Bank of America Corp
Change company Symbol lookup
Select an option...
BAC Bank of America Corp
SU Suncor Energy Inc
USOI Credit Suisse X-Links Crude Oil Shares Covered Call ETNs
GE General Electric Co
HLNE Hamilton Lane Inc
HLI Houlihan Lokey Inc
HIG Hartford Financial Services Group Inc
HIBB Hibbett Sports Inc
HHC Howard Hughes Corp

Financials : Banks | Large Cap Value
Company profile

Bank of America Corporation is a bank holding company and a financial holding company. The Company is a financial institution, serving individual consumers and others with a range of banking, investing, asset management and other financial and risk management products and services. The Company, through its banking and various non-bank subsidiaries, throughout the United States and in international markets, provides a range of banking and non-bank financial services and products through four business segments: Consumer Banking, which comprises Deposits and Consumer Lending; Global Wealth & Investment Management, which consists of two primary businesses: Merrill Lynch Global Wealth Management and U.S. Trust, Bank of America Private Wealth Management; Global Banking, which provides a range of lending-related products and services; Global Markets, which offers sales and trading services, and All Other, which consists of equity investments, residual expense allocations and other.

Closing Price
Day's Change
0.64 (2.51%)
B/A Size
Day's High
Day's Low
(Above Average)

10-day average volume:

UPDATE: This unusual income fund has a dividend yield of 6.5% and has beaten the S&P 500

5:44 pm ET June 12, 2020 (MarketWatch)

By Philip van Doorn, MarketWatch

John Bartlett at the Reaves Utility Income fund selects companies with high returns on equity from expansion or improvement projects

Investors usually must contend with a trade-off between income and growth.

Not so with the Reaves Utility Income fund, which has a 6.48% dividend yield and performance that has beaten the S&P 500 Index over the past 10 and 15 years.

That's unusual, given that the benchmark index is driven by a heavy concentration in large-cap technology companies including Inc. (AMZN), Apple Inc. (AAPL), Alphabet Inc. (GOOGL) (GOOGL) and Microsoft Corp. (MSFT).

Here's a comparison of the fund's returns against the S&P 500 for various periods:

Total return - 2020 through May 29 Average return - 3 years Average return - 5 years Average return - 10 years Average return - 15 years

Reaves Utility Income -7.9% 3.5% 8.8% 13.5% 11.1%

S&P 500 Index -5.0% 10.2% 9.9% 13.2% 8.7%

Sources: SS&C ALPS, FactSet

Scroll the table to see all the figures.

John Bartlett, who co-manages the fund at Reaves Asset Management, discussed its strategy, holdings and how utility companies operate in an interview.

Reaves Utility Income, which is a closed-end fund, is designed to provide a high level of after-tax income, along with capital appreciation, by holding a portfolio that is at least 80% invested in companies that provide products or services for generating or distributing electricity, gas or water, along with companies involved in telecommunications, infrastructure, toll roads and municipal services.

So it's a broad definition of "utility company," as you can see by looking at its top 10 holdings:

Company Ticker Industry Share of portfolio Total return - 2020 Total return - 3 years Total return - 5 years

NextEra Energy Inc. US:NEE Electric Utilities 4.9% 6% 95% 184%

Union Pacific Corp. US:UNP Railroads 4.7% -5% 64% 89%

Verizon Communications Inc. US:VZ Telecommunications 4.1% -5% 45% 45%

BCE Inc. US:BCE Telecommunications 4.1% -9% 7% 22%

WEC Energy Group Inc. US:WEC Electric Utilities 3.9% 1% 61% 123%

Dominion Energy Inc. US:D Electric Utilities 3.8% 4% 20% 47%

Altice USA Inc. Class A US:ATUS Cable/Satellite TV 3.6% -6% N/A N/A

Southern Co. US:SO Electric Utilities 3.2% -9% 30% 65%

Telus Corp. CA:T Telecommunications 3.2% -4% 19% 41%

Eversource Energy US:ES Electric Utilities 3.2% 0% 49% 99%

Source: FactSet

Conventional wisdom is that you cannot make a lot of money investing in capital-intensive, slow-growing businesses. Bartlett explained that some of those businesses can increase earnings as they invest in expanding or improving electric grids, pipelines, water or other infrastructure.

