "next best" asset class becoming too popular.
As many investors have purchased common shares of utilities as a proxy for a "super safe" investment, the increased demand for the asset both drives up the price and lowers yields - making conventional wisdom increasingly suspect and thus increasing the risk...
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