|SYMBOL||% OF PORTFOLIO|
|CME Group, Inc.||CME||3.5%|
|JPMorgan Chase & Co.||JPM||3.5%|
|The Home Depot, Inc.||HD||2.4%|
|Walgreens Boots Alliance, Inc.||WBA||1.5%|
|MFA Financial, Inc.||MFA||1.3%|
|Crown Castle International Corp.||CCI||1.2%|
|Ares Capital Corp.||ARCC||1.1%|
|Invesco Mortgage Capital, Inc.||IVR||1.1%|
|Two Harbors Investment Corp.||TWO||1.0%|
|Duke Energy Corp.||DUK||1.0%|
|KKR & Co. LP||KKR||0.9%|
|Dominion Resources, Inc.||D||0.9%|
|The Blackstone Group LP||BX||0.9%|
|LyondellBasell Industries NV||LYB||0.9%|
|Kinder Morgan, Inc.||KMI||0.8%|
|Apollo Investment Corp.||AINV||0.8%|
|Merck & Co., Inc.||MRK||0.7%|
|The Williams Companies, Inc.||WMB||0.6%|
|Digital Realty Trust, Inc.||DLR||0.6%|
|OUTFRONT Media, Inc.||OUT||0.6%|
|Lamar Advertising Co.||LAMR||0.5%|
|Chimera Investment Corp.||CIM||0.4%|
|Senior Housing Properties Trust||SNH||0.4%|
|Solar Capital Ltd.||SLRC||0.4%|
|Las Vegas Sands Corp.||LVS||0.4%|
|Och-Ziff Capital Management Group, LLC||OZM||0.4%|
|Apollo Global Management, LLC||APO||0.3%|
|Helmerich & Payne, Inc.||HP||0.2%|
|Capstead Mortgage Corp.||CMO||0.2%|
|Dynex Capital, Inc.||DX||0.2%|
|Ally Financial, Inc. Pfd, 8.50%||ALLY||0.1%|
|GMAC Capital Trust I Pfd, 8.125%||361860208||0.1%|
|Farm Credit Bank of Texas Pfd, 10.00%||30767E307||0.1%|
|First Tennessee Bank Pfd, 3.75%||337158208||0.0%|
|First Niagara Financial Group Pfd, 8.625%||33582V207||0.0%|
|Halcon Resources Corp. Pfd, 5.75%||40537Q407||0.0%|
|Morgan Stanley Pfd, 4.00%||61747s504||0.0%|
|Halcon Resources Corp.||HK||0.0%|
|SYMBOL||% OF PORTFOLIO|
|China Mobile Ltd.||941 HK||3.9%|
|Atlantia S.p.A.||ATL IM||2.5%|
|Vinci S.A.||DG FP||2.3%|
|BT Group plc||BT/A LN||2.1%|
|Vodafone Group plc||VOD||2.0%|
|Roche Holding AG||ROG VX||2.0%|
|Royal Dutch Shell plc||RDS/A||1.9%|
|Telenor ASA||TEL NO||1.7%|
|Swisscom AG||SCMN VX||1.4%|
|Novartis AG||NOVN VX||1.4%|
|Nestle SA||NESN VX||1.3%|
|TDC A/S||TDC DC||1.3%|
|DBS Group Holdings Ltd.||DBS SP||1.3%|
|Taiwan Semiconductor Manufacturing Co., Ltd.||TSM||1.3%|
|Singapore Telecommunications Ltd.||ST SP||1.0%|
|AXA S.A.||CS FP||0.9%|
|UBS Group AG||UBSG VX||0.9%|
|Total SA||FP FP||0.9%|
|National Grid plc||NG/ LN||0.9%|
|Electricite de France SA||EDF FP||0.8%|
|Husky Energy, Inc.||HSE CN||0.8%|
|Koninklijke Ahold NV||AH NA||0.8%|
|Reckitt Benckiser plc||RB/ LN||0.7%|
|KT&G Corp.||033780 KS||0.7%|
|Hopewell Holdings Ltd.||54 HK||0.7%|
|Toyota Motor Corp.||7203 JP||0.7%|
|Saudi Basic Industries Corp.||SABIC AB||0.6%|
|Telefonica Brasil SA||VIV||0.6%|
|Wolters Kluwer N.V.||WKL NA||0.6%|
|Jasmine Broadband Internet Infrastructure Fund||JASIF/F TB||0.6%|
|China Merchants Holdings International Co., Ltd.||144 HK||0.5%|
|MegaFon PJSC GDR||17GK LN||0.5%|
|Mining and Metallurgical Co. Norilsk Nickel JSC ADR||MNOD LI||0.5%|
|NN Group NV||NN NA||0.5%|
|Terna Rete Elettrica Nazionale S.p.A.||TRN IM||0.5%|
|ING Groep N.V.||INGA NA||0.4%|
|GAM Holding AG||GAM SW||0.4%|
|Sands China Ltd.||1928 HK||0.4%|
|Enagas SA||ENG SM||0.4%|
|MTN Group Ltd.||MTN SJ||0.4%|
|Sydney Airport||SYD AU||0.4%|
|Canadian Oil Sands Ltd.||COS CN||0.3%|
|Huaneng Power International, Inc.||902 HK||0.3%|
|Jiangsu Express Co., Ltd.||177 HK||0.3%|
|Gjensidige Forsikring ASA||GJF NO||0.3%|
|Bank of China Ltd.||3988 HK||0.3%|
|Advanced Semiconductor Engineering, Inc.||2311 TT||0.3%|
|NWS Holdings Ltd.||659 HK||0.3%|
|Coca-Cola Amatil Ltd.||CCL AU||0.3%|
|Aberdeen Asset Management plc||ADN LN||0.2%|
|Liechtensteinische Landesbank AG||LLB SW||0.2%|
|Mighty River Power Ltd.||MRP NZ||0.2%|
|Koninklijke Philips N.V.||PHIA NA||0.2%|
|China Resources Power Holdings Co.||836 HK||0.2%|
|EDP - Energias do Brasil SA||ENBR3 BZ||0.1%|
|Daqin Railway Co., Ltd.||601006 C1||0.1%|
|Centaur Funding Corp. Pfd, 9.08%||CNTAUR||0.1%|
|Yanbu National Petrochemical Co.||YANSAB AB||0.1%|
|Banque Cantonale Vaudoise||BCVN SW||0.1%|
|Wynn Macau Ltd.||1128 HK||0.1%|
|Mobile TeleSystems ADR||MBT||0.1%|
|St. Galler Kantonalbank AG||SGKN SW||0.1%|
|Barclays Bank plc Pfd, 7.10%||06739H776||0.0%|
|Jaguar Mining, Inc.||JAGGD US||0.0%|
|SYMBOL||% OF PORTFOLIO|
|Sirius International Group||964152AB8||0.2%|
|Laureate Education, Inc.||518613AD6||0.2%|
|Capital One Bank||14040HAN5||0.1%|
|NiSource Finance Corp.||65473QAS2||0.1%|
|NuStar Logistics LP||67059TAA3||0.1%|
|Genworth Holdings, Inc.||372491AA8||0.1%|
|Otter Tail Corp.||689648AR4||0.1%|
|Williams Companies, Inc.||969457BW9||0.1%|
|MetLife Capital Trust X||59156CAB7||0.1%|
|Time Warner Cable, Inc.||88732JAP3||0.1%|
|JPMorgan Chase & Co.||46625HHA1||0.1%|
|Enterprise Products Operating LP||293791AW9||0.1%|
|Zachry Holdings, Inc.||988745AA3||0.1%|
|Enbridge Energy Partners LP||29250RAR7||0.1%|
|Hartford Financial Services Group||416515AW4||0.1%|
|Energy Transfer Partners LP||29273RBA6||0.1%|
|Kinder Morgan Energy Partners LP||494550AZ9||0.1%|
|Oneok Partners LP||68268NAE3||0.1%|
|Entergy Gulf States Louisiana, LLC||29365PAN2||0.0%|
|Goldman Sachs Group, Inc.||38141GEU4||0.0%|
|Transatlantic Holdings, Inc.||893521AA2||0.0%|
|Arizona Public Service Co.||040555CL6||0.0%|
|C&S Group Enterprises, LLC||12467AAD0||0.0%|
|Williams Companies, Inc.||969457BU3||0.0%|
|WMG Holdings Corp.||92930MAG8||0.0%|
|TMX Finance, LLC/Titlemax Finance||87261NAG5||0.0%|
|Teppco Partners LP||872384AC6||0.0%|
|National Rural Utilities Cooperative Finance Corp.||637432LR4||0.0%|
|Ameren Illinois Co.||02361DAG5||0.0%|
|DCP Midstream, LLC||23311RAC0||0.0%|
|Comcast Cable Communications, LLC||20029PAG4||0.0%|
|Summit Midstream Holdings, LLC||86614WAC0||0.0%|
|American Airlines Group, Inc.||02377UAB0||0.0%|
|Gastar Exploration USA, Inc.||36729WAA1||0.0%|
|Coeur d'Alene Mines Corp.||192108AY4||0.0%|
|National Life Insurance of Vermont||636792AA1||0.0%|
|Enable Oklahoma Intrastate Transmission, LLC||29348QAB8||0.0%|
|Bank of America Corp. (BRL)||EI3513492||0.0%|
|Morgan Stanley (BRL)||61747YBA2||0.0%|
