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Capital 19 High Dividend Portfolio

PortfolioAORDDifference
1 Month-1.1%4.5%-5.6%
3 Months4.0%2.8%1.2%
1 Year18.6%11.7%6.9%
Since Inception20.0%8.8%11.2%
Data as at 31 July 2014  
We all know there is no such thing as a perfect investment, but high dividend paying stocks comes pretty close. These companies offer you the potential for capital appreciation, plus a steady stream of cash. Successful dividend investors know stock prices may rise and fall, but dividends can reward shareholders year after year.

The Capital 19 High Dividend Portfolio selects companies from both Australia and the United States, based not just on the dividend they offer, but also the probability of that dividend increasing in the future and the potential capital price appreciation of the stock.

The basics of dividend investing are easy to master. But finding the best dividend paying stocks goes beyond screening for yield alone.

A 40+ year study by Ned Davis Research Inc found stocks with rising dividends outperformed stocks with flat, shrinking or no dividends.

What's more, Ibbotson Associates' data shows that dividends make up almost half of the total historical return for stocks HighDividend

Everyone knows the best dividend paying stocks in Australia, but not many people are aware of a very special class of shares in the US known as Master Limited Partnerships.

What separates MLP's from the rest of the shares is a special tax consideration provided they pay out at least 80% of their profits as dividends. This leads to an extremely attractive yield that often puts even the Australian dividend companies to shame

Many of the companies in this portfolio derive much of their cash flow from fee-generating assets such as pipelines that guarantee a minimum level of income regardless of whether customers use their allotted capacity. This low risk business model enables many of these Master Limited Partnerships to maintain and in most cases grow their quarterly, or even monthly, distributions.

As you might expect, the Capital 19 High Dividend Portfolio focuses on stocks that have a history of raising their dividend payment to investors. Whilst dividends are good, rising dividends are better and by holding a mixture of stocks from both Australia and the US, the portfolio receives a dividend from somewhere every single month of the year.

Income investors might like to withdraw those dividends, or you could re-invest the dividends to experience the magic of compounding

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Investment Minimums

The portfolio consists of 20 separate stock holdings and therefore we would recommend a minimum of $100,000 invested if you wish to copy the entire portfolio. Of course you are free to select individual shares from within the portfolio if you so desire but this will change your portfolio performance.

How it works

If you are interested in this portfolio, speak with your Capital 19 adviser who will ensure you receive all updates. Updates are sent out by email. If you wish to take action on any update, you can either do so yourself using the online trading platform, or have your Capital 19 adviser do so for you.

Shares are individually held in each client account

Fees

Standard execution fees apply. There are no other additional fees charged for the service. It is complimentary to all clients of Capital 19.

Risks

There are a number of risks that apply to this strategy.

Market Risk

We consider the strategy as high risk and you should only use funds you can afford to lose. Stock prices can go down as well as up

Liquidity Risk

Liquidity risk refers to the risk there will not be enough buyers and sellers available to execute your desired trade.

Counterparty Risk

Counterparty risk refers to the risk of not receiving funds from your trading counterparty. This strategy only trades exchange stocks so the exchange guarantees the counterparty risk.

FX Risk

We are trading an instrument denominated in US Dollars. The value of this asset will change in Australian Dollar terms due to changes in the AUD.USD exchange rate. You can elect to hedge this currency risk if you desire. Please speak to your Capital 19 adviser about this.

Hypothetical Performance

The backtested performance shown is hypothetical only. It does not represent actual investment results. Performance is simulated only and has certain limitations. Since the trades have not been actually executed the results might have under compensated for the effects of market spreads and possible lack of liquidity.. The results shown include the impact of FX on the value of the portfolio and it does not re-invest dividends received. . Historical performance is only an indication and cannot be relied upon for future performance. Capital 19 makes no guarantee any account will experience similar results

Withholding tax

The US will impose a 15% withholding tax on any US dividend received. This has not been included in the performance calculations and would reduce overall results. Speak to your tax adviser about the possibility of re-claiming these withholding taxes. For Australian dividends you might be eligible to receive franking credits. The performance shown does not take this into consideration. Again you should speak to your tax adviser about franking credits received.