Cqs New City High Yield Share Discussion Threads

[redhill9] 21/6/2022 09:58

Not sure about your logic there.

New funds can, for example, currently be invested in Prefs (which are a key constituent of the portfolio) at good yields. For example, AV.A, SANB and STAB can be bought for a yield of around 7% - throw in a bit of the additional gearing then available and the yield increases to well over 7.5% (less cost of debt). Your suggestion that all the cash raised is used to pay dividends seems a little off?

If holding a fixed interest stock long term the share price may go down, which reduces the NAV of a fund such as NCYF, but the income continues. This is why the NCYF share price remains steady while the NAV has reduced. If holding fixed interest stocks in a long term portfolio for retirement income - as I do - it's the income on those stocks that matters not the share price at any point in time. Certainly the dividend currently payable by NCYF is going to come under some pressure over future years but I'd suggest there's enough leeway in the current high yield for that not to be a major concern as it will still remain attractive for some time yet.

It's certainly not the disaster you seem to want to suggest (and the market seems to agree with me, hence the premium to NAV).

[my retirement fund] 21/6/2022 08:55

Well another yet more issued, another million issued so that gives them an additional 40K profit to prop it up, so long as they can keep issuing buckets full of additional equity the music can keep playing out aloud I guess, no ?

[metaltrack] 20/6/2022 16:30

Capital losses have just about been covered by dividends over the past few years.It was nice to have a regular payment and unfortunately with shares being issued to cover payouts I'm sad to see this go.NCYF was part of my portfolio for a long time.I wish you all the best if you decide to hold.

[cc2014] 20/6/2022 08:28

Sure, the yield is great but is it sustainable long term given the long term reduction in NAV?

[redhill9] 19/6/2022 18:39

You two must be relieved not to be invested in a share paying around 8.3% yield that the market appears to still like despite your comments.

[cc2014] 17/6/2022 18:53

And there we go. Another 1.5m shares issued at 53.6p

[cc2014] 17/6/2022 14:07

NAV smashed yesterday and breaches 50p. Now 49.63p

Still NCYF trundles along at a 8% premium to NAV despite the capital losses to investors.

[rahosi] 03/5/2022 08:24

REA. Assuming you mean the preference shares RE.B, the 22/4 Annual Report stated:-

The payment of dividends on the company's 9 per cent cumulative preference shares was resumed in June 2021. In addition to the payment in December 2021 of the current preference share dividend of 4.5p per share, a further 1p per share was paid in respect of the cumulative arrears then outstanding of 18p per share. It is the directors' intention that, in addition to paying the preference dividends accruing in respect of 2022, the company will also pay not less than 10p per share of the remaining 17p arrears of dividend during 2022

The Prefs 52 week price has gone from ~80 to 114.5 currently

---
The regular shares RE., currently 170 went from a 52 week low of 50 to a high 0f 208 with the prospect of those dividends being restarted once the above has occurred.

[guitarsolo] 28/4/2022 12:51

Marktime/Retirement:
Just to add a little of what I know, the last published figures were poor with EPS of 4.18p (down from 4.59 the year before) and indeed it left the 4.47pps dividend uncovered. This required them to dip into the reserves which stood at 4.15pps at the end of the same period.
Just looking at these numbers would cause justified concern. But there was a bit of narrative that was relevant. The covering info stated that the 4.18pps EPS was low because two particular coupons had been missed (for Rea Holdings and Matalan). I can't tell you exactly how much they were or how much of the gap up to the dividend would have been covered had they been paid on time. But more importantly, I have it on good authority from a reliable investor who holds the Rea coupon elsewhere that it WAS paid, albeit after the accounting period. I'd imagine the Matalan coupon is similar. Therefore, the picture may not be as bleak as first thought.
I've held NCYF for ages and am down on capital but the dividends take me into profit. Ian Francis has very deliberately (in my view) increased the dividend every year (by 0.01p recently) just so that (in my view!) he can claim to have a record of always increasing dividends! Of course, taking inflation into account and it's a real term drop.
But reading IF's narratives over the years, the ultra-low interest rate environment has been a horror to navigate. Bonds have matured or been called and replaced with lower and lower rates meaning that it's been nigh on impossible to keep the EPS growing (and in fact it's fallen). He has tried to trade his way a bit, and issued more equity at a premium with some degree of leverage, all to try and keep the plates spinning.
My view (and why I continue to hold) is that I think IF thinks an era of higher interest rates is coming and this will turn the tide back (slowly) in the other direction and corporate borrowing rates will be more "normal". Well, we will see.
But back to my opening remarks about Rea/ Matalan, I await the next report which should show these late coupon payments and in effect boost the next set of results. If they do, we can relax a little. If they don't, then be worried! Meanwhile, the reserve is there for a reason.
Guitarsolo

[my retirement fund] 28/4/2022 11:25

No you've not missed anything, and its the later, they have managed in the past always managed to keep the party going with leverage and issuing and selling new shares above NAV.

