Henderson Far East Income Limited

2.50 (1.0%)
Share Name Share Symbol Market Type Share ISIN Share Description
Henderson Far East Income Limited LSE:HFEL London Ordinary Share JE00B1GXH751 ORD NPV
  Price Change % Change Share Price Shares Traded Last Trade
  2.50 1.0% 251.50 201,511 16:35:11
Bid Price Offer Price High Price Low Price Open Price
250.50 251.50 253.50 250.00 251.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Investment Offices 20.98 7.96 5.10 - 406.77
Last Trade Time Trade Type Trade Size Trade Price Currency
17:39:18 O 4,093 250.987 GBX

Henderson Far East Income (HFEL) Latest News (1)

Henderson Far East Income (HFEL) Discussions and Chat

Henderson Far East Income Forums and Chat

Date Time Title Posts
30/5/202309:46Henderson Far East Income Ltd1,388
23/11/202213:13Henderson Far East5
04/1/201318:48HENDERSON Far East Ord. Trust.15

Add a New Thread

Henderson Far East Income (HFEL) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
2023-06-09 16:39:40250.994,09310,272.90O
2023-06-09 15:35:11251.508742,198.11UT
2023-06-09 15:25:09250.50350876.75AT
2023-06-09 15:25:05251.50410.06O
2023-06-09 15:25:04250.00174435.00AT

Henderson Far East Income (HFEL) Top Chat Posts

Top Posts
Posted at 14/4/2023 17:11 by goldpiguk
Hi mjames20 and Bareknee.

Cutting the dividend in half would be a worst-case scenario for HFEL, but at some point in the next couple of years, I do expect the dividend to be 'rebased' lower.

I have not done a complete analysis of every HFEL holding, but below are details of the top ten holdings with yields alongside. These cover about a third of holdings in value. (Information taken from Market Screener and HL websites.)

BHP Group yield 6.65%
Woodside Energy yield 11.51%
Macquarie Group yield 3.82%
Samsung yield 2.45%
Macquarie Korea Infrastructure Fund yield 6.45% expected to rise to 7.06%
Rio Tinto yield 7.49%
United Overseas Bank yield 4.37%
Digital Telecommunications Infrastructure Fund yield 8.14%
Vinacapital Vietnam Opportunity Fund yield 3.36%
Taiwan Semiconductor Manufacturing yield 2.05%

Only Woodside Energy in the top ten holdings has a dividend yield above HFEL. Bareknee is right to refer to the use of options, but a close look at the portfolio suggests something else is also at work - churning of shares to flatter income.

In one of the company reports I do remember reading that purchases are timed carefully to maximize dividends, but this is coming with capital destruction. With a decreasing value of capital, choices become more and more limited and the company will eventually have its hand forced.

I would much rather HFEL tackled this sooner rather than later. Unless there is an incredibly strong bull market the current dividend looks unsustainable.


Posted at 14/4/2023 13:26 by goldpiguk
Hi terrybill,

Unlike many investment trusts, HFEL doesn't seem to publish an annual (or semi-annual) dividend timetable.
The next dividend is expected near the end of May.

I really do wonder how much longer this trust can continue paying such an elevated dividend. The share price is still at a premium to NAV and I expect a rebasing of the dividend at some point to avoid further capital erosion.

I am still a holder of HFEL and would welcome such a move. I think it is more 'when' and not 'if' a dividend cut happens. Slashing the dividend by up to 50% would still leave a good yield and provide the basis for longer-term capital growth. In the short term, the shares would be likely to move to a discount. That would be the point I would consider adding to my holding.


Posted at 28/2/2023 20:53 by investingdad
Very true, but what types of companies are they? Admittedly, it has been a while since i looked but they had Chinese petrochemicals and oil etc. Are those companies stopping their growth/dividend payment? they Asia focused and likely to still grow in current conditions? Or are they tied to the global chain? Miners will return once demand picks up again, particularly into the energy transition which will be long. Financials will pick up too. I suppose it all depends what time you bought in, as I am a recent newcomer here for the dividend. My view is that this fund isn't bought for massive growth, I have had that in the past with BGS, FCSS and PHI all of which at a point have gone to +100%. But in 10 years time, I think Asia will be doing well, I think the share price will be above 400p and I will have reinvested the dividend to make up a significant part of the holding. Whilst, hopefully, trusts like MMIT and IGC take off for growth. Just the way I see it.
Posted at 08/11/2022 06:44 by 2sporrans
Hi mjames

Please see post 1187 for the Geo. split at 30Sep22.
The table pasted is still the same on the HFEL website.
So, ~26% China incl. HK and ~7% Taiwan.

On the high divi please see post 1173, noting the contribution from option writing and other factors.

For me, another feature, arguably more concerning than the 2 above, is that HFEL trades at a small premium to NAV.
Given it's poor Total return performance the past 3 years, a substantial discount seems to me to be more in order.
Peer ITs generally trade with discounts, 10%+ typically.
e.g. AAIF recently with discount of 11<>14% and a consistently superior TR past 3 years.

