North American Income (NAIT)

North American Income Trust (NAIT) is unique in its peer group, with an actively managed portfolio of c. 50 large-cap US equities designed to generate a growing dividend as well as capital appreciation. Whilst US equities are less well known in the UK for their equity income characteristics, there are many large companies that pay attractive and growing dividends, and, with a history of superior earnings growth in the US, dividend growth can often be higher too.

NAIT’s current strategy began in 2012, since when annualised Dividend growth of 8% substantially outstrips both UK and US inflation. Dividends have increased every year under the strategy and are paid using a mixture of natural dividend income and options income, in an approximately 80/20 ratio, to achieve a current dividend yield of c. 3.5%. NAIT has over a year of revenue reserves.

NAIT is Managed by Fran Radano and Jeremiah Buckley. Fran initially managed NAIT from 2015 to May 2024 at Aberdeen AM. Following a review, the board moved the management contract to Janus Henderson in August 2024, where Jeremiah, who is responsible for a number of US equity dividend strategies, took on the role as NAIT’s manager. Fran subsequently joined Janus Henderson in late 2024 and was appointed as co-manager. Whilst the core proposition remains, evolutions utilising the greater resources of Janus Henderson’s US equities team have resulted in a wider spread of higher-yielding compounding stocks, contrasting with lower-yielding growth stocks, with the objectives of diversifying and improving dividend growth further.

NAIT is net Geared c. 7% using long-term, low-cost debt at interest rates below the portfolio yield. The board has made active use of share buybacks and the trust will have a continuation vote and conditional tender offer in 2027, which should underpin and help to narrow the current 9% discount.