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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 81600  
Subject: Re: or this fund for Roth? Date: 11/21/2011 3:36 PM
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You wrote, http://finance.yahoo.com/q?s=GGN
GGN - nice return -

You meant, http://finance.yahoo.com/q?s=GGN

Utilities can be an excellent portion of a good stock portfolio. But you need to dig deeper into the numbers. Reaching for yield like this can be dangerous.

GGN is yielding about 8.5% because its earnings are in the tank and the board of directors has refused to lower the dividend. GGN is loosing money. What's worse, they have a negative cash flow and will run out of cash - unless they borrow more or do something drastic like cut their dividend - in about 18 months.

Honestly I think there might be better bets in the utility sector than GGN.

BTW, if you don't have a lot of cash on hand or the time to invest in analyzing the company's numbers but still want to invest in a utility, perhaps you should consider a utility ETF. Three good candidates might be VPU, XLU & IDU.

Bear in mind that normally utilities probably won't buy you a huge amount of growth. Mostly they are dividend plays that hopefully won't be too affected by rising inflation. But then that's probably not a bad place to be invested given today's market.

- Joel
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