Henderson Far East Income Share Discussion Threads

[4spiel] 19/6/2022 16:57

Just collect the dividend for next year or two and add on any signs ant dip because it will go back to 297p

[zac0_4] 19/6/2022 13:26

JF - I like to have a position in both camps. Global equity funds and (various) dividend paying trusts. I agree HFEL has been a fairly safe haven this year so far with a virtual flat total return over the last 6 months. Compared to the 12% loss over the corresponding period from my Vanguard All Cap Index that looks ok. It's the long term return that needs to improve. A total return from HFEL (divs reinvested) over the last 5 years of 8.5% is nothing to shout about compared to the 42% total return from the Vanguard Index fund over the same period. I hold both.

[petewy] 19/6/2022 11:50

Good comment JF.

[jfinvestments] 18/6/2022 10:08

In my opinion, over the next couple of years I think we will see mindsets of investors change. It already has started, with the slowing of growth, there has been a move to safer income trusts. I think this will continue. Offering a return of 6-8% will be something that is sought after and should provide further interest.Also, if you look at the 6 month comparison for this sector (Asian equity income) it has only lost 3.87% - only beaten by Schroder oriental at -2.27%. over a year comparison it does move further down the list however. But the point I am trying to make is that it is fairly steady. And if it offers a good yield and you allow it to compound, then in ten years time there will have been some capital growth (max data shows 27%) but your compounding should do the job of raising your money considerably. I actually like the portfolio although I don't forsee huge capital growth, you have exposure to mining and semiconductor tech and some financials. I think during the change to electric that's a safe bet.

[zac0_4] 18/6/2022 09:49

kaffee - the benefit of investment trusts is that they can hold back revenue received to smooth out dividend payments during poor years ie 2020.

From the latest financial report (full year 2021)HFEL paid out £34.04m in dividends from income generated of £33.77m. The shortfall being met from revenue reserves which currently stand at £25.66m.

The same principle applies to MRCH. They have raised their dividend payment year on year for 39 consecutive years utilising this business model.

[kaffee] 18/6/2022 07:30

>1.2 would be nice though :-)

And there are plenty >6% with coverage >1.6, and good cash flows (acknowledging all figures are historic and can be wiped !!)

My point is, not much fat here to maintain that div although their history shows they have.

[wllmherk] 18/6/2022 07:15

I take your point kaffee but there are not many stocks with a dividend cover of 2 or more and yielding 6%+ so I pay my money and take my chances. I take the view there are no risk-free investments in the stock market, HFEL included.

wllm :)

[kaffee] 18/6/2022 06:37

Forgive me if this question pushes your buttons, but all you "buying for the yield" types - are you not bothered by the div cover of less than 1 ? Or are ADVFN numbers wrong ?

Seeing MRCH mentioned above as well, that coverage is 0.94. Is that sort of average of IT's ?

[tim 3] 18/6/2022 06:01

I agree timing is difficult and predicting markets especially tops and crashes even more so however what we can do is have a plan of what to do based on how the market trades. I am about 50% invested at present as I agree levels particularly in tech look risky and although I think it's unlikely have points where I will add even if the S&P drops below 2000.If you have a plan and invest long term timing becomes less critical.

[wllmherk] 17/6/2022 22:06

I would agree Timbo, I thought the US market was way overvalued and will now correct dragging other markets down in its wake. Timing is the key, but, hard to get right. Big gains to be made for those who do though.

wllm :)

[tim 3] 17/6/2022 19:46

Be surprised if this is the bottom the way the market is behaving is incredibly weak and points to going lower maybe considerably lower imo and we certainly have not had a capitulation sell off yet that often indicates a bottom.

[jfinvestments] 17/6/2022 17:12

I can't see how the damage is fully done yet. The Fed are playing catch up to stop inflation and losing. They continued to feed the market when it should have began tapering. They push the wrong hike from here and things can go very quickly. Look at the other day, without the initial rally (which was more than obvious) following the Fed 75bp hike it would have been a steeper fall. If liquidity falls, then the US market is going to not be able to hold up.This being Asia based hopefully it offers some extra security. But US leads the way, and this will to some degree follow.Also, we are at the point where a recession is being called by almost all now. But as I have said before, I hope you are correct and this is it.

