Nicholas Equity Income Fund, Inc.

NSEIX

Equity Income with Growth

Nicholas Equity Income Fund, Inc. (NSEIX) was designed to invest in dividend-paying stocks across the market capitalization spectrum. The Fund launched in 1993 and is managed by lead portfolio manager Michael L. Shelton, CFA, CPA, and co-portfolio manager David O. Nicholas, CFA. The Fund has tended to own more small- and mid-cap stocks. We believe the focus on smaller companies allows the Fund to enhance its potential return by combining the long-term principal appreciation of smaller stocks along with the power of dividend income.

As is true with the other Nicholas Funds, a critical component to the Fund’s style is seeking to buy stocks with dividend yields greater than the market, valuations offering the best opportunity for capital appreciation over the long-run and a margin of safety to offset the risk of price declines. The Nicholas philosophy has strongly maintained the benefits of buying stocks at valuations that are afforadble relative to their long-term potential. The Fund’s history suggests this approach can produce more consistent, risk-adjusted returns over time. 

  • Snapshot
  • Objective
  • Performance
  • Portfolio Manager
  • Distribution History
  • Documents &
    Forms

Investment Approach

Nicholas Equity Income Fund seeks to provide investors with a reasonable stream of income along with long-term capital growth through a diversified portfolio of stocks with attractive dividend yields. The Fund will invest in small- to large-sized companies with capitalizations generally between $1 to $100 billion. The Fund is typically benchmarked against the Standard & Poor’s 500 Index.


Fund Facts

Co Portfolio Manager: Michael L. Shelton
Co Portfolio Manager: David O. Nicholas
Style: Equity Income, Growth
Fund Inception: 11/23/1993
Fund Assets (millions): $522.6*
Number of Holdings: 48*
* as of 06/30/2016  
Minimum Initial Investment: $500
Fiscal Year-End: March 31
Prospectus Date: July 31
Cusip: 653734103
Ticker NSEIX
   
   

Characteristics*

Weighted Avg Forward P/E Capped: 14.17x
Weighted  Avg Trailing P/E Capped: 15.00x
Weighted Median Mkt Cap (million): $10,386.7
Weighted Avg Mkt Cap (million): $64,367.4
Weighted  Harmonic Avg. Price/Book: 2.54x
Turn Over Rate: (03/31/16) 24.92%
Standard Deviation: 10-Yr(2) 14.13%
Sharpe Ratio: 10-Yr(2) 0.66   

 

Sector Diversification*

Sector Diversification

Top Ten Holdings*

Holdings % Net Assets
Pfizer Inc.  3.60%
Walgreens Boots Alliance, Inc.   3.43%
Cardinal Health, Inc. 3.02%
W.P. Carey Inc.  3.01%
Nielsen Holdings plc  2.96%
Chubb Limited  2.94%
AbbVie Inc. 2.87%
Time Warner Inc.  2.85%
Apple Inc. 2.64%
TEGNA, Inc. 2.49%
Total 29.81%

(1) Annualized
(2) Average Annual

* Data as of 06/30/16 unless stated otherwise.


 

Morningstar Ratings

  Rating # of Funds
Overall 408
3 Year 4 star ranking 408
5 Year 4 stars 348
10 Year 5 star 240

Morningstar Category: Mid-Cap Value
Source: Morningstar, as of June 30, 2016.
The Overall Morningstar Rating™ for a fund is derived from a weighted average
of the risk-adjusted performance figures associated with its three-,five- and ten year (if applicable) Morningstar Rating™ metrics. (3)

Lipper Rankings

  1 Year 3 Year 5 Year 10 Year
Ranking 70% 48% 42% 2%
# of Funds 518 427 312 208

Category: Equity Income
Source: Lipper, as of June 30, 2016.
Lipper Ranking Scale: 1% equals highest; 100% equals lowest (based on total returns).