|RAAM Global Energy Co.||74920AAC3||0.0%|
|Great River Energy||39121JAA8||0.0%|
|SYMBOL||% OF PORTFOLIO|
|Laureate Education, Inc., 5.00%, 6/15/2018||51861JAW9||0.1%|
|Coeur Mining, Inc., 9.00%, 6/9/2020||BL1760299||0.1%|
|CVS Pass-Through Trust||336249AC1||0.1%|
|FBR Securitization Trust, Series 2005-2 Class M1||30246QAG8||0.1%|
|Private Restaurants Properties, Inc., 9.00%, 4/10/2017||OSI030117||0.1%|
|NCP Finance LP, 11.00%, 9/25/2018||62886YAB0||0.1%|
|ABG Intermediate Holdings (2), LLC, 9.50%, 5/27/2022||BL1301409||0.1%|
|North Atlantic Trading Co., Inc., 7.75%-8.75%, 1/13/2020||65733EAB2||0.1%|
|Texas Competitive Electric Holdings Co. LLC, 4.671%, 10/10/2015||955XXEII9||0.0%|
|Fairway Outdoor Funding, LLC, Series 2012-1 Class B||30605XAB9||0.0%|
|Merrill Lynch Mtg Investors Trust, Series 2004-A4 Class M1||59020ULT0||0.0%|
|Morgan Stanley Capital, Inc., Series 2005-HE7 Class A2C||61744CWK8||0.0%|
|San Bernardino County California Redevelopment Agency (San Sevaine)||79685PCK4||0.0%|
|Northwind Holdings, LLC, Series 2007-1A Class A1 Floating Rate Note||668457AA2||0.0%|
|JPR Royalty, LLC||46635XAA1||0.0%|
|Wells Fargo Asset Securities Corp., Series 2005-AR1 Class 1B1||949781AG3||0.0%|
|ABG Intermediate Holdings (2), LLC, 0.00%, 5/23/2022||00076VAL4||0.0%|
|Banc of America Funding Corp., Series 2006-I Class SB1||05951VAN9||0.0%|
|Citigroup Commercial Mtg Trust, Series 2004-HYB2 Class B1||17307GEF1||0.0%|
|Bear Stearns ARM Mtg, Series 2003-6 Class 2B-1||07384MXJ6||0.0%|
|Residential Asset Securities Corp., Series 2006-KS4 Class A3||75406EAC5||0.0%|
|SYMBOL||% OF PORTFOLIO|
|Telefonica Emisiones SAU||87938WAC7||0.6%|
|QBE Capital Funding III Ltd.||74734PAA0||0.3%|
|Enel Finance International S.A.||29268BAB7||0.2%|
|Deutsche Telekom International Finance BV||25156PAC7||0.2%|
|Federative Republic of Brazil (BRL)||105756BJ8||0.2%|
|CFG Holdings Ltd./CFG Finance, LLC||12527MAA8||0.2%|
|ZFS Finance USA Trust II||98876YAA8||0.1%|
|Bakkavor Finance (2) plc (GBP)||EJ7114972||0.1%|
|Lowell Group Financing plc (GBP)||EJ1073307||0.1%|
|Arcos Dorados Holdings, Inc. (BRL)||03965UAA8||0.1%|
|CRH America, Inc.||12626PAJ2||0.1%|
|Petrobras Global Finance B.V.||71647NAB5||0.1%|
|Cimpor Financial Operations B.V.||17186LAA1||0.1%|
|Dai Ichi Mutual Life Insurance Co., Ltd.||23380YAB3||0.1%|
|Banco Santander Brasil S.A. (BRL)||EJ5896455||0.1%|
|Tullow Oil plc||899415AC7||0.1%|
|VimpelCom Holdings B.V.||92718WAB5||0.0%|
|Odebrecht Offshore Drilling Finance Ltd.||67576GAA5||0.0%|
|GFL Environmental, Inc.||36168PAC0||0.0%|
|ELM B.V. (AUD)||EG3891660||0.0%|
|Consolidated Energy Finance S.A.||20914UAB2||0.0%|
|Alrosa Finance S.A.||02109TAC6||0.0%|
|Synergy Aerospace Corp., 6.50%, 7/7/2015||065433A24||0.0%|
|B.A.T. International Finance, plc||05530QAB6||0.0%|
|ELM B.V. (AUD)||EG3891660||0.0%|
|Millicom International Cellular S.A.||600814AM9||0.0%|
|Ambev International Finance Co., Ltd. (BRL)||02319LAB1||0.0%|
|Anheuser-Busch InBev (BRL)||03523TAY4||0.0%|
|Federative Republic of Brazil (BRL)||105756BJ8||0.0%|
|Telemar Norte Leste SA||87944LAE9||0.0%|
|Concordia Healthcare Corp.||206519AA8||0.0%|
|Petro Co., Trinidad Tobago Ltd.||71657YAD4||0.0%|
|Nexteer Automotive Group Ltd.||65341EAA8||0.0%|
|Telefonica Emisiones SAU||87938WAC7||0.0%|
|Petrobras Global Finance B.V.||71647NAB5||0.0%|
|Cia de Eletricidade do Estado da Bahia (BRL)||20442CAA5||0.0%|
|Itau Unibanco Holding S.A. (BRL)||46556LAC8||0.0%|
|Schahin II Finance Co. (SPV) Ltd.||80629QAA3||0.0%|
|ET Three, LLC, 10.00%, 9/30/2019||29760LAA0||0.0%|
|ET Two, LLC, 10.00%, 9/30/2019||26924BAA1||0.0%|
|Abengoa Finance SAU||00289RAA0||0.0%|
|Gaz Capital SA||368287AE8||0.0%|
|Arcos Dorados Holdings, Inc.||03965UAB6||0.0%|
|CEMEX Espana Luxembourg||151288AB3||0.0%|
|Cash Store Financial (CAD)||14756FAB9||0.0%|
|ZFS Finance USA Trust V||98877CAA5||0.0%|
|SYMBOL||% OF PORTFOLIO|
|Cash & Cash Equivalents||3.1%|
CME Group, Inc. operates securities and commodity exchanges. The company serves the risk management and investment needs of customers around the globe. It offers wide range of products across various asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. Its products include both exchange traded and over-the-counter derivatives. CME Group brings buyers and sellers together through its CME Globex electronic trading platform across the globe and its open outcry trading facilities in Chicago and New York City. It provides hosting, connectivity and customer support for electronic trading through its co-location services. It also provides clearing and settlement services for exchange-traded contracts, as well as for cleared over-the-counter derivatives transactions. The company also offers a wide range of market data services-including live quotes, delayed quotes, market reports and a comprehensive historical data service and have expanded into the index services business through CME Group Index Services. CME Group was founded in 1898 and is headquartered in Chicago, IL.
Source – FactSet
JPMorgan is a diversified financial company with banking, investment banking, private banking, asset management, securities services and credit card operations. The entity is the result first of a merger between JP Morgan and Chase Manhattan and then the acquisition of BankOne by JPMorgan Chase.
The diversified nature of JPM gives it some characteristics that are different from a traditional bank. Investment banking and securities processing are impacted more by the level of activity in the financial markets than by economic strength or interest rate movements. Revenue growth in asset management and private banking is mostly a function of growth in assets under management. Credit card operations are similar to traditional banking and can benefit from the economies of scale that have resulted from combining JPMorgan Chase and BankOne.
