Yield Compression: A dynamic not seen in over two decades

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Livewire Markets

The chart below highlights a compression of yields around a focus point of around 4.5% to 5%. Philip Parker, Chairman of Altair Asset Management says it is a dynamic that he hasn’t seen since the late 80s and early 90s. “The point is that all of the low hanging fruit might actually be taken by now. So what we are focusing on is companies that have got growth of equity as well as the ability to increase their dividend. Some people refer to that as ‘industrial yield’ and we see that as a major ongoing theme.” Parker says while traditional dividend payers like the Banks and Telstra present attractive opportunities at current levels, they are unlikely to substantially grow dividends in the years ahead. In this short video Parker outlines one company he believes has the rare combination of offering growth with the prospect of increased future dividends.


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