Risk has been growing, sooner or later as you point out the music will stop. The market here is stupid and clearly asleep at the wheel. It will get a nasty shock sooner or later imo.

[marktime1231] 28/4/2022 11:20

Checking back having sold up last July, got out because I was expecting NCYF cannot sustain an 8% yield. I guessed they would be looking to merge with another high yield trust and reset lower. And yet it is still going strong, trading at a healthy premium.

In February the interim report to 31 Dec 2021 came with the dire news that revenue in H1 was just 2.09p versus 2p paid in dividends. Despite which it said it continues to aim to increase total dividends paid, which last year were 4.47p (full year revenue to June 2021 was just 4.18p). How on earth can you do this, a shortfall from gross portfolio revenue, and ongoing charges are 1.25%?

We will "draw modestly on reserves" over the next couple of years they say.

Actually issuing new shares £10-20M pa and increasing gearing. Are new investment opportunities coming along at 10%+ interest rates to justify raising funds? Or are they trading and borrowing to plug the gap in underlying revenues?

This has all the hallmarks of a scandal, increasing pay outs to attract new investors at a premium but increasingly unable to cover the coupon from income. Like a ponzi scheme, covering commitments to existing shareholders with fresh subscriptions.

Or have I missed something? The market is not stupid and is still buying in at 7% premium to NAV.

[cc2014] 10/3/2022 11:26

It's amazing how many shares the MM will absorb when they are in the mood and how few when they aren't.

[lab305] 10/3/2022 10:38

Sold 820k of these today. The transactions are showing up late and as buys instead of sells. Reason for sale asset value dropping below 50p.

[my retirement fund] 09/3/2022 16:24

115% gross gearing and a particularly high risk portfolio yet a 6% premium to NAV. Please describe the justification, your thoughts ?

[redhill9] 08/3/2022 14:45

myretirementfund, I've always thought the NCYF premium was justified by the gearing being at a much lower rate than the income yield - isn't that right?

cc2014, not sure "stabilised" is quite the right term for RAVP! Being Prefs I doubt they would be a complete write-off anyway but being valued at zero for a while at least must be prudent until the company can be seen to be trading as usual.

[my retirement fund] 08/3/2022 14:14

Insane its at a premium

[cc2014] 08/3/2022 14:10

NAV down to 50.08p. RAVP has stablised now.

[wllmherk] 03/3/2022 12:07

I sold out of RAVP last week as could see the writing on the wall, took a significant loss at 89p, but, looking a good move at current price. In these for income so as long as they can hold the dividend I'm not too worried.

wllm :)

[cc2014] 03/3/2022 10:48

They publish daily NAV's so they do the work for you. I would expect them to hold Raven at market price. Yesterday it fell again and they will have had to write off the dividend yesterday as well so the NAV is likey to fall again when published today. In time I agree Raven will go to zero although there seem to be plenty of punters with no conscience prepared to invest in Russia who don't agree, looking at Raven's share price. I'm a bit shocked it hasn't been suspended.

From memory RAVP was 3.4% of their holdings. And much as I like this fund that's the challenge with high yield investments. It's fine until it isn't.

I'm not invested currently due to the excessive premia to NAV. I would want a 5% discount to NAV and the chances of that are slim.

[my retirement fund] 03/3/2022 10:00

Not looked at this for a while. Clearly the Raven holding needs to be written to zero and its dividend removed from the yeild. Has anyone managed to do the calculations yet?

[redhill9] 25/2/2022 15:11

Due today but give it time.

Some positive comments about future dividends in the update today with the half-year report.

Edit: Divi received in my HL account

[gostevie63] 25/2/2022 14:19

Weren't we supposed to get a dividend today? No sign of mine...

[panshanger1] 22/10/2021 15:43

Ex div 28/10 for 1 pence Approaching 52 week high here