BlackRock Sustainable American Income 31 December 2019
Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by BlackRock Sustainable American Income. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.
The Company aims to provide an attractive and growing level of income return with capital appreciation over the long term, predominantly through investment in a diversified portfolio of primarily large-cap US equities
BlackRock North American Income Trust
Association of Investment Companies (AIC) Sector
12 Mo Yield
Dividend Distribution Frequency
Latest Market Capitalisation
Latest Net Gearing (Cum Fair)
Latest Ongoing Charge Ex Perf Fee
(Discount) / Premium (Cum Fair)
Daily Closing Price
BlackRock North American Income Trust (BRNA) offers investors a portfolio of high-quality US companies at attractive valuations, with a track record of strong dividend growth. The trust is overseen by Tony DeSpirito (lead manager), Franco Tapia (co-manager) and David Zhao (co-manager).
Last year, in an attempt to attract new investors, the board announced a shift in strategy, increasing the dividend by 62% and allowing a proportion to be funded from capital. At the current share price the trust offers investors a yield of 4.3%. The move has paid off and the trust now trades at a premium of 1.2%.
BRNA believes that companies which pay dividends have stronger management teams, and that those that can grow their dividends offer attractive long-term returns at lower levels of volatility. To find these companies, the team uses a bottom-up, stock-specific approach, starting with a universe of the 500 largest US companies by market cap and breaking it down by fundamental analysis.
Since the current managers took over in 2014, there has been a marked improvement in the trust’s performance: it has now outperformed the benchmark Russell 1000 Value index in four of the past five calendar years, and this has been achieved at low levels of beta.
Currently yielding 4.5%, BRNA is an attractive option for investors looking for a source of equity income that isn’t the ‘usual suspect’ UK. Since changing its management team in 2014, the trust has been a true turnaround story. The impact that Tony has had on the portfolio has been stark, as we illustrate in the Performance section. Over three years he has generated the highest alpha of any manager focusing on North America excluding Canada (1.51), at relatively low levels of standard deviation (19.42%).
The manager has shown a clear capacity to capture upside and limit downside, all the while delivering a strong level of income. Given the uncertain environment for world equities, we are not surprised that the trust now trades at a premium, and believe that BRNA is well suited to a more uncertain environment of elevated economic and political risks.
|Strong track record of delivering total returns
||Trading at a premium
|Now yielding 4.5%, with the Board having increased the dividend by over 60% last year
||Current uncertainty surrounding US market conditions
|Low levels of relative volatility are attractive in the current uncertain environment