Lipper Analytical Services, Inc. is an independent mutual fund research and rating service. Each Lipper average represents a universe of Funds with similar investment objectives. The highest percentile rank is 1 and the lowest is 100. Rankings for the periods shown are based on Fund total returns with dividends and distributions reinvested and do not reflect sales charges.

(3) © [2016] Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or loses arising from any use of this information. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating ™ (based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance, including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) One cannot invest directly in an index. Fund holdings and/or sector weightings are subject to change at any time and are not recommendations to buy or sell any security. 

Past performance does not guarantee future results.

 

Nicholas Equity Income, Inc. Investment Objective

The Nicholas Equity Income Fund, Inc. seeks to provide investors with a reasonable stream of income. Its secondary purpose is to provide moderate long-term growth of capital. The Fund pursues its objective by investing in a diversified portfolio of income-producing equity securities and fixed income investments.

Investment Policies & Considerations
Historically, dividends paid by companies to their shareholders have accounted for almost half of the total returns earned by common stocks. This has made dividend-paying stocks an attractive way to provide investors with superior total return.

Our policy is to invest primarily in income-producing securities, such as common stocks, preferred stocks, and convertible securities. We will generally select securities with dividend yields that are expected to be higher than the current dividend yield of the S&P 500.

  • Combined growth rate and dividend yield of 10% or better
  • A history of consistent earnings
  • Return on equity (ROE) of 15%, or an improving ROE
  • Debt to total capitalization of less than 50%
  • A price to earnings ratio lower than two times the growth rate
  • An enduring franchise or brand
  • Honest, capable management
  • Significant management ownership of stock
  • Long-term and short-term business momentum

This portfolio may include investment grade and non-investment grade, as well as rated and non-rated securities. Our manager and analysts perform in-depth credit analysis to determine which investments are appropriate for the Fund. Our analysis considers the issuer’s financial resources, sensitivity to economic trends and conditions, operating history, management, and other factors. In general:

  • We do not attempt to predict interest rate movements.
  • We hold bonds with short to intermediate maturities in order to help portfolio stability while pursuing competitive returns.

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  •  Quarter-End Performance
  • Month-End Performance
  • Quarterly Performance Presentation

As of June 30, 2016

Average Annual Returns

Fund 3 Month YTD  1 Year  3 Year 5 Year 10 Year
Nicholas Fund (NICSX) 1.87% 0.35% -8.53% 10.96% 12.30% 8.97%
Nicholas II - Class I (NCTWX) -0.28% 0.08% -5.72% 10.02% 9.69% 7.86%
Nicholas II - Class N (NNTWX) -0.33% -0.04% -6.04% 9.66% 9.32% 7.50%
Nicholas Limited Edition - Class I (NCLEX) 2.88% 2.70% -3.94% 7.58% 8.03% 8.16%
Nicholas Limited Edition - Class N (NNLEX) 2.75% 2.51% -4.31% 7.20% 7.65% 7.81%
Nicholas Equity Income Fund (NSEIX) 3.62% 6.30% 0.34% 8.75% 9.97% 9.65%
Nicholas High Income Fund - Class I (NCINX) 2.75% 5.13% -1.88% 2.13% 4.30% 5.14%
Nicholas High Income Fund - Class N (NNHIX) 2.64% 4.98% -2.25% 1.74% 3.94% 4.83%
             

 

  1 Year 5 Year 10 Year 7-Day Yield 7-Day
Effective
Yield
 
Nicholas Money Market (NICXX) 0.00% 0.00% 0.96% 0.00% 0.00%  

 

The 7-Day Yield quotation, rather than the Total Return quotation, more closely reflects the current earnings of the Fund.

Performance data quoted represents past performance and does not guarantee future results.  The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.  Performance current to the most recent month end may be lower or higher than the performance quoted.