JPM believes that its various business units can improve the profitability of each other. Loans to potential investment banking clients have the potential to help win investment banking deals and increase loan volume. There may be synergies between asset management, private banking and investment banking. However, realizing the synergies between these businesses is not easy or automatic.
Jamie Dimon is the Chairman and CEO of JPM. Dimon is one of the most respected and highly thought of managers in the financial services sector. Prior to Dimon becoming CEO, JPMorgan Chase had not delivered the results that investors hoped for. The performance of the company in navigating the liquidity crisis and credit problems associated with the housing downturn and recession of 2007-2008 appears to have been extremely favorable relative to other industry leaders and could position the company for market share gains and high profitability in the future.
Home Depot, Inc. is a home improvement retailer that sells building materials and home improvement products. It operates The Home Depot stores, which provides full-service, warehouse-style stores that sells a wide assortment of building materials, home improvement products and lawn and garden products and provide a number of services. The company offers national installation services through pre-screened independent contractors for products ranging from floors to roofs, windows to water heaters, and kitchen cabinets to vinyl siding. Its retail stores offer professional customers, including repair and remodel contractors, special services and support to make them more successful on the job site. It serves professional remodelers, general contractors, repairmen, small business owners, and tradesmen. Home Depot was founded by Bernard Marcus, Arthur M. Blank, Kenneth Gerald Langone and Pat Farrah on June 29, 1978 and is headquartered at Atlanta, GA.
Source – FactSet
AT&T is one of the largest telecommunications companies in the world, providing fixed line and wireless services to residential and business customers, primarily in the U.S. Today's AT&T has been formed over time by combinations of former Regional Bell Operating Companies, including Southwestern Bell (the controlling entity), Pacific Telesis, Ameritech, and BellSouth. AT&T has also incorporated the legacy AT&T Corporate assets including an international long haul fiber network.
AT&T Wireless is one of the largest wireless service providers in the U.S. claiming more than 90 million subscribers. While certain operating metrics continue to trail Verizon Wireless, AT&T has improved its operation meaningfully over the last few years. Revenue growth has been driven by subscriber additions, declining churn (a measure of lost customers) and impressive growth in data usage by AT&T's customers. Smart-phones (like the iPhone) are used by a growing portion of AT&T's wireless user base; growing wireless data revenues have become a meaningful component of AT&T's wireless revenues.
AT&T's traditional wireline division has experienced declining revenues over the last few years. Consumers and businesses have decreased the number of traditional access lines utilized for voice services, as consumers either drop their home phones or use competitive offerings (from cable providers, for example) and as businesses switch from traditional ATM/Frame Relay services to newer Internet Protocol (IP) based services. Offsetting some of these declines has been growth in DSL and fiber optic cable lines into homes, and growing IP services to businesses.
AT&T has shown an ability and willingness to return capital to shareholders through both dividends and share buybacks. AT&T has increased its dividend at an average note of approximately 4% in recent years.
Walgreens Boots Alliance, Inc. provides drug store services. In December of 2014 Walgreens and Boots Alliance merged to become Walgreens Boots Alliance. It is the largest retail pharmacy, and health and daily living destination in the USA and Europe. The company is headquartered in Deerfield, IL.
Target Corp. owns and operates general merchandise stores. It also operates SuperTarget stores with a line of food and general merchandise items and offers an assortment of general merchandise, including many items found in the company's stores and a complementary assortment, such as extended sizes and colors, sold only online. Target was founded by George Draper Dayton in 1902 and is headquartered in Minneapolis, MN.
Source – FactSet
MFA is a real estate investment trust ("REIT") which invests in mortgage securities issued by U.S. Government sponsored entities Fannie Mae and Freddie Mac, and other private residential mortgage loans. MFA can pass through income earned from portfolio investments directly to shareholders without paying tax at the entity level, provided it continues to qualify as a REIT.
MFA has more than $2.5 billion of equity capital, which is leveraged with short maturity credit instruments to support an investment portfolio of more than $8 billion. It must pay out most of its earnings in dividends to shareholders, in accordance with IRS regulations.
MFA executed its initial public offering more than 10 years ago. It has substantially increased its size since becoming a public company by issuing new shares. MFA earns spread income on the difference between its yield on mortgage securities and its cost of borrowing. It assumes varying degrees of interest rate risk associated with owning investments that generally have longer maturities than the financings employed to fund these. It takes credit risk on portions of its portfolio that are invested in private mortgage securities and whole loans, a strategy it began to employ since the onset of the mortgage finance crisis that began in 2007. MFA's earnings increase when short maturity interest rates are lower than intermediate and longer maturity rates, and vice-versa. The extremely low short-term interest rate environment in place since late 2008 has supported very attractive spread earnings, and dividends. MFA's book value and dividend could be expected to decline during an environment of relatively high short-term interest rates, such as that experienced in the middle of the last decade.
MFA's dividend payments are a function of its skill earning spread income, in managing portfolio interest rate risk, and in managing credit risk. A modest degree of capital growth may be achieved if MFA can sell new equity above book value or sell investments at a profit. Book value erosion is also possible if MFA sells new shares at a discount to book value, or suffers losses on investments.
Crown Castle International Corp. operates as a Real Estate Investment Trust (REIT), which engages in the provision of shared wireless infrastructure solutions. The company was founded in 1994 and is headquartered in Houston, TX.
Pfizer, Inc. is a research-based, global biopharmaceutical company. The company's global portfolio includes medicines and vaccines, as well as many of the world's best-known consumer healthcare products. It collaborates with healthcare providers, governments and local communities to support and expand access to reliable, affordable healthcare around the world. It operates through four operating segments: Primary Care, Specialty Care and Oncology, Established Products & Emerging Markets, and Consumer Healthcare. The Primary Care segment includes products in therapeutic and disease areas: Alzheimer's disease, cardiovascular, erectile dysfunction, genitourinary, major depressive disorder, pain, respiratory, and smoking cessation. The Specialty Care and Oncology segment comprises the Specialty Care business unit and the Oncology business unit. The Specialty Care business unit includes products in the following therapeutic and disease areas: anti-infections, endocrine disorders, hemophilia, inflammation, multiple sclerosis, ophthalmology, pulmonary arterial hypertension, specialty neuroscience and vaccines. The Oncology business unit includes pharmaceutical products addressing oncology and oncology-related illnesses. The Established Products & Emerging Markets segment comprises the Established Products business unit and the Emerging Markets business unit. The Established Products unit includes pharmaceutical products that have lost patent protection or marketing exclusivity in certain countries and/or regions. The Emerging Markets unit includes human prescription pharmaceutical products sold in emerging markets, including Asia, Latin America, Middle East, Africa, Central and Eastern Europe and Turkey. The Consumer Healthcare segment includes non-prescription products in the following therapeutic categories: dietary supplements, pain management, respiratory and personal care. The company was founded by Charles Pfizer and Charles Erhart in 1849 and is headquartered in New York, NY.
Source - Factset
Ares Capital Corporate is a business development company ("BDC"), organized under the U.S. Investment Company Act to invest primarily in loans to middle market businesses. Provided that Ares meets conditions required to maintain its status as a BDC, it can pass through income earned from portfolio investments directly to shareholders without paying tax at the entity level.
Ares is managed by Ares Management, LLC. The company has more than $3 billion of equity capital, and it is able to borrow up to 1 times its equity to fund its investment portfolio. It must pay out most of its earnings in dividends to shareholders, in accordance with Investment Company and IRS regulations.
Ares is one of the largest BDCs in the United States. It substantially increased its size during 2010 by acquiring Allied Capital, a seasoned internally managed BDC that had a portfolio with a cost basis in excess of $3.5 billion, for approximately $1.8 billion. Since acquiring the Allied portfolio, Ares has disposed of a significant portion of the assets at prices above the Ares purchase price, though well below Allied's original cost.
Ares dividend payments are a function of its skill in making attractive yielding loans that are repaid at maturity. A modest degree of capital growth may be achieved if Ares can sell new equity above book value or sell investments at a profit. Book value erosion is also possible if Ares sells new shares at a discount to book value, or suffers losses on investments.
Invesco Mortgage Capital is a real estate investment trust ("REIT") which invests in mortgage securities issued by U.S. Government sponsored entities Fannie Mae and Freddie Mac, other residential mortgage loans, commercial mortgages, and other entities that primarily make these investments. Invesco can pass through income earned from portfolio investments directly to shareholders without paying tax at the entity level, provided it continues to qualify as a REIT.
