Finding the dividend heroes of America: North American Income Trust

NAIT finds the dividend heroes of America…by Alan Ray

Overview

North American Income (NAIT) is an actively managed portfolio of approximately 50 large-cap US equities with the objective of producing a growing dividend as well as capital appreciation. Whereas the core proposition is equity income, any investor experiencing a sense of discomfort over the highly concentrated nature of the S&P500 could find NAIT a great way to access a different group of successful US companies.

NAIT currently yields 3.2% and over the last ten years has increased its Dividend at an annualised rate of 6.8%, well ahead of inflation. NAIT’s dividends are paid from a mixture of ‘natural’ dividend income and options income in an approximately 80/20 ratio. The trust also has a buffer to help cover any potential shortfall, with revenue reserves equivalent to more than one year of dividend payments. NAIT is moderately Geared, currently c. 6%, and uses low-cost long-term debt.

Performance over the last five years is ahead of the benchmark Russell 1000 Value Index’s 65%, with NAV and share price total returns of 67% and 81% respectively (figures to 15/05/2026). The higher share price total return is a measure of discount narrowing, with the current discount standing at about 3%. NAIT’s board has shown a strong commitment to share buybacks to support this, which we look at in the Discount section.

NAIT is Managed by Fran Radano and Jeremiah Buckley. Fran first managed NAIT between 2015 and 2024. That year, NAIT’s board made the decision to award the management contract to Janus Henderson and Jeremiah was appointed as portfolio manager in August 2024. Fran subsequently moved to Janus Henderson and joined Jeremiah as co-manager. So, whilst there is long-term continuity in the core proposition, this has evolved to encompass a broader spread between higher-yielding mature businesses and lower-yielding growth stocks, taking advantage of the broad global research resources of the Janus Henderson equities business.

Analyst’s View

Investors are increasingly having to grapple with the thought that the largest stocks in the S&P 500 are spending at an extraordinary rate just to stay in the game, but are, perhaps, attributed valuations that suggest they have already won it. Although NAIT’s proposition is a very straightforward one of equity income, this is, in our view, a very interesting time for any investor in US equities to consider its merits, especially if they are worried about the above conundrum. The lens of equity income leads to a portfolio of profitable, steady businesses with the ability to pay, consistently, a growing dividend, and as many equity income investors know, sometimes it’s not the dividend per se that matters as much as what it says about a company.

But then again, NAIT stands on its own merits as an equity income trust. Yes, the dividend yield is a touch lower than the average UK equity income trust, but the US economy’s faster growth trajectory ultimately translates to faster dividend growth, and there aren’t many UK equity income trusts with a ten-year dividend growth rate of almost 7%. Put another way, a buyer of NAIT ten years ago in May 2016 would have paid about 180p, would have received over 100p of that back in dividends and would have a yield on their initial cost of just over 7%. As more and more investors avoid the finality of buying an annuity for their retirement and continue to invest for the long-term, numbers like this can really matter. In that context, NAIT’s proposition looks right on the money.

Bull

• NAIT offers strong diversification compared to the composition of the US stock market
• Strong track record of growing the dividend ahead of inflation
• Low-cost gearing enhances capital and income returns

Bear

• US stock market’s strong performance contrasts with mixed economic signals
• Lower yield than many UK equity income trusts
• Gearing can amplify losses as well as gains

See the full research on NAIT here >

_Disclaimer

_{Disclosure – Non-Independent Marketing Communication}

_{This is a non-independent marketing communication commissioned by North American Income (NAIT). The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.}