Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a888572

Henderson’s Lofthouse: oil woes overshadowing divi hotspots

Encouraging increases are being overlooked as attention is focused on hardship in the resources sector, says income manager.

 
Henderson’s Lofthouse: oil woes overshadowing divi hotspots

Investors' focus on the falling oil price and the inevitable curtailing of dividends in the resources sector is leading them to overlook income-paying opportunities in the broader market.

That is according to Ben Lofthouse, who co-runs the £686 million Henderson Global Equity Income fund and manages the Henderson International Income (HINT ) investment trust.

In an investment update, Lofthouse said investors had rightly focused on defensive parts of the market following the oil price plunge, but cautioned against becoming too conservative.

Lofthouse said he was avoiding areas where more dividend cuts were likely, namely mining and oil, but added there was seemingly a belief in markets that all income-paying companies were under pressure.

‘The outlook for dividend growth is actually quite good,’ he said. 'We have seen Taiwan Semiconductor (TSM.N) increase its dividend by 33% which is a pretty big statement.

‘We have seen a number of big European institutions, like AXA (AXAF.PA), which we own, increase their dividend by double digit amounts and even a French house builder increasing its dividend by 10% for next year. I think dividend growth in many sectors is quite good.

‘It will be overshadowed by the resources sector. We are definitely set to see cuts in the mining and commodities sector this year and next and it is likely that we continue to see oil, with many US oil companies cutting their dividend this year, and that will take the edge off top line growth.’

Tapping telcos

Instead, Lofthouse (pictured) said he was focusing on areas of the market which are showing resilience, as well as undergoing meaningful restructuring. Telecommunications, which makes up 9.6% of the fund, was a prime example, he said.

‘We have got a large position in telecommunications and that is a sector [which] perhaps over-invested in the past and has been restructuring and we are now seeing the fruits of that. We are seeing better data usage and we invest in certain markets around the world and telecoms has been a good one for us.’

Elsewhere, Lofthouse said he was still heavily invested in financials but with a clear emphasis on insurance and ancillary industries rather than banks.

‘We have quite a big exposure to financials but within that we have quite low exposure to banks. In terms of places we are avoiding, we don’t have any exposure to European banks and we don’t have very much in mining and we are underweight oil. We are avoiding the areas where dividend cuts are more likely.’

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: The sterling slump: what’s next?


After Boris announced he was backing Brexit, sterling suffered its biggest slump in six years. Our Market Mavens discuss. Follow the Market Mavens LinkedIn page for weekly videos, in which our panel of industry experts share their views on financial news

The Citywire guide to investment trusts

In association with Aberdeen Asset Management

More about this:

Look up the funds

  • Henderson Global Equity Income A Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

Look up the fund managers

  • Ben Lofthouse
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

David Kempton: 5 stocks I'm buying as EU vote looms

by David Kempton on May 24, 2016 at 17:15

Sorry, this link is not
quite ready yet