Invesco Mortgage Capital is managed by Louisville-based Advisers, Inc. The company leverages its equity capital to support its investment portfolio. It must pay out most of its earnings in dividends to shareholders, in accordance with IRS regulations.
Invesco executed its initial public offering during 2009, although its manager has a longer record of managing mortgage securities portfolios. It has substantially increased its size since becoming a public company by repeatedly issuing new shares. Invesco earns spread income on the difference between its yield on mortgage securities and its cost of borrowing. It assumes varying degrees of interest rate risk associated with owning investments that generally have longer maturities than the financings employed to fund these. It takes credit risk on portions of its portfolio that are invested in private mortgage securities and whole loans. Invesco's earnings increase when short maturity interest rates are lower than intermediate and longer maturity rates, and vice-versa. The extremely low short-term interest rate environment in place since Invesco's initial public offering has supported very attractive spread earnings, and dividends. Invesco's book value and dividend could be expected to decline significantly during an environment of relatively high short-term interest rates, such as that experienced in the middle of the last decade.
Invesco's dividend payments are a function of its skill earning spread income, in managing portfolio interest rate risk, and in managing credit risk. A modest degree of capital growth may be achieved if Invesco can sell new equity above book value or sell investments at a profit. Book value erosion is also possible if Invesco sells new shares at a discount to book value, or suffers losses on investments.
QUALCOMM, Inc. engages in the development, design, manufacture, and marketing of digital telecommunications products and services. It operates through the following segments: Qualcomm CDMA Technologies, Qualcomm Technology Licensing, and Qualcomm Strategic Initiatives. The Qualcomm CDMA Technologies segment develops and supplies integrated circuits and system software based on technologies for the use in voice and data communications, networking, application processing, multimedia, and global positioning system products. The Qualcomm Technology Licensing segment provides rights to use portions of the firm's intellectual property portfolio. The Qualcomm Strategic Initiatives segment invests in the technology, design, and introduction of products and services for voice and data communications. The company was founded by Franklin Antonio, Adelia Coffman, Andrew Cohen, Klein Gilhousen, Irwin Mark Jacobs, Andrew Viterbi, and Harvey White in July 1985 and is headquartered in San Diego, CA.
Source - Factset
Two Harbors Investment Corp. is a real estate investment trust that invests in residential mortgage-backed securities, residential mortgage loans and other financial assets. Its objective is to provide attractive risk-adjusted returns to its stockholders over the long-term, primarily through dividends and secondarily through capital appreciation. The company intends to achieve this by constructing a well-balanced portfolio consisting primarily of RMBS, with a focus on managing various associated risks, including interest rate, prepayment, mortgage spread, financing, and credit risk. It focuses on security selection and implements a relative value investment approach across various sectors within the residential mortgage market. Two Harbors Investment was founded on May 21, 2009 and is headquartered in New York, NY.
Source - Factset
Duke Energy Corp. engages in electric power and gas distribution operations, and provides other energy related services. The company through its subsidiaries operates its business through three segments: Regulated Utilities, International Energy and Commercial Power. The Regulated Utilities segment conducts electric and gas operations primarily through Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Indiana, and the regulated transmission and distribution operations of Duke Energy Ohio. This segment provides services to residential, general service and industrial customers. The International Energy segment principally operates and manages power generation facilities and engages in the sales and marketing of electric power, natural gas, and natural gas liquids outside the U.S. Additionally, this segment owns a 25 percent interest in National Methanol Co., which produces methanol and methyl tertiary butyl ether located in Saudi Arabia. This segment offers services to retail distributors, electric utilities, independent power producers, marketers, and industrial and commercial companies. The Commercial Power segment owns, operates and manages power plants and engages in the wholesale marketing and procurement of electric power, fuel and emission allowances related to these plants as well as other contractual positions. This segment generation operations consist primarily of Duke Energy Ohio's coal-fired and gas-fired non regulated generation assets located in the Midwest region of the U.S. and wind and solar generation located throughout the U.S. Duke Energy was founded on April 3, 2006 and is headquartered in Charlotte, NC.
KKR & Co. LP provides investment and private equity asset management services. It operates business through three business segments: Private Markets, Public Markets and Capital Markets. The Private Markets segment is comprised of the global private equity business, which manages and sponsors a group of investment funds and vehicles that invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions. The Public Markets segment is comprised primarily of the company fixed income businesses which manage capital in liquid credit strategies, such as leveraged loans and high yield bonds, and less liquid credit products, such as mezzanine debt, special situation assets, rescue financings, distressed assets, debtor-in-possession financings and exit financings. The Capital Markets segment combines the assets acquired in the Combination Transaction with the company's global capital markets business. The company was founded by Henry R. Kravis and George R. Roberts on June 25, 2007 and is headquartered in New York, NY.
Virgina-based Dominion Resources, founded in 1909, produces and transports electricity and natural gas, serving retail and commercial energy customers in 15 states in the Mid-Atlantic, Northeast, and Midwest. The portfolio of assets includes approximately 28,000 megawatts of generation (primarily coal, nuclear, and gas), 6,000 miles of electric transmission lines, 11,000 miles of natural gas transmission pipeline, 28,000 miles of gas distribution pipeline, and the largest underground natural gas storage system in the U.S.
The company reports its results through three segments including DominionVirginia Power, Dominion Energy, and Dominion Generation. The latter segment has non-regulated electrical power generation assets that complement Dominion’s regulated gas and electric utility businesses.
Dominion’s dividend to shareholders has grown at a 10 year average rate of more than 5%.
The Blackstone Group LP is a leading global alternative asset manager and provider of financial advisory services. Blackstone is one of the largest independent alternative asset managers in the world, with assets under management of approximately over $200 billion. Blackstone's alternative asset management business includes the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt vehicles, proprietary hedge funds and closed-end mutual funds. Blackstone also provides various financial advisory services, including corporate and mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement services.
Blackstone seeks to deliver superior returns to investors in its funds through a disciplined, value-oriented investment approach. This investment approach, implemented across Blackstone's broad range of alternative asset classes and investment strategies, helps provide stability and predictability to the business over different economic cycles. Asset flows into alternative investments and hedge funds have been extremely robust and could potentially remain strong for an extended period. As a leading manager of hedge funds and other alternative investments, Blackstone could benefit from this trend.
Blackstone faces a number of current headwinds, including higher interest rates, wider bond spreads, and potential tax legislation that may affect the partnership's realized tax liabilities. Blackstone has successfully weathered many different economic backdrops since its founding in the late 1980's, but past performance is no guarantee of future success.
LyondellBasell is a worldwide producer of olefins, including ethylene and propylene, polyolefins, polypropylene, and polypropylene compounds. Ethylene is the most significant petrochemical in terms of worldwide production volume and is the key building block for polyethylene and a large number of other chemicals, plastics, and synthetics. Ethylene and its co-products are fundamental to many segments of the economy, including the production of consumer products, packaging, housing, automotive components, and other durable and non-durable goods.
LyondellBasell's US petrochemical operations use ethane as a feedstock in the production of ethylene. Ethane pricing is based upon a floor price that is a slight premium to natural gas feedstocks and a ceiling price that is equal to oil equivalent feedstocks. It is a beneficiary of a high oil-to-gas ratio.
Staples, Inc. operates retail office supply stores. It offers a range of products of copy and print and technologies through an integrated retail and online shopping. It operates through the following segments: North American stores and online, North American commercial and International operations. The North American Stores and Online segment includes the company's retail stores and Staples.com businesses in the U.S. and Canada. The North American commercial consists of the U.S. and Canadian businesses that sell and deliver products and services directly to businesses, including Staples Advantage and Quill.com. The International operations segment covers operations in twenty three countries in Europe, Australia, South America and Asia. The company was founded in 1985 by Thomas G. Stemberg and is headquartered in Framingham, MA.