As of August 31, 2016

Average Annual Returns

Fund 3 Month YTD  1 Year  3 Year 5 Year 10 Year
Nicholas Fund (NICSX) -0.49% 1.31% -3.90% 9.77% 14.23% 8.98%
Nicholas II - Class I (NCTWX) 2.24% 4.53% 2.48% 10.16% 13.25% 8.25%
Nicholas II - Class N (NNTWX) 2.15% 4.31% 2.13% 9.77% 12.85% 7.88%
Nicholas Limited Edition - Class I (NCLEX) 6.76% 9.74% 9.70% 8.37% 11.70% 8.98%
Nicholas Limited Edition - Class N (NNLEX) 6.69% 9.52% 9.34% 8.00% 11.32% 8.64%
Nicholas Equity Income Fund (NSEIX) 3.52% 9.69% 10.71% 9.19% 12.53% 9.73%
Nicholas High Income Fund - Class I (NCINX) 3.84% 8.19% 3.10% 2.78% 5.49% 5.31%
Nicholas High Income Fund - Class N (NNHIX) 3.82% 8.04% 2.72% 2.45% 5.11% 4.95%
             

 

  1 Year 5 Year 10 Year 7-Day Yield 7-Day
Effective
Yield
 
Nicholas Money Market (NICXX) 0.00% 0.00% 0.88% 0.00% 0.00%  

 

The 7-Day Yield quotation, rather than the Total Return quotation, more closely reflects the current earnings of the Fund.

Performance data quoted represents past performance and does not guarantee future results.  The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.  Performance current to the most recent month end may be lower or higher than the performance quoted.

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Fund's Quarterly Performance Presentation

Quarterly Performance Presentation

 

Nicholas Fund's Expense Ratio: 0.72%
Nicholas II – Class I's Expense Ratio: 0.62%
Nicholas II – Class N's Expense Ratio: 0.96%
Nicholas Limited Edition – Class I's Expense Ratio: 0.86%
Nicholas Limited Edition – Class N's Expense Ratio: 1.21%
Nicholas Equity Income Fund's Expense Ratio: 0.72%
Nicholas High Income Fund – Class I's Expense Ratio: 0.71%(1)
Nicholas High Income Fund – Class N's Expense Ratio: 1.06%(1)
Nicholas Money Market Fund's Expense Ratio: 0.51%

The Adviser has agreed to voluntarily absorb management fees of 0.30% of Nicholas Money Market Fund's average net assets on an annual basis during the fiscal year ending December 31, 2016. This absorption continues today; however, the Adviser may decrease or discontinue it at any time.  The most recent expense ratios can be found in each funds current annual or semiannual report.

(1)The expense ratio may not correlate to the "Ratio of expenses to average net assets" provided in the Financial Highlights in the Fund's Annual or Semiannual Report. The information in the Financial Highlights reflects the operating expenses of the Fund and does not include Acquired Fund Fees and Expenses. "Acquired Fund Fees and Expenses" are those expenses incurred indirectly by the Fund as a result of acquiring investments in shares of one or more other investment companies.

Nicholas Money Market Fund has fee waivers in effect. Investment performance reflects these fee waivers. In the absence of such waivers, total returns would be reduced.

 

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Michael L. Shelton, CFA, CPA

Portfolio Manager and Senior Research Analyst
Industry experience: 20 years
Nicholas Company Tenure: 10 years
Lead Portfolio Manager - Nicholas Equity Income Fund, Inc.
Co-Portfolio Manager - Nicholas Fund, Inc.

 

Michael joined Nicholas Company in 2006. He serves as lead portfolio manager of Nicholas Equity Income Fund, co-portfolio manager of Nicholas Fund and is a senior research analyst. Michael has a depth of knowledge following years of covering the healthcare, technology and industrial sectors.  Michael has had the opportunity to work alongside Dave and Ab Nicholas analyzing companies for each of the investment strategies.  This experience has provided a sound basis for his adoption of the long held Nicholas investment philosophy and process. 
 
Prior to joining Nicholas Company, Michael worked for the Department of Defense Financing & Accounting Service as a financial analyst. He spent three years with Robert W. Baird as a research analyst and at McDonald Investments for one year focusing on healthcare companies. Before starting his investment career, he worked with Ernst & Young as an auditor and tax consultant.
 
