An In-depth Analysis of UTG's Dividend History, Yield, Growth, and Sustainability
Reaves Utility Income Fund (UTG, Financial) recently announced a dividend of $0.19 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-18. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Reaves Utility Income Fund's dividend performance and assess its sustainability.
What Does Reaves Utility Income Fund Do?
Reaves Utility Income Fund is a closed-end management investment company. The company's investment objective is to provide a high level of after-tax income and total return consisting of tax-advantaged dividend income and capital appreciation. It invests a portion of its total assets in securities of utility companies, which may include companies in the electric, gas, water, telecommunications sectors, as well as other companies engaged in other infrastructure operations.
A Glimpse at Reaves Utility Income Fund's Dividend History
Reaves Utility Income Fund has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Reaves Utility Income Fund's Dividend Yield and Growth
As of today, Reaves Utility Income Fund currently has a 12-month trailing dividend yield of 8.49% and a 12-month forward dividend yield of 8.49%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Reaves Utility Income Fund's annual dividend growth rate was 2.90%. Extended to a five-year horizon, this rate decreased to 1.70% per year. And over the past decade, Reaves Utility Income Fund's annual dividends per share growth rate stands at 5.10%. Based on Reaves Utility Income Fund's dividend yield and five-year growth rate, the 5-year yield on cost of Reaves Utility Income Fund stock as of today is approximately 9.24%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-04-30, Reaves Utility Income Fund's dividend payout ratio is 0.00.
Reaves Utility Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Reaves Utility Income Fund's profitability 3 out of 10 as of 2023-04-30, suggesting the dividend may not be sustainable. The company has reported net profit in 7 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Reaves Utility Income Fund's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
In conclusion, while Reaves Utility Income Fund's consistent dividend payments and relatively high yield may be attractive, its low profitability and growth ranks raise concerns about the sustainability of its dividend. Investors should consider these factors before making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