Source - Factset
Kinder Morgan, Inc. operates as a holding company. It owns and operates pipelines and terminals that transport natural gas, gasoline, crude oil, carbon dioxide and other products and stores petroleum products, chemicals and handle bulk materials like ethanol, coal, petroleum coke and steel. The company operates through six segments: Natural Gas Pipelines, Products Pipelines, CO2, Terminals, Kinder Morgan Canada and Other. The Natural Gas Pipelines segment is engaged in the sale, transport, processing, treating, storage and gathering of natural gas. The Products Pipelines segment is engaged in the transportation and terminating of refined petroleum products, including gasoline, diesel fuel, jet fuel and natural gas liquids. The CO2 segment is engaged in the production and sale of crude oil from fields in the Permian Basin of West Texas and the transportation and marketing of carbon dioxide used as a flooding medium for recovering crude oil from mature oil fields. The Terminals segment is engaged in the translating and storing of refined petroleum products and dry and liquid bulk products, including coal, petroleum coke, cement, alumina, salt and other bulk chemicals. The Kinder Morgan Canada segment transports crude oil and refined products from Alberta, Canada to marketing terminals and refineries in British Columbia, the state of Washington and the Rocky Mountains and Central regions of the U.S. Kinder Morgan was founded by Richard D. Kinder and William V. Morgan on August 23, 2006 and is headquartered in Houston, TX.
Source - Factset
Apollo Investment Corporation is a closed-end, non-diversified management investment company that invests in debt and equity securities to provide current income and capital appreciation. Apollo holds several types of securities to pursue the objective, including mezzanine loans and senior secured loans for private middle-market companies, direct equity investments, and thinly traded public companies. Apollo's investment portfolio totals more than $2.5 billion, making it one of the largest business development companies in the United States. Apollo is registered with the SEC as a business development company for tax and public liquidity advantages.
Apollo dividend payments are a function of its skill in making attractive yielding loans that are repaid at maturity. A modest degree of capital growth may be achieved if Apollo can sell new equity above book value or sell investments at a profit. Book value erosion is also possible if Apollo sells new shares at a discount to book value, or suffers losses on investments.
Intel is the world's leading provider of semiconductors (microprocessors) for the personal computer industry. Intel's products provide computers with the ability to process data, and encompass such functions as graphics, memory and power management.
Historically, Intel was dependent upon the desktop computing market for growth. More recently, notebooks and network infrastructure components have served as incremental drivers of demand. Developing markets growth has also been a positive development for Intel in lower-end personal computer markets.
While there are significant barriers to entry in the microprocessor market, it remains fiercely competitive. In years past, the biggest source of competitive differentiation was processing speed (often referred to as clockspeed), an area where Intel traditionally dominated. More recently, the focus has shifted to solutions that help to maximize battery life in the case of notebooks, mobile handsets, and tablets, and to those that minimize power consumption in the case of servers. In these end markets, Intel has much lower market penetration.
Intel has been shareholder friendly in recent years in its capital management. The annual dividend has increased more than 10% per year since 2005, and the company has reduced shares outstanding.
Chimera Investment Corporation is a real estate investment trust (REIT) that invests in several areas of the mortgage bond market. Its objective is to use dividends as the primary source of return to investors with a secondary objective of capital appreciation. The company invests in residential mortgage loans, residential mortgage-backed securities, and real estate-related securities to try to meet this goal. Chimera's long-term strategy is to take advantage of the interest rate and credit environment, buy assets at attractive prices, and employ leverage to increase returns.
Chimera stock performed poorly through most of 2008 and 2009, as well as in 2011. In the fourth quarter 2008, the company raised additional capital, and adjusted to a lower leverage strategy to continue operating in turbulent market conditions. In 2010 its assets totaled more than $8 billion, up more than five times from 2008.
The company is externally managed by Fixed Income Discount Advisory Company (FIDAC), a registered investment advisor and wholly-owned subsidiary of Annaly Capital Management. FIDAC is a fixed-income investment management company that focuses on managing interest rate and credit-sensitive fixed-income strategies.
Solar Capital is closed-end, externally managed investment company that is structured as a business development company (BDC) with more than $1.2 billion in assets. The company invests predominantly in debt and to a lesser extent the equity of privately held companies. The primary goal of Solar Capital is to provide current income and capital appreciation. Due to tax purposes the typical BDC distributes approximately 90% of its income to shareholders.
Numerous types of securities are utilized to meet the objective including mezzanine loans, senior secured loans, and direct equity investments to the middle market companies.
Las Vegas Sands operates casinos, hotels and convention facilities. Properties include the Venetian Casino Resort and the Sands Expo and Convention Center in Las Vegas, Nevada; the Sands Macao Casino and Venetian Macao Casino in Macau, China; and the Marina Bay Sands in Singapore. LVS has focused on using convention business to drive higher than industry average non-gaming revenues. The company's strategy is to build signature casino resorts and then connect convention facilities in order to drive more predictable and repeatable customer traffic midweek to its properties.
The Asian gaming opportunity over the next five years is attractive. Demographics in the region are compelling for years of growth driven by low penetration of mass market gaming, growing incomes, easing of travel restrictions for mainland Chinese, and infrastructure development. LVS has positioned itself for leadership in the region with its development plans for the Cotai Strip as well as Singapore, where it is one of two licensed operators. Leading with a strategy that draws convention business to its properties, the Sands aims to repeat its success in the Las Vegas convention market in Asia. The company could also generate equity value for shareholders through real estate development activities in and around the Cotai Strip in order to capture the value of the traffic created by its casino resorts.
Helmerich & Payne, Inc. is an energy-oriented company. It is engaged in contract drilling of oil and gas wells for exploration and production companies. The company operates its business through three segments: U.S. Land Operations, Offshore Operations and International Land Operations. Its contract drilling operations consist mainly of contracting company-owned drilling equipment primarily to large oil and gas exploration companies. Helmerich & Payne was founded in 1920 and is headquartered in Tulsa, OK.
Morgan Stanley is a global financial service firm, with more than 700 offices in over 25 countries. Revenues are divided between trading/principal transaction, investment banking, asset management, and credit cards. Morgan Stanley has some leading positions in its various business, with particular strength in wholesale investment banking and trading, its historic core business.
Investment banking activity is off due to slower overall economic growth, as are closed mergers and acquisitions volumes, commission trading activity, and margin debt. Asset management fees reflect depressed equity prices and sluggish activity, and higher bankruptcy rates are pressuring the credit card margins of Discover Card business. The firm has announced employee layoffs in response to the challenges of the business environment. Lower interest rates should improve the outlook for most of Morgan Stanley's businesses, and the firm is poised to expand its presence in Europe.
China Mobile is the incumbent wireless provider in China and is the world's largest wireless telecom operator with over 760 million mobile subscribers. The company holds licenses to operate nationwide 2G (GSM) and 3G (TD-SCDMA) services. China Mobile's dominant 2G network covers over 98% of the population. In its 3G network China Mobile continues to gain market share, having added over 100 million customers in 2013.
Towards the end of 2013, China Mobile was the first wireless telecom carrier in China to receive a 4G (TD-LTE) network license. The company is focused on building the infrastructure to support the 4G (TD-LTE) technology and have half a million base stations around China that will deliver continuous coverage to all cities and urban areas by the end of 2014. China Mobile may grow revenue and operating profit through driving higher data usage and 4G penetration, increasing minutes of use, managing churn, and continuing to add subscribers.
As the incumbent telecom, China Mobile benefits from significant economies of scale and a mature, cash generative, core franchise. Over the next few years capital expenditure should decrease and free cash flow generation should ramp up in a company that already pays an attractive dividend.
Atlantia SpA is a holding company which engages in the infrastructures and mobility networks sectors. It operates through the following business segments: Italian Motorways, Italian Airports, Overseas Motorways, Technology, Design and Construction, and Atlantia. The Italian Motorways segment consists of the management, maintenance, construction, and widening of the Italian motorway operators under concession. The Italian Airports segment operates and develops the Rome Fiumicino and Rome Ciampino airports. The Overseas Motorways includes the holders of motorways concessions in Chile, Poland, and Brazil, and the companies that provide operational support for these overseas activities and the related foreign registered holding companies. The Technology segment includes the subsidiaries that produce and operate free-flow tolling systems, traffic, and transport management systems, public information, and electronic payment systems. The Design and Construction segment covers the companies related to the design, construction, and maintenance of road infrastructure. The Atlantia segment performs parent company functions for its subsidiaries and associates whose business is the construction and operation of motorways, airports and transport infrastructure, parking areas and intermodal systems, and management of motorway or airport traffic. The company was founded in 1950 and is headquartered in Rome, Italy.
