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It’s all about dividends, says Harry Nimmo
Cash generative stocks like Moneysupermarket and Hargreaves Lansdown are boosting the performance of the Standard Life Investments Smaller Companies investment trust run by Harry Nimmo.
Dividends and cash generative stocks are the key to investing says Harry Nimmo, manager of the Standard Life Investments Smaller Companies investment trust.
He’s buying into dividend rich stocks like Moneysupermarket (MONY.L) and likes online businesses that have high margins, fixed costs and excess cash to return to shareholders.
Another stock in this category, and one used by many Citywire Money readers, is Hargreaves Lansdown (HL.L), operator of the country's biggest funds supermarket, which will return 93% of its post-tax profits to shareholders with a 22.6p dividend per share this year.
Nimmo manages the £160 million trust and the Standard Life Investments UK Smaller Companies fund, an open-ended fund with similar holdings, which has just over £1 billion in assets under management.
The investment trust has outperformed the fund because its gearing, or borrowing, has given it an edge when markets have risen.
However Nimmo agrees that gearing can cause problems for the trust if the market goes through a downturn but he has a positive outlook on the markets for next year and believes we are seeing the first signs of a recovery in both the US and UK.
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by Gavin Lumsden on May 17, 2013 at 13:49
2 comments so far. Why not have your say?
richard gere
Nov 26, 2012 at 11:10
According to the financially theory, a corporation will issue a dividend when they can’t invest in a project that meets the shareholder investment return expectancies. Based on this premise, the corporation rather gives money back to its owner (e.g. the shareholder) through a dividend payout.
report thisIan Holmes
Dec 01, 2012 at 13:37
I have entrusted some of my hard earned cash to Mr Nimmo and I use HL for my investments, ISAs and SIPP, so I am kindly disposed to both. However, something that intrigues me: how can a "smaller companies" fund justify investing in a FTSE100 company with HLat number 80 being one of the top 10 holdings?
Just a thought!
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