Seems investors will pay a modest premium for enduring [thus far] high income streams, going by FTSE100 based ITs, City of London and Merchants.

The HFEL divi isn't under immediate threat; but were it to even be chiseled down a tad, a substantial [15+% ? 20%?] discount would likely ensue.

The debacle of the Shell divi, 2020, salient experience.
The divi was never cut since WW2.....BoDs took the long view and 'looked through' cyclical troughs as they repeatedly came and went.
Then it was slashed, consequent to the oil price implosion H1 2020. Pared down to 30% of previous. Share price cratered, similar magnitude.
Great buying opportunity though.

fwliw, i think there's a better than evens chance HFEL will raise the divi again next August; just a tad.

Posted at 07/11/2022 19:07 by mjames20
Hello everybody,

I don't hold this share but am considering it due to the attractive yield which is around 9% and almost covered. Exposure to China has been reduced to 18% so even if China has a rough time HFEL should be able to cope. The share price has fallen 33% over the last five years so share price performance has been poor but dividend appears sustainable so perhaps a buying opportunity as price won't remain at this level if dividend is sustained. What am I missing? Why is the yield do high?

Posted at 02/9/2022 16:21 by 2sporrans
On the HFEL dividend:

Whist it may well be sustainable, one ought to be aware that not all of the divi. paid out comes from dividend income paid out by the underlying company holdings.

I make it that around 70% comes from those, adjusted up for the gearing.

The remaining ~30% is partly derived from call option writing fees.
I've never been able to work out quite how much but the recent Edison report has this to say:
"The managers may write put or call options to generate additional income dependent on the pricing and attractiveness of the opportunity, and have on average written around 10 options per year since inception in 2006.
In H122, revenue from dividends increased 14.7% on the same period in 2021; however, total income growth was slightly lower at 11.9%, due to fewer options being written."

From what i've been able to divine, something like 10-20% of the HFEL dividend comes either from capital gains [from trades] or from income made at sacrifice of capital gain.
Example of latter is Kerley's selling and buying of holdings, made to maximise the dividend take from them [does he tend to sell XD?]
I guess both gain and sacrifice are crystalised for those call options where the call bargain is struck but the shares sold continue to gain in price...., assuming the asset sold was bought cheaper than the sell from the call.

Don't want to make overly much of why the above eats into the share price performance of HFEL but i expect it does explain a fair lot of price underperformance against peers and the Asian income High Dividend sector.

Generally, the post GFC environment of disinflation [until recently] and extremely low rates and NPV discount rates + easy credit has been unusually advantageous for growth/'long-duration' assets and to the relative detriment of value stocks.
This explains the great majority of HFEL's [and its sector's] poor share price performance over recent years.

Now the game has changed, question is what world will we be in, after the ongoing inflationary-downcycle and monetary tightening [not in PRC or Japan though] is done?
Will it be one more supportive of value stocks v growth?
Until we get there, i suppose one can make the observation that HFEL's distinct relative outperformance - such as orinocor has noted above - may not mean it actually makes a +ve total return, let alone a real one, inflation adjusted for 2022.

Still, it is highly cash generative and for certain long term holders [such as myself] this is, in itself, attractive.

The divi. does seem to be covered ok and there is about a year's divi-cash in reserve or at least was when i last checked some months back.

Posted at 18/8/2022 12:44 by goldpiguk
Hi Una,

Thanks for posting the 'Shares Mag' article. I don't think anyone could possibly argue that a yield of over 8% looks very attractive.

The real question is about the longer-term sustainability of the HFEL dividend. In the short term, there is already 5.3p of revenue towards the expected 6.0p November dividend, so that looks safe.

However, the dividend does look stretched and it would take very little for it to need rebasing. The write-up in shares mag looks as though it is based on the HFEL factsheet published on 20th July rather than any real analysis by the writer - and the reference to a discount to NAV suggests the author only took a cursory glance at this company. (Any investor following HFEL would know that in recent months it has more often than not traded at a premium to NAV.)

The risks to medium/longer dividend sustainability arise on several fronts.

Rio Tinto and BHP remain two of the top ten holdings. Rio Tinto recently slashed its very generous dividend by more than half due to cooling demand from China, rising expenses, and labour shortages. Although BHP increased its already huge dividend by 8% this year, it too is expected to be cut going forward. HFEL would find it next to impossible to replace these investments with others that could compensate for the expected reduced income in 2023.

The other headwind facing HFEL is China's zero covid policy resulting in whole regions being shut down. This combined with its worst heatwave in 60 years is having a major impact on the Chinese economy. (July Factsheet 23.9% of the portfolio is in China.)


Additionally, the Taiwan issue has not gone away, which is why I have a fairly low weighting to the region.

I continue to hold 5,000 HFEL shares in my ISA, but unlike many here I expect an eventual rebasing of the quarterly dividend.


