Buy, hold or sell: Fidelity Global Dividend
The £381 million fund is ranked third out of the 25 funds in the Investment Association (IA) global equity income sector over the period from its launch in January 2012 to the end of April.
It is ranked number one over three years, returning 33.7% against a sector average of 18.3%.
Roberts seeks 'companies with sustainable yields and dividend growth potential in order to provide a distribution to shareholders that grows every year'. The fund currently yields 2.9%.
Buy: General Electric (NYSE:GE)
General Electric has been a long-term underperformer, according to Roberts, due to a 'sprawling group structure'. For over a decade, he says, investor attitudes to the stock were apathetic at best.
For years its profit and loss statement was dominated by the financial services part of its business, GE Capital - but the vast majority of that asset base has been sold over the past year or so, along with a further disposal of other non-core industrial businesses.
This “will be a good catalyst for performance”, says Roberts.
He bought into GE in September 2015 at $24 (£16.60), and the firm now accounts for 3% of the portfolio. The share price has since climbed to $30.
GE is now dominated by three divisions - power and water, aviation and healthcare - which according to Roberts “operate in oligopolistic markets with very high barriers to entry”.
He therefore expects “a very resilient earnings profile, despite the element of cyclicality that is inherent with industrial businesses”.
Hold: Glaxosmithkline (LON:GSK)
Roberts aims to allocate around a quarter of his portfolio to the healthcare sector, a decision made back in early 2012, at a time when “it was a contrarian call to have such a large weighting to the sector”.
“I was confident that prospects [for the sector] would start to look much better as research and development started to pick up,” he explains.
“Demographics plus greater penetration into emerging markets are both strong tailwinds, offset slightly by pressures on healthcare budgets in developed countries.
“Valuation multiples in the sector looked attractive, especially relative to the wider market.”
Roberts bought into GlaxoSmithKline at the fund's inception at a price of 1,400p.
Although the company's share price has not progressed much in absolute terms (it is currently trading at 1,455p), on a total shareholder return basis including dividends, the shares have returned almost 32%.
GlaxoSmithKline currently yields 5.4%, which is high relative to current levels of cash flow. But Roberts is confident the dividend will not be cut.
Sell: Kraft Heinz (NASDAQ:KHC)
Roberts bought into Kraft Heinz at a price of $60 in December 2014, when it was Kraft Foods.
The firm, which was best known for its dairy products and soft drinks brands, was another contrarian pick in the face of an increased focus in the wider food and drinks sector on healthy eating and wellness.
With the shares trading on a free cash yield of 5% and a 4% dividend yield, Roberts says the valuation looked attractive, with an in-house Fidelity analyst also highlighting a “shareholder-friendly management team focused on growth in cash profits”.
After researching the company, Roberts concluded “there were similarities with Dr Pepper, a company already held in the portfolio, with its US-centric market positioning and management approach”.
The firm merged with Heinz in March 2015 - a deal that turned out to be favourable for Kraft shareholders, who received one-for-one shares plus a special dividend of $16.50 per share.
Roberts sold out on valuation grounds a year later at $76, despite the firm forecasting continued improvements in its margins - indeed, its share price has risen a further $4 since.
However, at the time the market was pricing in earnings before interest and tax of 30 per cent, which, according to Roberts, is well above industry norms. For this reason, the manager says, he could 'no longer justify the valuation from a risk/reward perspective'.
The general term for the rate of income from an investment expressed as an annual percentage and based on its current market value. For example, if a corporate bond or gilt originally sold at £100 par value with a coupon of 10% is bought for £100 then the coupon and the yield are the same at 10%, or £10. But if an investor buys the bond for £125, its coupon is still 10% (or £10) and the investor receives £10 but as the investor bought the bond for £125 (not £100) the yield on the investment is 8%.
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
Generic, loosely-defined term for markets in a newly industrialised or Third World country that is in the process of moving from a closed economy to an open market economy while building accountability within the system. The World Bank recognises 28 countries as emerging markets, including Argentina, Brazil, China, Czech Republic, Egypt, India, Israel, Morocco, Russia and Venezuela. Because these countries carry additional political, economic and currency risks, investors in emerging markets should accept volatile returns. There is potential to make large profit at the risk of large losses.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.