No. of Recommendations: 5

You wrote,
GGN - nice return -

You meant,

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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