Dubbed the ‘halo’ trade, investors are turning to mature, asset-heavy Australian companies with high barriers to entry to achieve steady, reliable returns.
Investors are increasingly turning to mature, asset-heavy companies with reliable dividends – a trend dubbed the ‘Halo’ trade – highlighting how dividends remain a key strategy for balancing income and growth in a shifting economic landscape.
According to GlobalX ETFs, HALO businesses typically operate in sectors where economic value is anchored in large physical systems that support national and global supply chains.
Energy, transport, and industrial infrastructure highlight how critical economic value is tied to tangible assets that demand massive investment, complex engineering, and long development timelines. These foundational systems – ranging from power networks to manufacturing facilities and supply-chain inputs – anchor modern economies and create hard-to-replicate barriers for competitors.
“For Australian investors, accessing these industries through global thematic exposures provides a way to participate in the physical foundations of the global economy,” senior investment strategist, Billy Leung, said.
Leanne Pan, portfolio manager for the Prime Value Equity Income (Imputation) Fund, said dividends continue to provide a stable component of equity returns, even in what she calls the current “poly crisis” environment.
“Historically, dividends have contributed significantly to total ASX returns across many cycles. Hence there should always be some dividends in a portfolio.”
She emphasised that investors should focus not just on dividend yield, but on sustainable total returns, combining both income and capital growth to avoid dividend traps.
“But investors need to look beyond the dividend yield alone and consider a total return approach combining both dividend yield and capital growth, to avoid dividend traps,” she said.
“Dividends can be financially engineered, so investors need to understand the true drivers of a business, what underpins the dividend and whether it is sustainable.”
The recent rotation into these so-called ‘Halo’ stocks – mature companies with heavy assets and low obsolescence – has further boosted dividend investors.
Pan noted that while software and tech companies may struggle to deliver reliable dividends amid AI-driven disruption, established companies with tangible assets have emerged as attractive options for balancing income and stability.
The latest ASX reporting season offered further reassurance for dividend-focused investors, with many companies posting solid earnings and upgrades.
Pan highlighted the strong results from major banks, noting healthy revenue growth and minimal debt issues, while cautioning that near-term sentiment could be affected by unfolding geopolitical tensions in the Middle East.
Since its inception in 2001, the Prime Value Equity Income (Imputation) Fund has delivered a net return of 10.4 per cent per annum, rising to 12.5 per cent per annum when franking credits are included.
Over the 12 months to February 2026, the fund returned 25.1 per cent net of fees, or 26.7 per cent with franking credits, underscoring the potential of a disciplined dividend-focused strategy even in volatile markets.
Source: InvestorDaily