Source – FactSet
Paris-based Vinci is one of the largest integrated construction/concession firms in the world, with annual revenues of approximately 40 billion euros from operations in approximately 100 countries.
The group's business is divided into two main areas. Concessions provide approximately 60% of operating profit, including toll motorways in France, parking lots, airport operations, and a portfolio of other infrastructure assets. Contracting operations provide almost 40% of operating profit, including large infrastructure construction projects, technical installation & maintenance, road building, and real estate development.
Vinci's revenue and profits have fluctuated with economic cycles, as one might expect from its collection of businesses. Profits declined in the aftermath of the 2008 global financial crisis, before recovering since 2012. Notwithstanding the cyclical volatility, Vinci's profits and dividends have generally grown on a secular basis. Per share dividends have increased by more than 10% since the year 2000, though dividend growth has slowed from this pace in recent years.
BT Group Plc provides communication solutions and services. Its principal activities include networked IT services, local, national and international telecommunications services, higher value broadband, and Internet products and services. The company has five customer-facing businesses: BT Global Services, BT Business, BT Consumer, BT Wholesale and Openreach. The BT Global Services provides networked IT services to multinational corporations, domestic businesses, government departments and other communication service providers around the world. The BT Business provides a range of innovative communications products and services and serves consumer customers, small and medium sized enterprises in the United Kingdom. The BT Consumer provides consumer fixed voice and broadband in the U.K. with a growing base of TV and BT sport customers. The BT Wholesale provides broadband, voice, data connectivity, managed network outsourcing and value-added solutions to the UK communication providers. The Openreach owns, maintains and develops access network that links homes and businesses to the networks of Britain's communication providers. BT Group was founded on March 30, 2001 and is headquartered in London, the United Kingdom.
Vodafone is one of the world's largest providers of mobile telecommunications services, with presence in more than 25 countries. The company has stakes in large carriers in Germany, Italy, and Spain. After a period of heavy spending on strategic acquisitions and 3G licenses, Vodafone's cape requirements have decreased relative to operating revenues. The company has developed positive, growing cash flows in most markets as a result.
Vodafone has put this cash to work largely by making acquisitions, including Hutchison Essay which gives the company exposure to the fast growing cellular market in India. With sales of certain non-strategic holdings, and in the absence of further large acquisitions, Vodafone should be able to continue increasing its dividend in the coming years, as well as buy back shares.
Headquartered in Switzerland, global pharmaceutical company Roche has been in operation for over a century. Roche is the world leader in oncology and virology, and its annual revenues exceed 45 CHF billion (Swiss Francs). Its main products include treatments for anemia (CERA), arthritis (Rituxin), cancer (Herceptin, Tarceva and Avastin) and Hepatitis C and HIV. The company also operates a diagnostics business, which specializes in disease monitoring, prevention and genetics testing. Roche owns a sizeable stake in U.S.-based Genentech and Japan-based Chugai.
Roche's solid cancer franchise largely originates from Genentech. In addition, a strong relationship with Chugai allows for penetration of the difficult to enter Japanese market. Collectively, the companies lead the oncology industry with popular cancer drugs like Rituxan (which also treats rheumatoid arthritis) and Herceptin, the latter of which has shown especially promising potential in combination with Avastin in certain cancers. Avastin is also in studies for additional cancers. Roche's diagnostics division has grown through products focusing on diabetes, molecular diagnostics, and immunochemistry. An improved product mix, with high barriers to entry given the biologic nature of many of its products, should serve to support Roche's sales and earnings over time.
Roche has an intriguing dividend yield. It has increased per share dividends by more than 15% annually over the last 5 years.
Royal Dutch Shell Plc produces oil and natural gas. It operates through three segments: Upstream, Downstream, and Corporate. The Upstream segment combines the operating segments Upstream International and Upstream Americas, which have similar characteristics and are engaged in exploring for and recovering crude oil and natural gas; the liquefaction and transportation of gas; the extraction of bitumen from oil sands that is converted into synthetic crude oil; and wind energy. The Downstream segment engages in manufacturing, supply and distribution and marketing activities for oil products and chemicals; alternative energy; and CO2 management. The Corporate segment represents the support functions, comprising holdings and treasury, headquarters, central functions and its self-insurance activities. The company was founded in February 1907 and is headquartered in The Hague, Netherlands.
Source - Factset
Sanofi engages in the research, production and distribution of pharmaceutical products. It operates through the following segments: Pharmaceuticals, Human Vaccines, and Animal Health. The Pharmaceuticals segment includes research, development, production and sales activities relating to pharmaceutical products, including prescription, consumer health care, and generic products. This segment also includes equity affiliates and joint ventures with pharmaceutical business activities. The Human Vaccines segment includes research, development, production and marketing of vaccines. The Animal Health segment comprises the research, development, production and marketing activities for Merial, which offers a range of medicines and vaccines for a wide variety of animal species. The company was founded in 1994 and is headquartered in Paris, France.
Source - Factset
Telenor ASAA engages in the provision of telecommunications, data, and media services. It operates through the following segments: Mobile Communication, Fixed Line Communication, Television-Based Activities (Broadcast), and Other Operations. The Mobile Communications segment includes voice, data, internet, content services, customer equipment and messaging. The Fixed Line Communication comprises of telephony, internet, television and leased lines, and provision of data and managed services. The Broadcast segment involves satellite TV activities within the Nordic region including pay-TV services via satellite dish, satellite master antenna TV-networks systems and broadcasting rights. The Other Operations segment consists of international wholesale, digital services portfolio and corporate functions. The company was founded in 1855 and is headquartered in Fornebu, Norway.
Source - Factset
Swisscom is Switzerland's market leader in the field of mobile and fixed line telecommunications. The Group also owns Fastweb, a provider of broadband communications services in Italy. In Switzerland, Swisscom serves its customers via over 2.5 million fixed access lines, 1.7 million broadband access lines, and more than 6 million mobile access numbers. The company also has a growing pay television business. In Italy, Fastweb's broadband customer base totals more than 1.9 million customers.
As is the case with most incumbent telecommunications services providers, Swisscom is working through a transition from a business led by metered PSTN fixed line and mobile voice services to a business led by high speed data communications. In recent years, growth of high speed data service revenues has not fully offset revenue declines from the legacy businesses. Elevated levels of investment have been required to support improvements to the firmâ€™s high speed data infrastructure network.
Swisscom dividends have been flat in the recent past, and they are expected to remain flat in the near future. Nevertheless, Swisscom's dividends are attractive in Swiss Franc terms, and its strong market position increases the possibility that its dividend can be maintained or increased over time.
Swiss-based Novartis manufactures and sells pharmaceutical and nutrition products worldwide. Novartis was formed from the 1996 merger of Sandoz and Ciba-Geigy, and is the world's fifth largest producer of non-prescription over-the-counter drugs. Novartis also holds nearly one-third of the voting stock of Roche, Europe's fifth largest drug company. Novartis also has a strong generic franchise, mostly marketed under the Sandoz name. The company is currently the number two global generics manufacturer after Teva. The acquisition of Alcon in 2010 has helped Novartis gain a leading position in the global eye-care market.
A solid balance sheet enables Novartis to pay a strong and growing dividend.
Nestle is a Switzerland-based global food and beverage company. The largest food and beverage company in the world, Nestle products principally include chocolate, infant nutrition, pet care and frozen foods. Some familiar Nestle brands include Nescafe, Stouffers, Purina, Powerbar and Nespresso. Nestle has nearly 500 manufacturing sites worldwide.
Nestle has demonstrated cost discipline, improving margins and return on capital through effective asset utilization. Organic growth drivers include the growing influence of nutrition and health businesses in their product mix, and management's focus on their top 21 brands. The company is generating substantial cash flow that can be directed toward share buybacks and increasing dividend payouts.
TDC is the leading provider of communications services in Denmark, holding market leading positions in landline telephony, terrestrial broadband, mobile communications, and pay-TV services. Outside Denmark, TDC has significant presence in the pan-Nordic business communications market, utilizing a comprehensive fiber network in Sweden, Norway, and Finland. Denmark's telecommunications market is characterized by strong competition and strict regulation, and TDC has been continually challenged to increase efficiency in order to compete effectively on price while still maintaining solid profitability.
Since TDC's privatization from government ownership more than 20 years ago, it has had strategic shareholders that included U.S. regional telecommunications firms Ameritech and SBC, as well as private equity firms. At present, most of TDC's shares are freely floated.
