Counting your rewards
WHAT HAVE THEY BEEN BUYING AND SELLING?
For retiree investors, protecting capital must be a priority. However, many people make the mistake of seeing this only in absolute terms. If they have R3 million, they want to still have R3 million next year. But what about inflation? If your capital doesn’t increase, inflation means you’re growing poorer.
It’s vital for retiree investors to ensure they’re able to generate an income from their capital and grow that capital to protect against inflation.
Equity funds with a focus on dividends can play this role in a portfolio. The dividend stream delivers an income while underlying stocks grow in value in the long term.
The tables show which local counters the Marriott Dividend Growth Fund, Bridge Equity Income Fund and Counterpoint High Yield Fund bought into and sold out of between March 31 2016 and March 31 2017. The share must have had a weighting of over 1% to be considered.
Marriott looks for companies with sustainable dividend streams, so its portfolios don’t tend to go through too many changes. The only addition over the period was British property development and investment firm Hammerson, which listed on the JSE in September last year.
The managers sold out of Nedbank and reduced exposure to Standard Bank.
Marriott has therefore shown preference for defensive industrials like BAT, which offers a yield of over 3%. The managers also added to their AVI position.
Bridge runs an extremely stable portfolio on this fund. Its holdings are more or less equally weighted, so there’s little movement within the portfolio. The only change was to remove Nampak and bring in Netcare.
Nampak recently announced it wouldn’t pay a dividend, which excludes it from a fund of this nature. Netcare has consistently paid out dividends for over 15 years; it’s currently trading on a yield close to 4%.
Counterpoint’s portfolio is much larger than the other two, but didn’t see huge changes. Dividend funds tend to show lower turnover as the companies they look for are generally more consistent performers.
Counterpoint bought into Nedbank and added Truworths. The retailer’s share price has gone nowhere in three years, but it is offering an appealing dividend yield of over 6%.
Two of the fund’s more interesting holdings are property counters Stor-Age and Investec Australia Property Fund. Stor-
Truworths International Investec Australia Property Fund
Age is the only listed real estate company in self storage. It’s performed well since its November 2015 listing and is offering a yield of over 7%.
Investec Australia offers an opportunity to diversify away from South Africa-specific risks and delivers a yield north of 7%.
The table below shows the funds’ top-five local holdings at March 31 2017.