Posted at 23/7/2022 10:36 by kenmitch

The covid share price low of 270p wasn’t much lower than it is now. I would agree with you about lack of potential share price upside if the share price was nearer to the 340p or so high of the last couple of years. But at current 282p share price there could well be 20% or so share price upside on top of that great 8%+ dividend yield.

Conversely over £3.20 and THEN the downside case and dividends being wiped out by capital loss would be much more convincing.

And surely that very high yield should support the share price against further significant share price fall. After all a 270p share price and 9% annual dividend would look a no brainer for investors wanting a big reliable dividend paying Investment Trust. AND upside potential would then be higher too.

If the share does fall further and as long as there doesn’t seem to be a risk of a dividend cut, then arguably there’s a stronger case for buying more rather than selling should that happen. I will likely add to my stake if the share goes below 270p, but fwiw I don’t think it will because of the high yield supporting against further downside at 270p.

Posted at 26/2/2022 12:16 by exel
IMHO - the HFEL share price has come out of an horrendous week pretty much as well as might have been expected? - down by just 1.7% to 291p from 296p (WoW). But no one can see much past the present moment, right now, given fast-moving events in Europe.

Meanwhile, HFEL's closely watched TNAV (per share) will remain in sharp focus. It's declaration on 18/2/22 was 294.1p per share. This had fallen by circa 2.6% to he latest (25/2/22) 286.5p. Maybe the 2.6% reduction is a more accurate reflection? - equating to a circa 1.6% premium, being a low-ish premium v HFEL's (closer to 5%?) norm.

Posted at 03/9/2021 09:24 by 2sporrans
Post 812

"The current annual dividend is 23.4p, which therefore constitutes a yield of 7.7% on the current Offer price of 301.5p."

The dividend paid for August [XD 29Jul21] was 5.9p, having risen a tad from 5.8p.
It is a near certainty that for the next 3 payouts will also be 5.9p; hence the payout for the year to Aug22 will be 23.6p.
At a share price of 295p, that's a projected 8.0% income return.

This very high level of payout by HFEL is all very well, providing it is sustainable and preferably, not at the expense of capital appreciation, i.e. the growth of the NAV.

But is it?

Posts 804, 807, 809 and 810 attempted to gain insight into this and came up with some answers.

"HFEL's portfolio generated an historic 4.8% divi. income at 30Jun21; hopefully growing to 5.2% a year hence."

That's what the Edison report states.
At the date - 30Jun21 - all the data relates to, the dividend income coming into the HFEL coffers from the companies it was invested in was 4.8% over the previous year.
Over that same year, HFEL paid out 23.2p in dividends which at the 30Jun21 share price equated to a 7.2p yield.
The 2.4p variance is surely of interest, if not necessarily concern.

The free cash flow income of 9.2% yield and the continued growth in reserves [enough to cover ~3/4 of the coming year's divi. payout from memory] suggest that a 23.6p payout should not be concerning.

However, one should be aware that such a high payout, likely comes at the expense of some capital appreciation in the NAV - and hence the share price
That 2.4% variance between divi. income in and divis paid out indicates the magnitude of the sacrifice in NAV growth made to achieve the divi payout.

To the extent the 2.4p variance can be explained by factors such as the income from call options writing - i.e. independent of the portfolio valuation as such - the size of that sacrifice reduces.
Hence my interest in it.

Looking at the "sacrifice" issue another way:
While the HFEL divi income is way higher than that paid out by its peers [few pay out above 4%], the performance of it's share price over recent years has [reciprocally?] been well below the indices for Asian or Asian-Pacific income equities i've looked at.
Sure, much of this will be down to stock selection/weightings; the contribution of that 2.4% variance is i perceive [see below] to be modest.

I imagine the greater concern amongst HFEL investors is that their total return has been distinctly below par v its peer group over the past year; this underperformance being clear since July 2020.
Looking at 3 of the peer indices, over the past 12 months, the total return for HFEL is between 11 and 16% below them [so, that 2.4% variance is put into context].

Comparing with the one of these indices which is for HIGH dividend Asian income equities, HFEL total return is down about 5% since what was a high point about end Jan. 2020 [i.e. pre-pandemic] while that index is up, albeit a paltry 1%.
And it's not as if HFEL shares have suffered from a widening discount and the underlying NAV grown nicely.

Well, it concerns me as HFEL is actually the largest holding in my portfolio.

Obviously, growth stocks have been where to be over recent years and especially the past 18 months. The extent to which low discount rates have triumphed over their very high valuations wasn't something i had expected.
Meanwhile, the 'safe', "value" play on HFEL has only been rewarding in that there's been opportunity to add at low prices and very high income stream that comes with those.
To the extent the divis can grow sustainably at something close to inflation, guess this will pan out tolerably well over next few years.

Henderson Far East Income share price data is direct from the London Stock Exchange
Your Recent History
Henderson ..
Register now to watch these stocks streaming on the ADVFN Monitor.

Monitor lets you view up to 110 of your favourite stocks at once and is completely free to use.

Log in to ADVFN
Register Now

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

Support: +44 (0) 203 8794 460 | support@advfn.com

V: D: 20230610 15:06:16