Henderson Far East Income Share Discussion Threads

[bluemango] 26/7/2023 09:50

Depends if you take an extreme short term view or, like most sensible investors, have a horizon that stretches at least to the medium term ahead.

Your 'not very heartening' comment could, with identical logic, be applied to literally any company about to pay a quarterly dividend.

[wskill] 26/7/2023 09:18

2.5% record day surely quarterly divis

[fordtin] 26/7/2023 09:18

scruff1 - "10% record day", are you getting a bigger div than everyone else?

Tomorrow's div is only ~2.5%.

[scruff1] 26/7/2023 08:31

If the trades can be believed it looks like a few have the same plan as me. There cant be many suffer an share price drop the day before a 10% record day

[fordtin] 26/7/2023 08:14

Not sure how issuing shares at a premium to the prevailing net asset value can sound like the shares are being offered at a discount, but I've edited my last post in an attempt to avoid any ambiguity.

[fabius1] 26/7/2023 01:25

Fordtin, I would perhaps change the wording to 'more than it's value', or alternatively, you might consider the shares are being offered at a discount. Probably a case of pays your money, makes your choice.

[aleman] 25/7/2023 18:28

HDIV should sack the board. Buying back 3.8% of shares and then complaining they are not generating enough income to efficiently cover overheads so might restructure is lunacy. They've thrown away potential income themselves just to let people selling out get a better price. The only ones who come out of it looking sensible are the ones that sold out in the last year.

HFEL have been doing the opposite - but is it sensible to make your new investors pay more than the market on its own would dictate? Who buys them all anyway? Are they fed to marketmakers?

[scruff1] 25/7/2023 17:36

232 could be a best price thursday. I'm largely out tomorrow I'm thinking. I can see this losing the 6 and some.I see HDIF is admitting its struggling and need to have a re think.

[fordtin] 25/7/2023 16:30

re -"Am I missing something"

"The Company announces that it agreed on 24 July 2023 to allot 175,000 ordinary shares at 241.75p per share, each fully paid under its block listing facility. The net asset value per ordinary share as at the close of business on 24 July 2023 was 232.8p. "

8g, they are selling something for more than the sum of it's parts are worth, what more can I say?

edit -to add clarity for fabius1, I've changed 'it's worth' to 'the sum of it's parts are worth'.

[8gggggggg] 25/7/2023 16:11

What is the point of issuing new equity at these very low prices, !?, I would have thought best action do opposite and BUY in equity at these very low levels..??Am I missing something Dakas.

[zac0_4] 24/7/2023 12:50

I too hold this in 2 accounts - ISA & SIPP. I'm in the process of selling all my dividend payers in my SIPP and moving the capital into funds (global growth & global growth and income). It won't happen overnight but that's my plan.

Here's the 5 year returns, with dividends reinvested, of my holdings

Greencoat UK Wind +48%
Merchants Trust +40%
Henderson High Income +27%
LGEN +24%
New City High Yield Fund +16%
Henderson Far East Income -4%

And here's the return from my holding in Legal & General International Income Trust, which is a simple global tracker fund, +58%

I've known for some time that dividend investing is not all it seems to be . . . I'm finally starting to do something about it! Both BP & Shell have been sold so far this year. The cull will continue.

[scruff1] 24/7/2023 08:52

One things for sure - seeing as this as a !0% divi being handed out on Thursday there is virtually zilch interest - indeed we are down 4p at the mo and we can add 6p to that Thurs. I have 2 tranches of HFEL each in different accounts. If there isnt a sign of life one of em is going Weds pm - better things to do with my money.

[zac0_4] 23/7/2023 20:33

Robsy2 - My portfolio is made up of 30% dividend payers and 70% non-dividend payers.

My suggestion would be to simply invest in a global tracker fund and (if required) sell down units as and when you need income.

Not 1 of my dividend payers (trusts / individual shares) can match the total return from Legal & General International Index Trust over a 5+ year time period!

[tim 3] 22/7/2023 11:40

Robsy2

You may want to do some research on MRCH.(I am a long term holder)

They have increased the dividend for 40 years and have a good capital return compared with the ftse all share over the last 5 years.

CTY may also be worth a look.

