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The Reaves Utility Income Fund Announces Regular Monthly Dividend of $0.115 Per Share

Posted by Dana in April 8th 2009

The Reaves Utility Income Fund (NYSE Alternext US: UTG) announced the next three monthly dividends at a rate of $0.115 per common share per month, unchanged from the per share rate paid for the previous quarter. The dividend represents an annualized yield of 11.8% based on the current market price. As of April 3, 2009, the Fund’s market price was $11.70 per share and its net asset value was $12.52.

A portion of the distribution may be treated as paid from sources other than net income, including but not limited to short-term capital gain, long-term capital gain and return of capital. The final determination of the source of all distributions in 2009, including the percentage of qualified dividend income, will be made after year-end.

Not less than eighty percent of the Fund’s assets will continue to be invested in the securities of utility companies. As a policy, the Fund continues to strive to provide a high level of after-tax income and total return consisting primarily of tax-advantaged dividend income and capital appreciation.

Ronald Sorenson, CEO, Chief Investment Officer of W. H. Reaves, and portfolio manager of the Fund, noted recently that the he still expects most of the companies owned by the Fund to maintain their dividends in the coming year. Many, like AT&T, Duke Energy, and Progress Energy (each of which represented approximately 5% of the Fund’s holdings as of 3/31/09), he thinks, are likely to increase them. Sorenson pointed out that many of the companies that recently cut their dividends are financials with fundamentally flawed business models or industrials subject to rapidly deteriorating global demand. “Utilities and telecoms, on the other hand,” Sorenson added, “provide largely non-discretionary services. Demand for these services may decline, and earnings may be less than we expected six months ago, but the fundamental ability of these companies to generate profit is not significantly diminished.” “Moreover,” he noted, “we invest mostly in companies with strong balance sheets, which help them to sustain their dividends and give them access to credit markets even in these difficult times.”