[danieldruff2] 17/6/2022 16:58

Quite a few mainstream funds are already down 40-50%, about 75% is as severe as it gets, so most of the damage is done already I would say.

[jfinvestments] 17/6/2022 15:55

The crash was far shorter than anything I've known. But there were shares at great prices through to November. However it is worth considering why - as in the amount of equities being bought by central banks etc. China started first and set the tone, the amount of money in there has in part caused the impending crash and inflation. Also, the vaccine rally added to the continued stimulus into markets helped everyone 'win'. This time we are going into the opposite. It will be a much harder fall and longer recovery. Buying income little and often until you know it is time to buy seems the safer option from here. Recession is coming. They on average last 12 months, I think 18months - 2 years could he the span of this one as inflation will take it's time.

[panshanger1] 17/6/2022 08:22

Markets are forward looking as has been said - they need to see an end to this interest rate cycle and an easing of inflation ( particularly the actions and comments of the fed )No end in sight atm and therefore will be choppy for time being with further downside pressure imho Hopefully autumn - having said that I have no problem drip feeding in from here GLA

[danieldruff2] 17/6/2022 06:39

One thing about markets these days - they very quickly get to where they want to go. For example the covid crash lasted 3 days, great bargains to be had, then up it all went. This one will take longer but the turn will also be swift whenever it starts.

[tim 3] 17/6/2022 00:21

Great posts guys thanks.

My take is at present and probably for a while yet there appears no light at the end of the tunnel as far as markets and the economy are concerned and to me that is the best time to be looking to buy for the longer term because as soon as we reach the point in the cycle where there is evidence of a recovery ahead it will probably be to late as markets being forward looking will be back up again.

Will look to buy/add IT's and indeed etf's in small increments on the way down.

[gateside] 16/6/2022 23:54

Yes MRCH increased their dividend from 6.8p to just 6.85p per quarter earlier this year.

[jfinvestments] 16/6/2022 23:39

Yes, exactly. And still remains in the next generation of dividend heroes for marketing purposes. I recall MRCH only putting theirs up 0.0025p this year or so, but in the longer term I think it is prudent. Yes, agree. They might still do it to attract new investors?

[gateside] 16/6/2022 23:30

That would be 23.8p - minimal increase, but still an increase.

Without the war in Ukraine, I feel they would have gone for 24p

[jfinvestments] 16/6/2022 23:25

*0.0595 is what I meant. So it maintains the years of dividend growth. Is it something like 15? Could be way off with that.

[jfinvestments] 16/6/2022 23:05

I'll be happy with 0.0585p if it helps maintain capital and reserves. This will be an attractive trust for the next two years as growth slows. 260p could offer a 9% yield which is a safe enough bet in my eyes. Keeping the powder dry for now.

[gateside] 16/6/2022 22:57

MRCH should be more liquid as well now, as it was promoted to the FTSE250 at the last review.

MRCH along with CTY both currently yield 5% and for each IT the dividend looks very safe in my opinion.

[gateside] 16/6/2022 22:54

The next dividend announcement is due in late June.

Last year it was raised from 5.8p to 5.9p each quarter.

If they raise it to 6p / quarter for the coming year, that will be a forward dividend of an 8.4% yield

On that basis I feel that the share price should not fall much from here.

That is as long as the dividend is safe!

[jfinvestments] 16/6/2022 22:40

If there is one thing the market will do is sell good news. I think the only positive I can think off is US market is closed on Monday. FTSE should wait for direction from there. But we have Friday to get through first. I feel like this market is going to allow people to buy a few dips, and then really go. Allow some liquidity to be lost, then when no one can buy the dip. It goes. (I hope I'm wrong in all of this). I will be setting price targets, and looking for discounts and probably just buying higher yielding trusts. I still think higher dividend paying investment trusts will do well here. Providing they can cover for a year or so. HFEL has been robust over the last year - less than 4% decline over the last 6 months, 11% over the last year. I'm going to continue buying small amounts for dividend and I'll be watching for 200-250p for a larger prurchase. I'll also be looking closely at MRCH - once this offers 6% it will be on the buy list.