Positive outlook for listed infrastructure: FSI
There is no ‘one size fits all’ approach to dividends for listed infrastructure companies, according to First Sentier Investors (FSI), and the lockdown has shown the positive outcomes business and governments can have by working together on infrastructure.
Rebecca Myatt, portfolio manager for global listed infrastructure (GLI), said the firm believed companies that had accepted some form of Government support should not be paying out dividends, but the companies it had invested in did not opt for that support.
“The key deciding factor, in our view, is really the strength of a company’s balance sheet,” Myatt said.
“Those with weak balance sheets and limited liquidity should not increase debt to pay out a dividend, just because they committed to it before the crisis.
“But companies with strong balance sheets and no liquidity concerns should absolutely pay their dividend.”
The GLI team would now incorporate into its analysis whether infrastructure companies need a social license to operate.
“During COVID-19 we have been reminded which services are essential for society to function at its most basic level,” Myatt said.
“As we have all retreated into our own homes our basic needs have been for the water to be running, electricity and gas to be supplied, and for our WIFI to work so that we can remain connected to the outside world.”
A notable outcome of the lockdown was the strong collaboration between governments and businesses.
“If all parties have worked well together this should only strengthen the relationships a company has with its communities and with the government,” Myatt said
“We also believe that infrastructure can have a role to play in driving economic growth. For example, the European Green Deal could help in stimulating the economy through investment in renewable generation, electrification of transportation and decarbonisation of heating.
“This allows companies to accelerate their investment in renewables, which in turn leads to job creation and economic growth.”
Recommended for you
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
