"Institurional investors are still largely underweight in the utilities sector...and the reluctant flow of cash from large funds will probably keep the general utilities area fairly buoyant."
 
  -Lowell Miller
 
 
Fields in Dutchess County Copyright Judy Glasel  
Global Utilities + Infrastructure
Providing both rising income and growth, this portfolio seeks to participate in both the stability and dynamic growth of essential services and infrastructure worldwide. The stability arises from the fact that utilities and infrastructure are in constant demand and continuously generating revenues. The growth arises due to rising populations and demographic shifts that drive usage. In the developing world growth arises as economies push toward a developed-world standard of living.
Investment Philosophy
Within the universe of utilities, financially strong stocks with rising dividends offer the most consistent performance as well as the highest added value. Over time, increases in dividends induce increases in the price of the equity producing those dividends. Utilities that are low-cost producers, serve territories with a favorable competitive environment, and that conservatively exploit new opportunities will consistently generate rising revenues and rising dividends.
     
   
   
   
   
   
     
   
   
   
   
   
   
     
   
   
   
   
 
 
Investment Objective
Our objective is to exceed the total returns available from fixed income strategies of intermediate or long-term duration without increased volatility, and to provide investors with a unique path to participate in the equity markets. The goal is to provide investors with a current stream of income, growth of income, and growth of the underlying principal.
 
Investment Strategy
The process begins with a universe of traditional utilities-providers of water, gas, electric, and telecommunications services-to which some other essential services (waste disposal, natural gas and oil production, infrastructure equipment, and wireless communications companies) are added. Financially weak stocks are eliminated, as are stocks with a high ratio of dividends to earnings since there is little chance of a dividend increase for these issues. Risk/reward analysis and a socially responsible philosophy converge (we hold no nuclear-based electrics, for example) to produce a list of eligible, financially strong candidates.
 
In addition to high financial strength, a low dividend payout ratio, and a history of dividend increases, a company should offer a congenial regulatory environment, a sound competitive business position, growth demographics, and an absence of visible risk. While we prefer companies that have shown proven positive benefits from careful diversification that leverage their basic management strengths, we also consider diversification skeptically from a risk standpoint. Too, in the current environment of reduced regulation, we look for consolidation opportunities.
 
Portfolios contain 25-35 stocks in all the essential services, are fully invested, and are selected on a bottom-up basis. All stocks play a "role" as an element in a compounding machine of rising dividends. They may be held for a lifetime if they continue to play that role. Stocks are sold when companies fail to raise dividends, when prices increase to a point of overvaluation, when new risks manifest, or when we need to "make room" for a new and improving company. Occasionally we will invest in companies that do not pay a dividend but that offer strong prospects overall.