North American Income Trust delivers on its objective

North American Income Trust delivers on its objective – As an income fund seeking to deliver an attractive and growing dividends from investing in North American companies, it is appropriate that North American Income Trust (NAIT) asks to be compared to an index equivalent to its objective.  It does this by comparing itself to the Russell 1000 Value index, as well as the main S&P 500 index.

In that regard, for the year to 31 January 2018, the company’s NAV per share rose by 7.1% on a total return basis in sterling terms. This was ahead of the reference Russell 1000 Value index, which returned 3.7% but was behind the S&P 500 index return, which rose by 11.8%.

The final dividend per share of 16.0p, which will take the total dividends for the year to 39.0p (2017 – 36.0p), an increase of 8.3%.  The total dividend represents a yield of 3.0%, compared to the 1.8% yield from the S&P 500 index.

At the end of the year, the portfolio held 94% in equities in 41 equities and approximately 2% in 7 corporate bonds.


The strongest-performing sectors within the Russell 1000 Value Index for the period included technology, financials, materials and healthcare. However, telecommunications services, real estate and energy sectors recorded negative returns and significantly underperformed the overall market. The relatively higher dividend-paying telecommunication services and real estate sectors lost ground as US Treasury yields and investors moved into growth stocks.

The manager stated that the outperformance of the equity portfolio relative to the Russell 1000 Value index was primarily due to both stock selection and underweight allocations to the industrials and energy sectors, as well as stock selection in healthcare. The largest individual stock contributors to performance were underweights in General Electric and Merck. The fund was also underweight Wells Fargo, which experienced significant weakness in its energy-related businesses and cut in its quarterly dividend in November by 50%. 

Stock selection in the consumer staples sector and an overweight to telecommunication services weighed on the equity portfolio’s performance for the review period. The most notable detractor from performance among individual holdings was brewer Molson Coors Brewing Co., which reported a year-over-year decline in revenue for the third quarter of its 2017 fiscal year.

NAIT : North American Income Trust delivers on its objective

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