Start Off 2024 With Even More Dividend Growth

Dividend Growth, Income Investing

As I start a new year, I work through strategies that will let me make more money as we go through the year. The first quarter brings dividend increase announcements, and they put my focus on dividend growth investing. Every day, news crosses my desk highlighting the power of dividend growth.

Investing in growing dividends provides two advantages: the obvious one is that your portfolio generates an ever-growing income stream. Who doesn’t like to earn more income every quarter and every year?

Less obvious is the fact that dividend growth propels share price appreciation. For example, if a stock that yields 4% increases its dividend by 10%, the share price must increase by 10% to keep the yield at 4%. This automatic push for share price gains gets lost in the ups-and-downs of the market, but after a period of years, you will see that your dividend growth stocks have nicely gained in value.

There are different ways to benefit from dividend growth, too.

Here’s one of my favorites…

Model car on stacks of coins

The Reaves Utility Income Trust (UTG) sends a quarterly report showing the year-over-year dividend growth from the portfolio stocks. The list of over 50 stocks is too long to reprint, but here are the first few listings:

The complete list shows year-over-year weighted average dividend growth of 7.9%.

UTG is a high-yield closed-end fund (CEF) that pays monthly dividends and currently yields 8.7%. The dividends consist of a combination of earned income (dividends) and realized capital gains.

UTG has paid steady, slowly growing dividends for almost 30 years. The fund has never included any return of capital as part of the distributions. The focus on owning dividend growth stocks means the managers at Reaves Asset Management always have capital gains to harvest to support the fund’s high yield and monthly dividends.

The Reaves Utility Income Trust is an alternate way to invest in dividend growth. And, it’s an investment that pays you a great return every month.