[bluemango] 22/7/2023 07:59

Good cautionary posts, yes, but I would just gently ask - is the perceived churn actually the full story here or are there other (eg future regional growth) factors that might in time become more significant, thereby leading to less future reliance on churn?

If it's only a temporary strategy to cope with difficult market conditions that all have been experiencing, then good luck to them.

[robsy2] 22/7/2023 07:27

I was intrigued and attracted by the dividends here with a view to investing but having read the excellent posts have decided not to . Thanks Aleman particularly for the posts.
The search for rock solid yielders moves elsewhere! Any suggestions welcome.

[aleman] 20/7/2023 16:49

Their churn is high. They are constantly selling, so they are never short of cash to "exploit short term trading opportunities". They are doing it all the time.

[fordtin] 20/7/2023 16:01

Hi Aleman,

re - premium to NAV

For many years I was very wary of funds trading at a premium, but have since learned it can be a strength.

It seems to me that a part of HEFL's ability to maintain an attractive dividend is their ability to raise additional capital at a premium to NAV. It gives them the ability to exploit short term trading opportunities which would not be attractive if they had to raise capital at a discount to NAV.

[aleman] 20/7/2023 12:48

That's a separate issue. Most investment trusts would normally only dip into revenue reserves to maintain a dividend in what it considered exceptional and temporary circumstances (such as Covid). They would not do it routinely to maintain an uncovered dividend.

Last year's revenue reserve was £27m and dividend cost £36m, so that's 9 months cover. The interims saw a slight reduction in the revenue reserve and there has been a marginal dividend rise on a marginal expansion in equity base. So this year is looking at £37m+ dividend with a £26m buffer, which would be closer to 8 months cover. If that reserve cover continues to thin, expect to see some sort of modest dividend reduction.

However, if that goes hand in hand with further capital erosion in the absence of a return to a bull market, do not be surprised to see a possible change of policy and a significant rebase of the dividend. This is why I think buying the shares at a premium is not a good idea. That premium could become a significant discount, like other trusts, if and when there is such a policy change (even though there would be no related change in NAV). I think the shares should be trading at a discount just with this knowledge.

That is not to say that I think there is not reasonable value here in the underlying assets and underlying yield after the falls in recent years. I just think the market is slightly overpricing those underlying values because it possibly does not fully understand how the many consecutive years of large and rising dividend have been paid out. The market seems to assume it will continue. In absence of a new bull market, I think there is a distinct possibility it might not, and any change could come as a shock to some holders. The resultant selling would then see us move nearer a more typical discount - or even an overshoot of a that (again, even though underlying investments and NAV would not suddenly change).

There's a good possibility I might top up here in time but it's very unlikely I will do it at a premium to NAV unless I feel there is strong case that a bull market is restarting and the dividend footing then looks more secure.

[scrwal] 20/7/2023 12:27

I think in the past that Edison have stated HFEL has accumulated income reserves of maybe the equivalent of the yearly divi - these reserves came from excess profits not being paid out such that Edison didn't regard them as capital per se and probably still don't.

[tim 3] 20/7/2023 11:04

Am fine however they decide to generate the yield provided it doesn't result in a reduction in capital value.

Unfortunately for the last few years it has.

[goldpiguk] 20/7/2023 10:44

Hi 8w,

In the last full year results to August 31st 2022 option premium income is given as £2,922,000. With 154,948,564 shares in issue at the time that is under 2p towards earnings before taking management fees and expenses into account. Options writing only made a small contribution toward total earnings in the 2022 results.

Aleman is correct. (Was just writing this post and noticed Aleman's post above.)

Goldpig

[aleman] 20/7/2023 10:38

"Other income" was about 11% of the total at the interims. That does not explain the yield that is much higher than the underlying one you would expect on the investments. GoldPig and I seem to believe the same. I'm not sure how much proof there is for it, though. Given an unusually high churn, unusually high dividend and disappointing capital performance, it seems the logical assumption to work from - unless anybody else can come up with a better explanation.

Some other investment trusts pay out more than they earn and subsidise with capital - not necessarily in exactly the same way. So long as people understand how they work, and the associated risks, they can be useful enhanced income investments.