The North American Income Trust (NAIT) has reported a significantly improved performance for the year ended 31 January 2025, following its transition to Janus Henderson Investors as manager in August 2024. The portfolio manager Fran Radano moved across to Janus Henderson with the trust and is now supported by Jeremiah Buckley as co-manager. During the year, NAIT delivered a NAV total return of 23.8%, outperforming both its reference indices – the Russell 1000 Value Index, which is says returned 22.5% and the S&P High Yield Dividend Aristocrats Index, which it says returned 14.9%. The share price total return was even stronger at 24.9%, helped by a more active share buyback policy. Around 10% of the share base was repurchased during the year, adding 4.5p to NAV per share. NAIT’s discount narrowed slightly from 9.1% to 8.5%. This performance comfortably reverses the prior year’s small negative return.
Changing gears with a new manager
The switch to Janus Henderson was accompanied by a reduction in the management fee and a new conditional tender offer mechanism due in 2027, reflecting the board’s efforts to enhance shareholder alignment.
The manager transition has brought a refreshed investment approach. The portfolio has been repositioned to support capital growth alongside income, with increased exposure to technology and healthcare funded by trimming positions in staples, materials, and bonds. Although this marginally reduced the portfolio yield, the managers believe it improves long-term total return prospects.
Strong income and dividend growth
NAIT continues to offer an attractive yield, with dividends per share rising 4.3% to 12.2p. This marks the 14th consecutive year of dividend increases. Earnings per share grew to 12.4p, and the revenue reserve remains robust, covering over a year’s worth of dividends. Two special dividends – from CME Group and Lamar Advertising – added to the income profile.
Sector winners and losers
The managers highlighted Broadcom, Morgan Stanley, and several healthcare names as notable contributors to performance, thanks to growth in AI infrastructure and innovation pipelines. Detractors included UPS, Amgen, and Prologis, reflecting challenges in industrials and real estate amid elevated rates and inventory adjustments.
The team is positioning the portfolio for growth in a more volatile, policy-driven environment, with continued focus on large-cap names with strong balance sheets, dividend growth, and AI-driven productivity potential.
Outlook
Chairman Charles Park acknowledged the uncertainty brought by President Trump’s second term and accompanying trade tariff policies, but expressed confidence in the managers’ ability to steer through turbulent markets. The board believes the steps taken – from fee cuts to improved governance and the revamped portfolio – will support NAIT’s performance and relevance in the years ahead.
[QD comment MR: It’s encouraging to see NAIT put in a strong performance during its year of transition. The early signs under Janus Henderson are positive, with outperformance against both benchmarks and a meaningful uptick in NAV and share price total returns. The proactive stance taken by the board – from fee reductions to buybacks and the planned conditional tender – signals a renewed focus on shareholder value. The shift in portfolio strategy looks to have been well timed given the macro backdrop and evolving opportunities in AI. The trust’s consistently growing dividend – now in its 14th consecutive year – remains a core attraction, particularly for investors looking for income in a volatile market.]
