Portfolio Manager Perspectives

Jeff Benjamin

Dividend-slicing trend nearly over, says Henderson's Job Curtis

Good time to load up on high-yielding equities in food, beverage and other ‘classic defensive' sectors

Feb 23, 2010 @ 3:11 pm

By Jeff Benjamin

Corporate-dividend payouts have fallen over the past few years, but the bottom is now in sight, according to Job Curtis, manager of the $570 million Henderson Global Equity Income Fund (HFQAX).

“I think we're through the worst of it,” he said. “Overall, any company that was going to cut dividends has done so by now.”

With that in mind, Mr. Curtis said that even an “anemic recovery” will provide a good environment for high-yielding equities. “We've been though a massive storm, and right now, you have to be quite focused on cash-generative industries,” he said.

The fund is managed out of the London headquarters of Henderson Investment Management Ltd., one of the United Kingdom's largest money management firms.

In particular, Mr. Curtis prefers pharmaceutical companies, despite the challenges that come with expiring patents and continuing efforts in the U.S. for health care reform.

Food, beverage and tobacco companies are also appealing from a dividend perspective, he said.

“These are classic defensive sectors,” he said. “No matter what's going on in the world, people do carry on with eating, drinking and smoking.”

As with all the companies and sectors he likes in the current environment, the emphasis is on growth coming largely from emerging markets.

By geographic region, the global portfolio of about 70 stocks has a 34% weighting in the U.K., followed by 27% in continental Europe, 17.5% in the Asia-Pacific region and 15% in the United States.

By sector, the fund is most heavily weighted in pharmaceuticals at 12.8%, followed by 12.2% in energy, 9.9% in capital goods and 9.1% in food, beverage and tobacco companies.

Across the portfolio, the average dividend yield is 4.5%, but through a dividend capture program, Mr. Curtis was able to bump that yield up to 7.5% last year.

The dividend capture strategy involves buying shares of companies a few months before dividends are scheduled to be distributed to investors and then selling the shares shortly after the distribution. The strategy works best outside the U.S., where it is more common for companies to distribute bigger dividends only once or twice a year, as opposed to quarterly.

While the dividend capture strategy does generate higher yields, it also boosts turnover, which can swing as high as 200% annually for the fund.

Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives..


What do you think?

View comments

Recommended for you

Featured video


Connecting with teachers key to adviser impact on literacy

Advisers can help with curriculum if they don't have the bandwidth to visit classrooms.

Latest news & opinion

Morgan Stanley rides wealth management train to solid first quarter

Chairman and CEO James Gorman expresses excitement about expanding into workplace plans with purchase of Solium.

Fate of New Jersey fiduciary standard could come down to politics, court

With strong support from N.J. Gov. Phil Murphy, the proposal has momentum out of the gate.

Growing wealth fuels demand for family offices

The market for serving wealthy families may be bigger than some data suggest.

FPA backs away from controversial plan to merge chapters

The group is no longer seeking to dissolve local chapters as separate legal entities.

RIA succession plan takes the long view

The transfer of ownership over 22 years leverages company shares as an employee reward-and-retention tool.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print