Clime Asset Management

Billionaire Kerry Stokes’s Seven Group Holdings recently announced that son and heir Ryan Stokes would take over as chief executive from Don Voelte. Last year, we said Seven Group Holdings shares were a good option for income investors. But there is another option for income investors to get exposure to Seven: the company’s hybrid known as the Transferable Extendable Listed Yield Shares (TELYS4), trading on the ASX under the code SVWPA. SVWPA have a face value of $100 per unit and pay half-yearly dividends in arrears. SVWPA rank behind all creditors but are prioritised ahead of SGH equity holders. They are perpetual securities and have no maturity. The effective gross dividend rate for SVWPA is 7.05%, calculated on the current market price of $87.40. This produces a grossed up running yield approaching 8.1%. Although SVWPA brings with it more risk on a relative basis, the grossed up yield of about 8.1% compares very favourably to returns offered by term deposits. They will continue to attract the attention of income focused investors. (VIEW LINK)



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