Michael has earned his CPA and CFA designations. He graduated magna cum laude from Miami University in Oxford, Ohio and obtained his MBA from The Ohio State University. He is a member of the CFA Society Milwaukee.

 


 

David O. Nicholas, CFA

Chief Executive Officer, President, Chief Investment Officer and Portfolio Manager
Industry experience: 33 years
Nicholas Company Tenure: 30 years
Lead Portfolio Manager - Nicholas Fund, Inc., Nicholas II, Inc. and Nicholas Limited Edition, Inc.
Co-Portfolio Manager - Nicholas Equity Income Fund, Inc.

 

Dave Nicholas joined Nicholas Company as an investment analyst in 1986.  He serves in a leadership position for the company as CEO and President, while primarily focusing his efforts day-to-day on investments as a Portfolio Manager and the Chief Investment Officer.   Dave has developed his philosophy and skills over the past thirty years under the guidance of the long held investment philosophy and process developed by Albert O. Nicholas, the founder of Nicholas Company.  This opportunity has allowed Dave to gain a deep experience and knowledge analyzing companies and the equity markets.

Dave’s approach is aligned with the Nicholas core investment philosophy and process, while adjusting it to meet the characteristics of various capitalization growth companies.  Core elements to the philosophy include identifying companies with secular growth capabilities, consistent earnings growth, strong balance sheets and solid management teams.  Dave also shares a preference for non-consensus strategies when market opportunities arise.

Dave is the lead portfolio manager of Nicholas Fund, Nicholas II and Nicholas Limited Edition, while serving as co-manager for Nicholas Equity Income Fund.  As Chief Investment Officer he guides the firm’s investment process and the investment team on a day-to-day basis.

Dave earned a B.B.A. in Finance from the University of Wisconsin-Madison and completed his M.S. in Finance at the University of Wisconsin-Milwaukee, where he is a member of the University’s Business School Advisory Board. He has earned the right to use the CFA designation and is a member of the CFA Society Milwaukee.


 


 

NOTE: None of the distributions included income from U.S. Treasuries, U.S. Agencies, state government or municipalities.
 

Distribution Year

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Distribution History 2016

Pay Date Net
Investment Income
Short Term
Capital Gains
Long Term
Capital Gains
Total
Distribution
12/27/2016 TBD TBD TBD TBD
11/03/2016 TBD TBD TBD TBD
08/04/2016 0.0999 0.0000 0.0000 0.0999
05/05/2016 0.0851 0.0000 0.3955 0.4806


TBD = To Be Determined

 

 

Distribution Year
  • 2016

Please print, complete and mail to the appropriate address:

Nicholas Family Of Funds
c/o U.S. Bancorp Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

Overnight Express:

Nicholas Family Of Funds
c/o U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202


Order By Telephone

1-800-544-6547

Automated transactions are available 24 hours a day, 7 days a week.

To speak to a representative, call Monday - Friday, from 8am - 7pm, Central Time.

Shareholders calling from outside the U.S. may call collect, 414-765-4124, Monday - Friday, from 8am -7pm, Central Time.



The Nicholas Funds are offered only to United States residents, and information on this site is intended only for such persons. Nothing on this web site should be considered a solicitation to buy or an offer to sell shares of any Nicholas Fund in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction. 

An investment in the Money Market Fund, Inc. is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

Please refer to each prospectus for important information about each investment company, including investment objectives, risks, charges and expenses. 

Mutual fund investing involves risk; principal loss is possible. Small- and medium-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities such as limited liquidity and great volatility. Investment by the Funds in lower-rated and non-rated securities presents a greater risk of loss to principal and interest than higher-rated securities. 

Past performance does not guarantee future results.

Diversification does not assure a profit nor protect against loss in a declining market.

Glossary of terms   |   Privacy & Security

Nicholas Funds are distributed by Quasar Distributors, LLC

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