A Rock Solid Multi-Decade History Of Distribution

Growth Built For The Long-Term

Every week, we’ll profile a high yield investment fund that typically offers an annualized distribution of 6-10% or more. With the S&P 500 yielding less than 2%, many investors find it difficult to achieve the portfolio income necessary to meet their needs and goals. This report is designed to help address those concerns.

As the calendar turns to 2024, it appears as if investors are already unwinding some of the excesses that were built up throughout the 4th quarter. The Fed pivot was the big stimulant, but a stable jobs market and steady growth have been supporting factors. However, when the Fed said that it was anticipating three rate cuts in 2024 and the market went ahead and priced in 6-7, it was clear that overenthusiasm was taking over common sense. Over the past week and a half, Treasuries have begun giving back some of their gains, while low volatility, value and utilities stocks are outperforming again.

It’s the latter group that may have the most potential this year. It was the worst performing sector of 2023 as tech and growth stocks dominated the equity market narrative, but a big shift back to defensive investing could happen if disinflation starts trending towards deflation this year. The demand for electricity, water and other basic services should be steady in a slowing economy and that presents an opportunity for investors if I’m right about this. That’s why I want to take a look at one of the best utility funds in the business, the Reaves Utility Income Trust (UTG). Its nearly 20-year track record and history of paying and raising its shareholder payouts could prove ideal heading into a challenging environment.

Fund Background

UTG has a fairly straightforward objective. It aims to provide a high level of after-tax income and total return consisting primarily of tax-advantaged dividend income and capital appreciation. It pursues this objective by investing primarily in dividend-paying common and preferred stocks and debt instruments of companies within the utility industry. UTG also utilizes leverage in order to enhance yield and total return potential.