Q1 2022 Dividend Growth Update

April 26, 2022

At Reaves, we believe one signal of a company’s strength and the durability of future earnings is its ability to grow dividends. As such, it was encouraging to see the majority of our holdings grow their dividends over the past 12 months, many at a faster pace than their respective sector average.

In total, 17 of the 20 dividend-paying stocks1 in the Reaves LTV Wrap Composite2 either raised their dividend or initiated one in the past year. Two maintained the same level — Canadian National and Shaw Communications. While Exelon Corp reduced its dividend, its shareholders received shares of Constellation Energy and the dividends received from the combined companies increased slightly year over year.3 None of the companies held in the portfolio reduced their dividend. The average weighted rate of dividend growth for the composite was 8.5%.

In aggregate, we believe the dividend growth exhibited by these companies speaks to their ability to compound earnings and dividends over time and aligns with the long-term objectives of this investment strategy — to generate both income growth and capital appreciation.

In the tables below, we sorted by sector the companies owned in the composite, calculated dividend growth in the past year, and compared it to the average dividend growth rate of their respective sector.

 
Real Estate

The table below shows the annual dividend increase for each Real Estate stock owned as of March 31, 2022, in a composite of wrap portfolios managed with the Reaves Long Term Value Strategy.

2022.04 Reaves Blog Q1 Dividend Growth Update-01

 

Utilities

The table below shows the annual dividend increase for each Utility stock owned as of March 31, 2022, in a composite of wrap portfolios managed with the Reaves Long Term Value Strategy.

2022.04 Reaves Blog Q1 Dividend Growth Update-02.1

 

Industrials

The table below shows the annual dividend increase for each Industrial stock owned as of March 31, 2022 in a composite of wrap portfolios managed with the Reaves Long Term Value Strategy.

2022.04 Reaves Blog Q1 Dividend Growth Update-03

 

Communications Services

The table below shows the annual dividend increase for each Communications Services stock owned as of March 31, 2022, in a composite of wrap portfolios managed with the Reaves Long Term Value Strategy.

2022.04 Reaves Blog Q1 Dividend Growth Update-04

 

Materials

The table below shows the annual dividend increase for each Materials stock owned as of March 31, 2022, in a composite of wrap portfolios managed with the Reaves Long Term Value Strategy.

2022.04 Reaves Blog Q1 Dividend Growth Update-05


 

The Case for Essential Service Infrastructure

 

Disclosures and Definitions:
Reaves Asset Management is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Registration does not imply any skill or training. Reaves is a privately held, independently owned “S” corporation organized under the laws of the State of Delaware.

The information provided in this blog does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities and sectors listed. Investors should consider the investment objective, risks, charges and expenses of all investments carefully before investing. Any projections, outlooks or estimates contained herein are forward looking statements based upon specific assumptions and should not be construed as indicative of any actual events that have occurred or may occur.

1 As of 3/31/22, the composite included six companies which do not currently pay a dividend. They are Charter Communications, Alphabet, T-Mobile US, Discovery, GXO Logistics and PG&E.

2 Reaves LTV Strategy is represented by the LTV SMA Wrap Composite. This composite contains those LTV discretionary portfolios with wrap (bundled) fees. Wrap accounts are charged a bundled fee which includes the wrap sponsor fee, as well as, Reaves’ investment advisory fee. Due to compliance requirements, the net-of-fees calculation is computed based on the highest annual fee assigned by any wrap sponsor who utilizes this portfolio in an investment wrap program (300 basis points from 1/1/03 through 12/31/16 and, effective 1/1/2017, 250 basis points). The LTV SMA Wrap Composite performance consists of money-weighted, time-weighted returns and it includes the reinvestment of all dividends and other earnings. The inception date of the composite is December 2002; however, the composite was created in January 2013. This composite has been managed in a similar manner to the LTV ERISA Composite which ended in December of 2019. The LTV SMA Wrap Composite does not represent all of Reaves’ assets under management.

3 During Q1 2022, Exelon Corp spun off Constellation Energy to its shareholders. Exelon shareholders received 1 share of Constellation for each 3 shares of Exelon held. Exelon reduced its quarterly dividend from $0.3825 to $0.3375 and Constellation initiated a quarterly dividend of $0.141. The Q1 2022 combined dividends totaled $0.3845, a slight increase from the Q1 2021 quarterly dividend from Exelon of $0.3825.

4 The S&P 500 Real Estate Index comprises stocks included in the S&P 500 that are classified as members of the real estate sector.

5 The S&P 500 Utilities Index is a capitalization-­weighted index containing electric and gas utility stocks (including multiutilities and independent power producers). Prior to July 1996, this index included telecommunications equities.

6 The S&P 500 Industrials Index comprises those companies included in the S&P 500 that are classified as members of the industrials sector.

7 The S&P 500 Communication Services Index comprises those companies included in the S&P 500 that are classified as members of the communication services sector.

8 The S&P 500 Materials Index comprises those companies included in the S&P 500 that are classified as members of the materials sector.

Weighted average is a calculation that takes into account the varying degrees of importance of the numbers in a data set. In calculating a weighted average, each number in the data set is multiplied by a predetermined weight before the final calculation is made.

Past results do not guarantee future performance. Further, the investment return and principal value of an investment will fluctuate; thus, investor’s equity, when liquidated, may be worth more or less than the original cost. This document provides only impersonal advice and/or statistical data and is not intended to meet objectives or suitability requirements of any specific individual or account.

All investments involve risk, including loss of principal. All data is presented in U.S. dollars.
Cash is cash and cash equivalents.
An investor cannot invest directly in an index.
Important Tax Information: Reaves Asset Management and its employees are not in the business of providing tax or legal advice to taxpayers. Any such taxpayer should seek advice based on the taxpayer’s own individual circumstances from an independent tax adviser.
Fees: Net performance reflects the deduction of advisory fees which are described in detail in our Form ADV Part 2A.
Please contact your financial professional, or click the following links, for a copy of Reaves’ Form ADV Part 2A and Form CRS.
Additional information about Reaves may be found on our website: www.reavesam.com.
2022 © Reaves Asset Management (W. H. Reaves & Co., Inc.)

Receive insights about essential service infrastructure