As is the case with most incumbent telecommunications services providers, TDC is working through a transition from a business led by metered PSTN fixed line and mobile voice services to a business led by high speed data communications. In recent years, growth of high speed data service revenues has not fully offset revenue declines from the legacy businesses. Elevated levels of investment have been required to support improvements to the firm's high speed data infrastructure networks.
TDC dividends have been flat in the recent past, and they are expected to remain flat in the near future. Nevertheless, TDC's dividends are attractive in Danish kroner terms, and its strong market position increases the possibility that its dividend can be maintained or increased over time.
DBS Group Holdings Ltd. operates as an investment holding company, which engages in the provision of retail, small and medium-sized enterprise, corporate and investment banking services. The company operates through the following business segments: Consumer Banking/Wealth Management, Institutional Banking, Treasury, and others. The Consumer Banking/Wealth Management segment provides services such as current and savings accounts, fixed deposits, loans and home finance, cards, payments, investment and insurance products. The Institutional Banking segment offers financial services and products to institutional clients, including non-bank financial institutions, government linked companies, large corporate and small and medium-sized businesses. The Treasury segment supplies treasury services to corporations, institutional and private investors, financial institutions and other market participants. The others segment encompasses activities from corporate decisions, and income and expenses not attributed to the business segments described. The company was founded in 1968 and is headquartered in Singapore.
Taiwan Semiconductor is the largest independent semiconductor foundry in the world. The industry is characterized by process orientation and scale, and TSM leads in both. It is the only company in its industry with the financial resources to continue to invest in both R&D and capital equipment/process technologies throughout the business cycle. TSM has manufactured chips for over 500 different customers globally, with a huge array of end market applications, including automotive, cell phones, video games, DVD players, digital camera, medical devices, etc.
Although margins are very volatile, cash flow generation has been robust, and TSM continues to gain share over time. Since being founded in 1987, TSM has been at the leading edge of technology manufacturing.
Vivendi SA provides media and telecommunication services. The company operates through six business segments: Activision Blizzard, Universal Music Group, SFR, Maroc Telecom Group, Global Village Telecom and Canal+ Group. The Activision Blizzard segment is engaged in the development, publishing and distribution of interactive entertainment software, online or on other media, such as console and PC. The Universal Music Group segment engages in the selling of recorded music, including physical and digital media, exploitation of music publishing rights as well as artist services and merchandising. The SFR segment provides telecommunication services, including mobile, broadband internet and fixed telecommunications in France. The Maroc Telecom Group segment is a telecommunication operator, which provides mobile, fixed telecommunications and internet services in Africa, predominantly in Morocco, as well as in Mauritania, Burkina Faso, Gabon, and Mali. The Global Village Telecom segment is a Brazilian fixed telecommunication and broadband internet operator and pay-TV provider. The Canal+ Group segment is engaged in the publishing and distributing of premium and thematic pay-TV channels in metropolitan France, Poland, Africa, French overseas territories and Vietnam, as well as cinema film production and distribution in Europe, and the organization of sporting events. Vivendi was founded on December 14, 1853 and is headquartered in Paris, France.
Source - Factset
Singapore Telecom, or SingTel, is a telecommunications company located in Singapore but through its subsidiaries, investments, and joint ventures has locations in more than 25 countries and nearly 400 million subscribers. Its investments include Optus, the second largest telecom operator in Australia, and Bharti Airtel, the largest teleco in India. The largest publicly listed investments include Advanced Info Services in Thailand (19% share of company), Bharti Group in India (16%), Globe Telecom in the Philippines (47%), and Singapore Post (26%). Although Optus in Australia is SingTel's largest investment outside Singapore it is a wholly owned subsidiary of SingTel, thus not publicly listed. Temasek, the Singapore government's investment arm holds a 54.4% stake in SingTel.
The company faces numerous opportunities and threats across its many markets, but management has seemingly been proven adept at navigating most markets as witnessed through the company's value creation over the long term.
As of 2011, the intermediate-term guidance is for mid-single digit revenue and EBITDA growth (earnings before interest, taxes, depreciation, and amortization) with operating leverage potentially delivering higher net income growth. The company targets a flexible dividend payout ratio of 45-60% of net income depending on investment and capital expenditure needs.
AXA SA operates as a holding company, which engages in the provision of insurance and asset management services. The company operates its business through five segments: Life & Savings, Property & Casualty, International Insurance, Asset Management and Banking. The Life & Savings segment offers products including individual and group savings products, life and health products for both individual and commercial clients. The Property & Casualty segment offer products including motor, household, property and general liability insurance for both personal and commercial customers. The International Insurance segment focuses on risks, reinsurance and assistance. The Asset Management segment includes diversified asset management and related services. The Banking segment involves in the banking activities, which includes retail banking, mortgages loans, and savings conducted primarily in France, Belgium and Germany. The company was founded in 1985 and is headquartered in Paris, France.
Zurich-based UBS is one of the largest investment management companies in the world, providing Wealth Management, Asset Management and Investment Banking services globally, and traditional banking in Switzerland. Following the turmoil of the global financial crisis and a US tax inquiry, UBS has been focused on improving its core businesses. Improved capital ratios, growth in the wealth management segment, and an emphasis on cost control have allowed the group to regain its footing and return to profitability.
The company remains one of the largest asset managers in the world with assets under management in the trillions. Economic growth in developing markets has also boosted the number of high-net worth individuals looking to diversify their financial holdings to areas outside of their home markets.
Headquartered in France, Total is an integrated international oil and gas company with key assets in Canada, Russia, Qatar, Angola, Nigeria, and Kazakhstan. Business lines include upstream (oil and gas exploration, development, and production), downstream (refining, marketing, trading, and shipping of crude oil and petroleum products), and chemicals (fertilizers and petrochemicals). Upstream operations have the highest margin, contributing the majority of operating income.
Output from many of the world's existing oilfields is declining, and the rate of developable new resources continues to slow. While developed OECD countries have recently curbed demand for oil, oil demand continues to increase in non-OECD nations. Although the majority of incremental energy supply is expected to come from renewable, nuclear, and gas, oil is expected to remain the largest source of transportation energy for decades.
Compared to other oil majors, Total has potential for an above-average growth profile, with exposure to the LNG (Liquid Natural Gas) market and lower-than-average depletion rates in existing oil fields. Total has approximately 40 years of proved and probable resources. Production setbacks in recent years have been disappointing, however, and the company has been criticized for under-investing in exploration. Total has been focused on improving its yield from producing assets.
Total's dividend appears to be fully covered by cash flow in the oil price ranges we have seen over the last 5 years. The firm's strong balance sheet and operating cash flow have enabled it to increase the dividend at an annual rate of approximately 7% over the last 5 years.
National Grid Plc engages in the transmission and distribution of electricity and gas in Great Britain and northeastern U.S. It operates through four segments: UK Electricity Transmission, UK Gas Transmission, UK Gas Distribution and U.S. Regulated. The UK Electricity Transmission segment engages in electricity transmission in England and Wales. The day-to-day operations of the system involves the continuous real-time matching of demand and generation output. The UK Gas Transmission segment owns and operates the gas national transmission system in Great Britain, with day-to-day responsibility for balancing demand. The UK Gas Distribution segment owns and operates regional gas distribution network in Great Britain. The U.S. Regulated segment owns and operates electricity distribution networks in upstate New York, Massachusetts, and Rhode Island. The company was founded on July 11, 2000 and is headquartered in London, the United Kingdom.
Source - Factset
Husky Energy, Inc. is an international integrated energy company. The company operates its business through two segments: Upstream and Downstream. The Upstream segment includes the exploration for, development, production and marketing of crude oil, bitumen, natural gas and natural gas liquids in Western Canada, China, Indonesia and Greenland. The Downstream segment includes upgrading of heavy crude oil feedstock into synthetic crude oil, and refining in Canada and the U.S. Husky Energy was founded in 1938 and is headquartered in Calgary, Canada.
Toyota Motor is one of the largest auto manufacturers globally, producing a full range of models such as the Camry, Corolla, 4Runner, Land Cruiser, the luxury line Lexus, and the hybrid Prius. Toyota has gained market share due to its high quality product coupled with generally attractive gas mileage and affordability.
