The AI Buildout Is Still Powering The 7% Yield And Delivering Alpha For Investors

The Cohen & Steers Infrastructure Fund (UTF) yields about 7%, supported by assets tied to the artificial intelligence buildout. An analyst covering the fund wrote that the setup looks even better now than it did at the start of 2023, when the bullish case first took shape.

AI data center construction drives demand for electricity, water, and fiber – infrastructure assets that form the fund's core holdings. The analyst pointed to growing power consumption forecasts and utility capital spending as structural tailwinds that keep cash flows visible.

A risk event for the thesis would be a slowdown in AI data center permitting or a sudden drop in the capital spending plans of major cloud providers. Either could pressure the fund's portfolio companies. Management has not flagged either scenario as imminent.

The fund's distribution rate of roughly 7% comes from a mix of dividend income and capital gains. The analyst expects that payout to remain sustainable as long as the infrastructure buildout continues at its current pace above $50 billion in annual spending by utilities and data center operators.

No change to the fund's holdings or leverage ratio has been announced since the start of the year.