Nice, but dull – four dividend super-heroes

Friday, Nov 02 2012 by
Nice but dull  four dividend superheroes

Never has the hunt for yield and good quality income flow been so great, a situation exacerbated by constant volatility and uncertainty and ultra low interest rates and government bond yields. For the slightly more adventurous conservative investor substantial and relatively safe yields can be found in the stock market, though they do come at a price as quality can be expensive in the current environment.

The first two companies Primary Health Properties (PHP) and HICL Infrastructure (formerly HSBC Infrastructure) are considered by some analysts to be like quasi-government bond securities as their revenues are largely guaranteed by the state. Though these two companies are very safe bets by equity standards, they do nonetheless carry operational risk, which is not the case for Gilts. Also, there is always regulatory risk, but the UK government tends to be careful about tinkering too heavily with existing contracts for fear of damaging future investment in the public sector. However, these risks are more than compensated for by their inflation-busting yields.

Just what the doctor ordered

Primary Health Properties (LON:PHP) is a healthcare real estate investment trust – a property company, which lets out modern purpose built medical centres mainly to doctors and dentists across the UK. There's certainly no speculative development for PHP or glamorous trophy buildings to adorn the annual report, but therein lies its 'nice' qualities. Nothing is built until it is pre-let and the lets can be for over a decade with rents linked to inflation. Most of its properties are worth less than £10 million making them relatively straight forward to build and manage in contrast to say a skyscraper. Another positive factor is that it's properties tend to be 99% let. For a property investors it doesn't come much better than that.

PHP really showed its mettle during the financial crisis where revenues remained stable and their were no cash flow crises. This stands in sharp contrast to say British Land, which struggled during the height of the financial crisis. In 2009 PHP did conduct a cautionary rights issue to beef up its equity buffer in case it breached its loan covenants with banks as all commercial property values were under pressure. But as it turned out, this was very profitable for shareholders who took up their rights. All in all this is probably one of the…

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Primary Health Properties PLC (PHP) is a United Kingdom-based real estate investment trust (REIT). The principal activity of the Company is the investment in primary healthcare property in the United Kingdom and the Republic of Ireland. It specializes in the ownership of freehold or long leasehold interests in purpose-built healthcare facilities, which are leased to general practitioners, National Health Service (NHS) organizations and other associated healthcare users. Its portfolio comprises over 270 primary healthcare facilities. The Company's properties include St Catherine's Health Centre, Birkenhead; Nairn Health Centre, Scotland; Lyng Centre, West Bromwich; Fountains Medical Centre, Chester; Victoria Central Health Centre, Wallasey; Port Talbot Resource Centre, South Wales; Rotherham Community Health Centre, South Yorkshire; Hume Street Medical Centre, Kidderminster, and Oswestry Primary Care Centre, Shropshire. more »

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HICL Infrastructure Company Limited (HICL) is a closed-ended investment company. The Company’s primary objective is investing and managing the assets with a view to spreading or otherwise managing investment risk. Its objective is to invest in funds in a portfolio of lower risk, operational, infrastructure projects to earn returns, as well as capital growth. The company’s portfolio focuses on social and transportation infrastructure concessions, debt funding of infrastructure projects, toll roads and regulated utilities and transmission systems. The Company owns over 90 infrastructure investments in accommodation, education, fire, law and order, health and transport sectors. Its investments include Newcastle Libraries, Northwood MoD HQ, Derby Schools, Doncaster Schools, Dorset Fire and Rescue, Medway Police, Ealing Care Homes, Glasgow Hospital, Connect PFI and others. more »

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National Grid Plc is an electricity and gas utility company. The UK Electricity Transmission includes high voltage electricity transmission networks in Great Britain. Its UK Gas Transmission provides the gas transmission network in Great Britain and UK liquefied natural gas (LNG) storage activities. The Company’s UK Gas Distribution includes four of the eight regional networks of Great Britain’s gas distribution system. US Regulated includes gas distribution networks, electricity distribution networks and high voltage electricity transmission networks in New York and New England and electricity generation facilities in New York and Massachusetts. The Company’s activities primarily relate to non-regulated businesses and other commercial operations, including United Kingdom based gas and electricity metering activities; UK property management; a UK LNG import terminal; other LNG operations, and US unregulated transmission pipelines. more »

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  Is Primary Health Properties fundamentally strong or weak? Find out More »

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About Justin Pugsley

Justin Pugsley

I’m an investment writer / copywriter producing thought leadership and marketing material and insights for asset management, wealth management and professional services firms. I manage my own investment portfolio and primarily focus on investing in dividend growth shares. I also do some momentum investing and occasionally pursue short-term investment strategies at the margins of my portfolio. I’m fascinated by geo-politics, history, economics and investing.   Linkedin: more »


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