Identifying companies that deliver sustainable and growing dividends over time.
Leading Australian equities investment manager, DNR Capital, has launched a new fund providing income seeking investors with a growing dollar income profile, to offset the current low interest rate environment – the DNR Capital Australian Equities Income Fund.
The Fund is managed and led by Chief Investment Officer, Jamie Nicol and Portfolio Manager Scott Kelly, under the same investment guidelines as the underlying strategy, the Australian Equities Income Portfolio.
“We are excited to offer another quality product to Australian investors. It’s a natural progression for this income generating investment strategy which has delivered for investors since inception in 2007.
“The Fund targets quality companies at attractive prices that provide sustainable and growing dividends over time. Its investment philosophy centres on six ‘quality’ factors which we believe contribute to medium-to-long-term outperformance: superior industry position, a sound balance sheet, strong company management, earnings strength, income sustainability and growth, and low ESG risk.” Nicol said.
“In the current low interest rate environment, meeting retiree and income seeking investor needs has become more challenging. Alternatives like cash, bonds and fixed interest are increasingly unattractive in our view,” notes Portfolio Manager, Scott Kelly.
“The Fund’s dual performance objective of capital and income should appeal to investors seeking a portfolio of quality companies which aims to grow the dollar value of income received by investors year on year. This same dual objective has helped the strategy deliver an annual gross yield of 6.6%1 for investors since inception.” said Kelly.
“Now more than ever, income seeking investors should consider a higher allocation to Australian equities with a focus on tax-advantaged, reliable and growing income generation. Income investors are generally seeking exposure to a diversified portfolio of quality companies at reasonable prices, with good visibility on long-term dividend sustainability and after-tax benefits.
A high conviction and concentrated equities Fund, focused on sustainable and growing income generation, increases the compound total return over time and helps retirees achieve their income goals” Kelly said.
He added: “We categorise income-generating companies as:
- Growers: high-conviction stocks that may be paying a below-market dividend yield, however we see a clear path towards delivering a sustainable and growing income profile in the medium term – REA Group (REA), SEEK (SEK).
- Compounders: quality stocks operating within a robust industry structure that have a strong competitive position, underpinning attractive and sustainable income growth – Amcor (AMC), IPH (IPH).
- Cows: stocks with a solid balance sheet and capital management potential that are being undervalued on traditional earnings-based metrics – Aurizon Holdings (AZJ), Wesfarmers (WES).
- Yielders: quality companies at attractive valuations that are delivering sustainable and cash-backed dividends, however with little growth – Suncorp Group (SUN), BHP Group (BHP).”
The Fund has generated strong performance since its recent inception in March 2020 to 31 July 2020, having outperformed the S&P/ASX 200 Industrials Accumulation Index by 8.26%2.
- Gross yield as at 31 July 2020.
- Outperformance as at 31 July 2020 since inception of 11 March 2020.
IMPORTANT NOTE: The information relating to DNR Capital has been prepared by DNR Capital Pty Ltd, AFS Representative – 294844 of DNR AFSL Pty Ltd ABN 39 118 946 400, AFSL 301658. Whilst DNR Capital has used its best endeavours to ensure the information within this document is accurate it cannot be relied upon in any way and you must make your own enquiries concerning the accuracy of the information within. The information in this document has been prepared for general purposes and does not take into account your particular investment objectives, financial situation or needs, nor does it constitute investment advice. Before making any financial investment decisions you should obtain legal and taxation advice appropriate to your particular needs. DNR Capital will not be responsible or liable to anyone who acts or relies upon anything contained in, or omitted from, this document. Past performance is not indicative of future performance.