Energy distribution a good long-term investment
Nino Ficca
Investors looking for high yields over a long period of time have been encouraged to examine the energy transmission and distribution industry to help satisfy their needs by a top company executive in the sector.
SP AusNet managing director Nino Ficca said: “Our business is a very stable business. It’s got a very high yield, in the 8 per cent range, which is very tax effective as 68 per cent of the return is tax effective or tax deferred.”
“It’s a very stable return that will go year on year on year,” he added.
Ficca believes an allocation to this industry sector can provide for good diversification in a portfolio, particularly one focused on growth.
“We think it makes for a good break in any balanced portfolio. It’s always good to have a balance between high growth and very stable yield type investments as well,” he said.
The key feature investors should consider is the industry’s longevity and necessity.
“The business will be here effectively forever. It’s not part of a cycle or a boom. This business is part of our everyday life. It’s electricity and gas to your home, my home, and everyone else’s home. So while we still need that service and will do in the foreseeable future it’s a very strong sustainable business,” Ficca said.
SP AusNet shares have been included in a few recognised fund managers’ portfolios and attracted some interest from hedge funds when the company initially listed on the Australian Stock Exchange.
The organisation has today reported a half-yearly profit for the 2006-07 financial year of $555.4 million, which was in line with its prospectus forecast.
The result has allowed the firm to declare a distribution to shareholders that represents 50 per cent of its forecast full year dividend of an 8.4 per cent yield return.
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