INTERVIEW
THE INVESTOR
|
23
Rick Pushinsky
We like consumer-
facing companies where
growth may be slow,
but it is coming
Are there regional di erences
individend behaviour?Which
countries have the best track
record of paying dividends?
There are big regional variations.The
standout example is the US, where
companies are addicted to buying back
their shares rather than increasing
dividends so the cash yield is much
lower. In the UK and Europe, there is
a strong dividend culture. Here, if a
company increases its dividend, that is
seen as a good sign. In the US, shares
will often fall after a dividend increase
as the market views it as an indication
that the company has nothing better
to do with its cash.There is also a very
strong dividend culture inAsia, with
many companies having a good yield
and payment discipline. Japan has never
had a dividend-paying culture but that
is beginning to change. Prime Minister
ShinzoAbe has devised a new index
that measures shareholder return to
encourage companies to invest or pay
dividends, but change is slow.
Where are you nding the best
dividend opportunities?
We are underweight in the US, partly
because there are fewer companies
yielding more than 3%, and if they are
it is often in industries we do not want
to invest in.We have also reduced our
exposure toAsia because we do not
think countries in the region
can escape the impact of the
slowdown in China.Australia,
Europe and the UK we like, and we’ve
been adding to our exposure in Japan.
We like consumer-facing companies
where growth may be slow, but it is
coming.That includes US companies
such as L Brands – the owner of
Victoria’s Secret – and Six Flags, which
owns theme parks, and Hugo Boss in
Germany.We also like infrastructure
companies. Ferrovial may be a Spanish
company but its two biggest assets are
25% of Heathrow and the toll ring
road inToronto.These are quality
assets. Sydney airport is a fantastic
quality asset – passenger numbers are
increasing, particularly of Chinese
tourists who typically spend three to
ve times as much in duty free as other
nationalities.The airport has designed
its retail business to be particularly
attractive to these customers.
Howdo youview the risk of
dividend cuts? Howdo you
protect the fund against them?
We think utility and commodity
companies are particularly at risk
from dividend cuts because of falling
commodity prices.We sold some energy
stocks a year ago and they have cut their
payments in the past few months.We
think our disciplined approach means
we should see dividend income for our
fund/portfolio growing over time. If
we do not sell before a cut then we seek
to meet the management as soon as
possible. If the yield on the shares falls
below 3% after the cut, we will
always sell. If we do not think
the dividend has been cut
enough, we will sell.
