Stephen Thornber, manager of the Threadneedle Global Equity Income Fund, picks five global stocks which are all yielding more than 5%:
Blackstone is the largest alternative asset manager in the world and is benefiting from a number of powerful drivers to its business. Banks around the world are being forced to de-leverage as tighter controls on capital are implemented by regulators, Blackstone with its strong capital base, ability to raise new funds and management skills, is ideally placed to acquire assets at attractive prices that the banks are being forced to sell. Demand for alternative investments is also growing as investors seek to diversify their investments and Blackstone has a strong brand, scale and a diversified long-life asset base. Together with a strong balance sheet and a commitment to an attractive dividend pay-out, Blackstone is yielding 6% currently and we believe this can grow by over 10% pa for the next few years.
Enterprise Products is a US utility company which operates oil and gas pipelines and transfer and storage facilities. Enterprise is benefitting from the growth in energy production from the US shale regions, production here has grown rapidly, but the necessary infrastructure is struggling to match this growth. Enterprise’s earnings are stable thanks to its long-term contracts, it has little energy price risk as most of its contracts are related to volumes, not value and it has a growth dimension unusual in the utility sector because it is expanding its pipeline network and signing new customers as shale production increases. Enterprise has a yield of 5% and has grown its dividend every year for the past 13 years.
NagaCorp is a Cambodian casino and entertainment operator and has a 40 year exclusive casino licence for the capital Phnom Penh. Positioned in fast growing IndoChina, NagaCorp is leveraged to the region’s economic growth, increased tourism and the growing demand for gaming destinations. NagaCorp has a strong balance sheet, with no debt, low cost operations, a favourable tax regime and a significant expansion project underway that will double its capacity by 2015. NagaCorp is trading at a discount to the Macau casinos and pays a 5.5% dividend.
Prosafe is the world’s leading operator of floating accommodation rigs and provides accommodation rigs to energy companies to house their staff and contractors when they undertake maintenance on offshore fields. Demand is strong as offshore production activity increases, existing rigs age and require more maintenance, and also by tighter health and safety regulations. Prosafe operates the largest and most sophisticated fleet, meaning it can charge the highest rates and operate in the toughest environments. Prosafe has a yield of 5.8% which has grown by over $20 a year in the last 5 years, a strong balance sheet with very little debt and is investing in two new rigs to meet future demand.
Digi.com is the third largest mobile telecom company in Malaysia, Digi’s growth is being driven by strong economic growth in Malaysia, the increasing usage of mobile phones and the pickup of data usage as smartphones become a larger part of the mobile market. Digi currently yields over 5% and I expect its profits to grow by 20-25% this year. The company’s debt free balance sheet means management have committed to increasing its dividend in line with its profit growth. Digi is part owned by Telenor, the Norwegian telecoms company, who have introduced European style cash management systems and levels of corporate governance, reinforcing our confidence that the company can deliver earnings growth and a high and growing dividend in the next few years as mobile usage continues to grow in Malaysia.
Stephen Thornber joined Threadneedle in 1994 and is a Global Equity Fund Manager. He also heads up the global oil sector research team. Stephen started his career at Touche Remnant and has also worked for Eagle Star Investment Managers, Aberdeen Fund Managers and the Kuwait Investment Office. He graduated with an honours degree in Business and Finance, Plymouth Polytechnic and is also an Associate of the UK Society of Investment Professionals (UKSIP).