The High Yield fund invests in stocks which pay higher than
average dividends. The thinking behind this strategy is that
companies with an ability to pay higher dividends on a sustained
basis generally provide stable growth opportunities.
Stocks included in the fund are selected according to a set of
financial screening criteria to identify those whose share price is
likely to be less volatile than average. This reduced volatility
combined with above average returns from dividends results in a
relatively stable portfolio with good potential for growth. The
indicators used to select such companies include:
- Above average dividend payouts.
- Low debt to equity ratios.
- High cash cover on dividend payments.
- Low price earnings ratios with stable earnings growth expected.
Large companies with a stable and diversified earnings base and
strong cash flows usually display such criteria. High yield equity
portfolios constructed in this manner aim to out-perform market
indices in stable or bear market conditions. Bloxham will aim to
invest in a spread of global sectors to reduce sector specific risk.
Why do dividends matter?
The payment of a dividend imposes a discipline on a company.
Dividend paying companies are shareholder friendly.
Dividend paying companies understand capital management and
the ROE (return on equity) of such companies tends to be higher.
Between 1950 and 2000, some 72% of the total return an
investor achieved in the U.S. market was delivered via the
dividend yield.
In Europe ex U.K. the average contribution of dividend to total
return has been 62% over the same time period.
“Ignoring dividends can be a very costly error. Earnings may look
sparkling, but turn out to be plain glass. A (dividend) payout, like a
diamond, is forever.” (Philip Coggan-Financial Times)
Suitability
The High Yield fund is designed for investors looking for reduced
volatility from their investments, but with good potential for gains.
While its low volatility and above average dividends makes it a
suitable fund for individuals who require income, the main objective
of the fund is to generate stable, consistent growth with low
volatility.
Provider: Irish Life
- Personal Investments (Signature/Signature 2/Signature Saver)
- Personal/Executive Pensions (Complete Solutions and Navigator)
- ARFs and AMRFs / Self Administered Pensions (Complete Solutions)
- Buy Out Bonds
Provider: New Ireland
- Lump sum & regular premium investments (SmartFunds & SelectSaver)
- Personal/ Executive Pensions
- Trustee Investment Plan
- Personal Retirement Bond
- ARFs and AMRFs