Toyota has increased its international production as more sales have been generated away from Japan, including joint ventures in low-cost China (ie Tianjin Toyota Motor Corp) and an agreement with the Chinese government to locally produce and sell passenger cars, most recently the Prius. Toyota also opened up a compact car plant in China in 2002, in addition to increasing presence in Europe and Latin America. International sales comprise and increasing proportion of Toyota's total sales. Overseas production mitigates the effects of currency fluctuations, although a stronger yen hurts earnings while a weaker yen helps. Innovation includes the number one selling hybrid-powered car, the Prius, which was introduced in April 2003 and continues to be met with significant demand.
Hong Kong-based China Merchants Holdings International (CMHI) is the largest port operator in China with operations ranging across the Pearl River Delta, Yangtze River Delta and the Bohai Rim. The company holds ownership interests in seven of China's top eight ports, which account for 70% of the country's container throughput. CMHI also manufactures containers, which are used for transporting finished and intermediate goods.
CMHI's fixed asset base is levered to the total amount of goods going in and out of its ports. China's importance as a manufacturing export hub has ensured that ships leave the country nearly full, but container ships still enter the country mostly empty. The company benefits broadly from increased trade volumes between China and the rest of the world, which historically correlated with global GDP growth.
NN Group NV engages in insurance and investment management. It operates through the following segments: Netherlands Life, Netherlands Non-Life, Insurance Europe, Japan Life, Investment Management, other, and Japan Closed Block VA. The Netherlands Life segment offers a range of group life and individual life insurance products. The Netherlands Non-Life segment offers non-life insurance products such as motor, transport, fire, liability, travel, and income protection to retail, self employed, small and medium enterprises (SME), and corporate customers. The Insurance Europe segment includes retail, self employed, SME, and corporate customer life insurance. The Japan Life segment manages corporate owned life insurance products to SMEs and owners and employees of SMEs through independent agents and bancassurance. The Investment Management segment overseas investment products and advisory services to retail and institutional customers. The other segment comprises of business of National Nederlanden Bank and ING Re. The Japan Closed Block VA segment includes NN Group's closed block single premium variable annuity individual life insurance portfolio in Japan. The company was founded in 1845 and is headquartered in Amsterdam, Netherlands.
MTN Group Limited is a leading mobile telecom operator in Africa and the Middle East. The company operates in 21 countries generally with low penetration rates of mobile subscribers. Nearly all customers prepay for their mobile service, allowing for wide customer participation. Falling handset prices are driving increased affordability and the monthly average revenue per user is surprisingly attractive for emerging economies.
The company generates substantial cash flow giving management flexibility to execute on the growth plan. Recently, the company expanded their geographic footprint with the acquisition of Investcom and entering the Iranian market. We believe the company may enjoy a long runway of growth opportunities.
Formerly known as Macquarie Airports, Sydney Airport owns a material equity interest in Sydney Airport (85% interest) and manages operations there.
Sydney Airport makes money via aircraft and passenger fees, rental of retail and passenger services company space, ground handling operations, parking operations, sales of advertising, and real estate development. Generally speaking, Sydney has succeeded in increasing "non-aeronautical" revenues as a percentage of total revenues by improving the retail and service offering available to passengers, their greeters, and airport employees.
In 2009 Sydney terminated its management agreements with Macquarie. The company's dividend fell in 2008 and 2009 as it sought to reduce leverage at its operating subsidiaries. Special cash dividends in 2010 and 2011 reversed this trend, and Sydney Airport goes forward as a much simplified single country operator.
Canadian Oil Sands Ltd. engages in the provision of investment opportunities in the oil sands industry through its interest in the Syncrude project. The Syncrude Project is comprised of open-pit oil sands mines, utilities plants, bitumen extraction plants and an upgrading complex that processes bitumen into Synthetic Crude Oil. Canadian Oil Sands markets its synthetic crude oil production to refineries in both Canada and the U.S. The company was founded on October 5, 1995 and is headquartered in Calgary, Canada.
GFJ went public in December 2010 at a price of NOK 58.75 (Norwegian Krone). It is a general insurer with a market-leading position in Norway and an international geographic footprint in Denmark, Sweden and the Baltics. GFJ first went outside Norway in 2006 growing its gross premiums written from 2.6% to 24.3% in just 4 years (primarily through acquisition). GFJ is currently very highly capitalized, appears to be well managed, and has initiatives underway to further improve operations.
As a property and casualty insurer most of its investment risk lies in shorter duration investments such as highly rated corporate and sovereign notes. Traditionally, more than two-thirds of its investments in bonds are held in credits rated A or above. Remaining investments are dispersed among lower-quality credits as well as minor investments in equities and alternative investments.
The company pays an annual dividend with a targeted ratio of 50-80% of reported net profits.
Bank of China Ltd. engages in the provision of banking and related financial services such as commercial and investment banking, and insurance and investment services. The company operates its business through the following segments: Corporate Banking, Personal Banking, Treasury Operations, Investment Banking, Insurance, and others. The Corporate Banking segment offers services to corporate customers, government authorities, and financial institutions such as current accounts, deposits, overdrafts, loans, custody, trade related products and other credit facilities, foreign currency, and derivative products. The Personal Banking segment provides services to retail customers such as current accounts, savings, deposits, investment savings products, credit and debit cards, consumer loans, and mortgages. The Treasury Operations segment deals in foreign exchange transactions, customer-based interest rate and foreign exchange derivative transactions, money market transactions, proprietary trading, and asset and liability management. The Investment Banking segment includes debt and equity underwriting and financial advisory, sales and trading of securities, stock brokerage, investment research and asset management services, and private equity investment services. The Insurance segment specializes in the underwriting of general and life insurance business and insurance agency services. The others segment comprises investment holding and other miscellaneous activities. Bank of China was founded on February 05, 1912 and is headquartered in Beijing, China.
Advanced Semiconductor Engineering, Inc. engages in the semiconductor packaging, design and production of interconnect materials, front-end engineering testing, wafer probing, and final testing services. It also provides integrated solutions for electronics manufacturing services in relation to computers, peripherals, communications, industrial, automotive, and storage and server applications. It operates through the following segments: Packaging, Testing, Electronics Manufacturing Services (EMS), and Other. The Packaging segment includes the wrapping of bare semiconductors into finished semiconductors with enhanced electrical and thermal characteristics. The Testing segment provides front-end engineering testing, wafer probing, and final testing. The EMS segment offers the electronic parts and materials services. The Other segment includes other activities of the company including turnkey services which consist of integrated packaging, testing and direct shipment of semiconductors to end users and original design manufacturing services. The company was founded by Chien Shen Chang Jason and Hung Pen Chang Richard on March 23, 1984 and is headquartered in Kaohsiung, Taiwan.
Founded in 1861, Liechtensteinische Landesbank (LLB) is the oldest bank located in the Principality of Liechtenstein, wedged between Switzerland and Austria. LLB's business is split between supplying traditional deposit and lending services in Liechtenstein and Eastern Switzerland and private banking services for clients around the world. Balance sheet assets total over 18 billion Swiss francs, supported by 1.5 billion of equity. The Principality owns slightly more than 50% of LLB's stock, with the rest widely held by residents of Liechtenstein and institutional investors.
LLB administers more than 40 billion Swiss francs in customer financial assets. These are invested in stocks, bonds, funds, and money market securities. This total declined in 2008 was primarily due to falling equity values and the strength of the Swiss franc relative to other currencies, though it has recovered since. Negligible Swiss interest rates have reduced the value of LLB's significant deposit endowment in the last two years, and that situation continues to pressure interest margins.
LLB's dividend yield is attractive relative to investment alternatives in the Swiss financial arena. Like other banks with more deposits than loans, LLB's earnings have been pressured in recent years by declining net interest margins, with sluggish customer trading activity unable to offset this.
Yanbu National Petrochemical Co. engages in the manufacture of petrochemical products. Its products include ethylene, ethylene glycol, high density polyethylene, low linear density polyethylene, polypropylene, butene, benzene, ethylene glycols, and high tenacity yarn. The company was founded on February 11, 2006 and is headquartered in Yanbu Industrial City, Saudi Arabia.
It is probable that buying or selling in the Fund portfolio will have occurred since this list was last updated. As a result of this buying or selling, the fund may own more, fewer, or no shares of the stock of any company listed. In addition, the fund may have purchased shares of companies that are not yet included in the above list.
This list of holdings is published with a one month lag on the first business day of each month. Holdings can and do vary over time.