Duff & Phelps Utility and Infrastructure Fund Inc.: A Dividend Strategy for Income Investors in a Low-Yield World

In an era where traditional fixed-income assets struggle to generate meaningful returns, income-focused investors are increasingly turning to alternative vehicles like closed-end funds. Among these, the Duff & Phelps Utility and Infrastructure Fund Inc. (DPG) has carved out a niche with its 6.66% forward dividend yield as of 2025, a figure that dwarfs the paltry yields offered by 10-year Treasuries or high-grade corporate bonds. For investors prioritizing cash flow over capital appreciation, DPG's managed distribution plan and diversified portfolio of utility and infrastructure equities present a compelling case. However, the fund's recent negative dividend growth rate and reliance on capital gains warrant closer scrutiny.

A Stable Payout in a Volatile Market

DPG's dividend consistency is its most attractive feature. Since 2015, the fund has maintained a quarterly payout of $0.07 per share, translating to an annualized $0.28 distribution as of November 2025. This stability is underpinned by its managed distribution plan, which prioritizes net investment income and supplements it with net realized long-term capital gains when necessary. As of November 2025, 48.7% of the fund's distribution stems from net investment income, while 51.3% comes from long-term capital gains-a mix that avoids the tax-inefficient return of capital, which erodes shareholders' equity as per the fund's announcement.

This approach contrasts sharply with many closed-end funds that rely heavily on return of capital to maintain payouts, a practice that can become unsustainable during market downturns. DPG's strategy, by contrast, leverages the predictable cash flows of utility and infrastructure stocks-sectors known for their defensive characteristics and regulated revenue streams. Holdings like NextEra Energy Inc. and Duke Energy Corp. further reinforce this stability, as these companies are less susceptible to economic cycles.

Sustainability Amid Declining Growth

While DPG's yield is enticing, its dividend growth trajectory has been less robust. Over the past three years, the fund has experienced a negative average dividend growth rate of -15%. This decline, however, is not indicative of operational weakness but rather a reflection of the fund's disciplined approach to capital preservation. By prioritizing consistent payouts over aggressive growth, DPG aligns with the needs of income-focused investors who prioritize reliability over compounding returns.

Moreover, the fund's payout ratio-though not explicitly disclosed-appears sustainable given its diversified portfolio and the tax-advantaged nature of its distribution sources. As of November 2025, DPG's annualized distribution rate as a percentage of net asset value (NAV) stands at 5.88%, a figure that remains well within the range of industry peers. This metric, combined with a five-year average total return on NAV of 13.33%, suggests that the fund's strategy balances income generation with long-term capital appreciation as reported by StockTitan.

A Tax-Advantaged Edge

In a low-yield environment, tax efficiency is paramount. DPG's distribution composition-predominantly long-term capital gains and investment income-offers a distinct advantage over dividends sourced from return of capital or short-term gains. For instance, long-term capital gains are taxed at lower rates for most investors, reducing the drag on after-tax returns. This is particularly valuable for investors in higher tax brackets or those seeking to optimize their retirement portfolios as stated in the fund's announcement.

However, investors should note that the exact tax characterization of distributions will only be finalized via Form 1099-DIV after year-end. While the fund's 19(a) notices provide preliminary guidance, the final breakdown may vary slightly depending on realized gains and income during the year as noted in the business wire report.

Conclusion: A Strategic Fit for Income Portfolios

DPG's dividend strategy is a testament to the value of structured, tax-conscious income generation in a low-yield world. While its negative dividend growth rate may deter growth-oriented investors, the fund's focus on stability, diversification, and tax efficiency makes it a strong candidate for those seeking reliable cash flow. In a market where even blue-chip stocks offer yields below 3%, DPG's 6.66% forward yield-backed by a mix of investment income and long-term gains-stands out as a rare and sustainable option. For income-focused investors willing to prioritize consistency over growth, DPG represents a compelling addition to a diversified portfolio.