Stock Analysis & Valuation NXG NextGen Infrastructure Income Fund (NXG)

• Previous Close: $50.74
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	1217.83	2300
Intrinsic value (DCF)	224.86	343
Graham-Dodd Method	59.81	18
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

NXG NextGen Infrastructure Income Fund (NYSE: NXG) is a closed-end equity mutual fund managed by Cushing MLP Asset Management, LP, specializing in income-generating investments across the energy infrastructure sector. Launched in 2012 and domiciled in the U.S., NXG strategically invests in upstream, midstream, and downstream energy companies, as well as energy-intensive industrial, chemical, and logistics firms. The fund targets stable cash flows through diversified exposure to essential energy infrastructure assets, including pipelines, storage, and transportation networks. With a focus on high-yield opportunities, NXG appeals to income-seeking investors looking for exposure to the evolving energy transition landscape. Its portfolio aligns with long-term demand for energy infrastructure, offering a unique blend of traditional fossil fuel and emerging low-carbon assets. As a financial services sector player, NXG provides a niche investment vehicle for those seeking infrastructure-linked income in a volatile energy market.

Investment Summary

NXG NextGen Infrastructure Income Fund offers investors exposure to high-yield energy infrastructure assets, supported by a diversified portfolio across the energy supply chain. The fund’s focus on income generation is reflected in its substantial dividend yield (currently $5.94 per share), making it attractive for yield-focused portfolios. However, risks include exposure to commodity price volatility, regulatory shifts in energy markets, and interest rate sensitivity, given its 1.25 beta. The fund’s negative operating cash flow (-$30.5M) raises liquidity concerns, though its lack of debt mitigates some financial risk. Investors should weigh its income potential against sector-specific uncertainties, including the energy transition’s impact on traditional infrastructure assets.

Competitive Analysis

NXG differentiates itself through its specialized focus on energy infrastructure income, leveraging Cushing MLP Asset Management’s expertise in midstream and logistics investments. Unlike broader income funds, NXG’s niche positioning allows it to capitalize on inefficiencies in energy markets, particularly in MLPs (master limited partnerships) and midstream operators. Its competitive edge lies in access to high-yield, tax-advantaged MLP distributions, though this also ties performance to oil/gas price cycles. The fund’s lack of debt provides flexibility, but its small size (~$170M market cap) limits economies of scale compared to larger infrastructure funds. While its concentrated energy focus offers higher yields, it lacks diversification into utilities or renewables, a growing segment in competing infrastructure funds. NXG’s performance is highly correlated with energy sector trends, making it less defensive than multi-sector income alternatives.

Major Competitors

• Western Asset Managed Municipals Fund (MMU): MMU focuses on tax-exempt municipal bonds, offering lower risk but also lower yields compared to NXG’s energy-centric strategy. Its strength lies in stable government-backed income, but it lacks NXG’s infrastructure growth potential.
• Cohen & Steers Infrastructure Fund (UTF): UTF invests globally in utilities, pipelines, and telecom infrastructure, providing broader diversification than NXG. Its larger AUM and multi-sector approach reduce volatility but may dilute energy-specific returns.
• Kayne Anderson MLP/Midstream Investment Company (KYN): KYN is a direct competitor with a similar MLP/midstream focus but at a larger scale ($1.2B AUM). Its deeper resources and institutional backing give it an edge in deal flow, though NXG’s smaller size allows for more nimble allocations.