Are you in pursuit of the Utilities sector exposure? Fear not, for there are various funds that cover this sector. In this piece, we will dissect and compare 6 of these funds.

Exploring the Fund

The Reaves Utility Income Fund (NYSE:UTG) identifies as a closed-end fund, or CEF for short.

UTG’s goal is to provide a substantial after-tax total return primarily through tax-privileged dividend income and capital appreciation. The fund intends to invest at least 80% of its total assets in dividend-paying common and preferred stocks, as well as debt instruments of companies within the utility industry. The remaining 20% of its assets may be invested in other securities including stocks, money market instruments and debt instruments, as well as certain derivative instruments in the utility industry or other industries. (UTG site)

As of 12/32/23, UTG had $2.08B in Net Assets, with 65 holdings, up from 44 at 9/30/23. Its expense ratio stands at 2.44%, which includes 1.10% in Interest expense, due to the 31% leverage that management uses.

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The comparison below pits UTG against various funds with high exposure to Utilities, we have:

-BlackRock Utilities, Infrastructure & Power Opportunities Trust (BUI)-Duff & Phelps Utility and Infrastructure Fund (DPG)-Gabelli Global Utility & Income Trust (GLU)-Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund (MFD)-Cohen & Steers Infrastructure Fund (UTF).

As of 12/31/23, UTG had 56.7% exposure to Utilities, way down vs. 77% at 9/30/23. DPG has the highest Utilities exposure, at 89.3%, while GLU has the lowest, at 30.4%.

UTG is the only fund in this group with a positive 5-year dividend growth, at 2.46%. MFD and DPG actually have negative 5-year growth rates of -.7.79% and -4.36%, respectively.

UTG and UTF have the largest 3-month average daily volume by far, at 299K and 286K, respectively, while GLU is at the low end of the scale, with 17.5K average daily volume.

MFD has by far the highest relative volume at 2X, followed by UTF, at 1.04X, whereas the rest of the group has lower than average relative volume, with GLU having the lowest, at just .33X.

UTG and UTF have the largest market caps of all these funds, at $1.96B and $2B, respectively, with MFD being the smallest, at ~$64M.

MFD has the highest dividend yield of the group, at 10.7%, while BUI’s 6.5% yield is the lowest.

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The Gift of Dividends

UTG has poured out over $1.3B to investors since its establishment in 2004.

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The management announces each quarter’s monthly amounts, ex-dividend dates, and pay dates in advance. Management has held the monthly payout steady at $.19 since July 2021, following an increment from $.18.

Time of 1/26/24, UTG offers a yield of 8.66% at its closing price of $26.32. It goes ex-dividend next on 2/15/24, with a pay date of 2/29/24.

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The Dreaded Taxes

From 2015 onwards, UTG’s distributions started to become centered around long-term capital gains.

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During November ’23 – January ’24, UTG’s distributions were composed of ~78% long-term capital gain and 22% NII:

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The Supportive Holdings

As of 12/31/23, UTG’s 2nd largest industry exposure was 20%, in Communication Services – it holds prominent cap telecoms, such as Germany’s Deutsche Telekom, and Canada’s BCE.

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