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Why yield investors should take a look at Centuria


Why yield investors should take a look at Centuria

If you’re looking for a robust income stock, Centuria Capital Group (ASX:CNI) is worth considering. Centuria owns a suite of assets focused on property and investment bonds, and pays an annual yield of around 4.3 per cent. Making this business even more appealing, is a share price that keeps heading in the right direction.

One powerful thematic that is likely to continue to play out over the medium term is growing demand for income generating assets and the shrinking availability of income generation per unit of assets.

The search for higher income yields

With the Baby Boomers moving increasingly into retirement, their investment focus shifts from accumulation to income generation. This is driving a slow acceleration in the growth of demand for lower risk income producing assets.

At the same time, the return generated from risk free income generating assets has been falling for decades. Nominal returns, even on longer dated government backed fixed income assets, are now close to zero and well below rates of consumer price inflation. This means that the income generated from these assets is not even high enough to preserve the purchasing power of the underlying principle over time.

This will see investors increasingly move up the risk curve in search of higher income yields. Invariably this will lead to the value of these assets being bid up and yield compression over time.


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Stuart is the Portfolio Manager of The Montgomery [Private] Fund. Stuart joined Montgomery in 2015 after spending 19 years in research roles with JP Morgan in Australia and in New York. Stuart was appointed Executive Director at JP Morgan in 2005 and for 8 years was Deputy Head of Research. Prior to this he worked as an analyst in the Australian Equities team at Bankers Trust Asset Management for 3 years. Stuart is a CFA® charterholder.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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