"Utilities get paid on the amount of investment they have on the ground," he said.

Infrastructure projects for regulated utilities are designed with regulators' input.

"The commission determines what kind of return on equity the utility can [expect], and then you can figure out how much a company can be allowed to earn," Bartlett said. So he and his team analyze the expansion or improvement projects plans as part of their investment-selection process.

As a South Florida resident, I pointed to Florida Power & Light Co., which has greatly reduced the amount of time it takes to restore electricity service after outages, over the past 16 years. (That is anecdotal, based only on my personal experience, living in an area with frequent power outages because of storm activity and an above-ground electric grid.)

Bartlett pointed out that FPL is a subsidiary of NextEra Energy Inc. (NEE), the largest holding of the fund.

He said NextEra was "a great company and very well-managed." Pointing to Florida, he estimated daily GDP of $1 billion a day for FPL's service area, and said that "the extent that they can drop a couple of days in general outage time," after a hurricane or tropical storm, "pays for the whole effort."

A lot of the fund's long-term success has come from its focus on investing for total return, while not using as much leverage (borrowing money to invest more and increase the portfolio yield) as it is allowed to, Bartlett said. The fund's maximum allowed leverage is 33%, while it was 22.9% leveraged as of May 29, according to Morningstar.

Monthly dividend

The focus on total return means distributing capital gains as part of the monthly dividend. Bartlett said the strategy is "to book our gains fairly early in the year, so we don't have to be forced to do anything that is not on our terms."

"We look at the fiscal year as a planning period," he said. "If we manage well, we can operate as we deem most prudent for the balance of the year."

Closed-end funds

A traditional open-ended mutual creates new shares as investors pour money in, and redeems them when investors sell. The shares are not traded publicly. The share price is really the net asset value (NAV), which is the sum of the market values of all the fund's holdings, divided by the number of shares. You can only buy or sell shares of a mutual fund once a day, at the market close.

Closed-end funds have a set number of shares. They are traded on public exchanges, as are exchange-traded funds (ETFs). However, most ETFs are passively managed, while closed-end funds are actively managed. Also, a closed-end fund might trade at a significant premium or discount to NAV, while an ETF tends to trade close to the NAV.

A closed-end fund can expand by issuing more shares, which is typically done through a rights offering that enables current shareholders to buy new shares at a discount.

A complication avoided

Some investors steer clear of closed-end funds because the fund managers sometimes decide to return some of the shareholders' own capital to them, as part of the dividend. This is can have tax advantages, but it may also be done simply to boost the yield. If a fund returns shareholders' own capital repeatedly, it leads to a decline in the NAV and the share price.

Bartlett said the Reaves Utility fund has never returned shareholders' own capital since it was established in 2004, and that it is against the firm's philosophy to do so.

"We place great importance on growing the income stream of UTG to the extent that we can support it. To us, supporting it means earning it," he said.

-Philip van Doorn; 415-439-6400;

(END) Dow Jones Newswires

June 12, 2020 17:44 ET (21:44 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

Earnings Calendar and Events Data provided by |Terms of Use| © 2020 Wall Street Horizon, Inc.

Market data accompanied by is delayed by at least 15 minutes for NASDAQ, NYSE MKT, NYSE, and options. Duration of the delay for other exchanges varies.
Market data and information provided by Morningstar.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses.
Please read Characteristics and Risks of Standard Options before investing in options.

Information and news provided by ,, , Computrade Systems, Inc., , and

Copyright © 2020. All rights reserved.