Henderson High Income Share Discussion Threads

[superiorshares] 22/9/2020 07:55

That Capital destruction continues.

Within 12 months time this dividend will be cut .

How can they continue to pay it ?

Zac0_4 your post is of interest thankyou. Looking at the 5 year chart of Merchants Trust. It would be physically impossible to have invested 10, 000 pound in MRCH over the last 5 years and it now be worth 10, 900 . either with a lump sum or dripped in .

If you look at the chart and say "I put my 10,000 in at the lowest point" ( like a gambler tells you he bet on the winning 33 t0 1 horse after the race ). And by magic you put your whole 10 thousand in at the very lowest point over the last 5 years . You would still not have 10,900 now.
The reality is anyone who has invested in this over the last 5 years has lost a fortune
The biggest capital losses in all the high Divi Trusts are still to come .

Its a complete no brainer that they will not be able to sustain these divi payments

[zac0_4] 15/9/2020 23:07

Same data for my other 2 dividend paying investment trusts. £10,000 invested over 5 years, dividends re-invested. Merchants Trust now worth £10,900. Henderson Far East Income now worth £15,900. I must admit I was surprised at the out-performance of HFEL compared to the 2 UK based trusts. Hope this is of interest.

[zac0_4] 15/9/2020 21:04

All - I hold here and 2 other dividend paying trusts. My main holdings are funds. My largest holding by far is in the Fundsmith Equity fund. A £10,000 investment 5 years ago here, with dividends re-invested, would today be worth £10,400. A similar £10,000 invested with Fundsmith 5 years ago is today worth £25,900. That's one of the reasons I reduced my investing for dividends. I now only have approx 15% of my portfolio invested for dividend income the balance, 85%, is in funds.

[mister md] 15/9/2020 19:16

Well I recall 20 years ago when I bought some unloved Unilever shares, Technology stocks were all the rage back then too ...

I like the 'safety' of 5-7 % dividend yield stocks and re-investing the dividends in other high yielders. With a few more exciting stocks to keep things fun of course.

[aleman] 15/9/2020 19:01

I've not seen any for while but there were loads of studies in the 80s and 90s that showed dividend payers produced the best returns in the long run if you reinvested the dividends. Here's a slightly more recent example.



It probably does not hold well at the moment after the recent run-up in tech stocks and fall in dividend payers, but the former look a bit bubbly and the latter a bit oversold so it might reassert itself.

[mister md] 15/9/2020 18:11

also in all 3, mostly MRCH

[petewy] 15/9/2020 17:17

Thanks zac0 I'm in the same stocks.

[mister md] 15/9/2020 15:06

2020 a big write-off for dividends overall
I'm more interested in 2021,2022 - will we see most company's dividend payouts approaching 2019 levels again ?

Also starting to wonder if holding too many of these income trusts is worthwhile, given that many of them invest in the same companies and you could just buy the top 10 holdings yourself and save on fees ... ?

[zac0_4] 13/9/2020 16:19

Aleman - I'll be interested to hear an update from the fund manager when the picture becomes slightly clearer. I agree with your comment around using saved income as a buffer. It's one of the reasons why I'm here as opposed to an individual share. A 5.9p depletion of reserves over 3 years takes reserves down by 75%. That might be a bit too far but that's only my gut feeling. Using your numbers the 1p dividend reduction would reduce current dividend level by 10% pa and would reduce depletion of reserves by 36%. So, less than half. I guess we'll just have to wait and see. It's a pretty difficult time to be invested in any UK dividend paying shares or trusts. Good Luck!

[aleman] 12/9/2020 13:47

Link suggested UK 2020 dividends will fall by 39-43%. Some are still cutting but some have increased and some are restoring. If we assume dividends are down 30%, 20% and 10% over the next 3 years - which I think is pretty pessimistic. HHI's income will be down 22.5%, 15% and 7.5% (since about 1/4 is fixed income). That will use up roughly 2.2p, 1.5p and 0.7p of dividend reserve or 4.4p in total. I'd guess the rest of this year might be 1.5p. With 8p of dividend reserve to see 5.9p depletion over 3 years, there is enough there to maintain the dividend, though this assumes no financial aftershock from Covid. If they do decide to rebase, on these numbers it will only be modest. A 1p reduction reduces reserve depletion from 5.9p to 2.9p over 3 years. I don't say it won't happen but think it would be small and don't see the point. Why save income to be a buffer and then fail to use it to the extent it's needed when it looks like it can be afforded? They should maintain the dividend for the time being until the outlook becomes clearer. There's plenty of time to review later next year.

[zac0_4] 11/9/2020 23:36

Aleman - I guess we'll have to wait for the year end figures to give us a true picture. The 1st half dividend income per share of 4.63p was about 17% down on the corresponding period last year. However, to put that into context, UK companies dividend payments in q2 were the lowest quarter since 2010, and were down 57% compared to q2 2019. Assuming q1 was roughly in line with q1 19 then UK dividend payments have reduced by 29% in the first half year. So, HHI reported figures look reasonable given the circumstances. Fingers crossed for 2nd half year!

[aleman] 11/9/2020 10:47

Why should they rebase? Dividend of 4.95p was nearly covered by 4.63p of income earnings in the half. There's about 8p of revenue reserve and a few companies are starting to restore dividends, albeit some at lower levels and odd ones are still being cut. Earnings cover has not been hit hard so far and I think there's plenty of "wait and see" time there. The odds look quite favourable for now though I grant it's pretty uncertain out there and dividends will struggle against a trend of tax increases to come..

[speedsgh] 11/9/2020 10:02

I remain on standby for a rebasing of the dividend in FY21...



"The first interim dividend of 2.475p per share was paid on 24 April 2020 and the second interim dividend for the same amount was paid on 31 July 2020. At the time that the second interim dividend was announced the Board recorded its current intention to use its revenue reserves where necessary to maintain the quarterly dividend of 2.475p per share for the remainder of this financial year. This continues to be our intention.

The Company's revenue stream this year has, of course, been adversely impacted by the recent dividend suspensions, deferrals and cuts by its investee companies. So far 24% of the Company's portfolio have made such announcements. However, the Company is in the fortunate position of being able to draw on revenue reserves which have been deliberately built up over the past 9 years for future "rainy days" and frankly it has been pouring this year! A third interim dividend of 2.475p per share was therefore announced on 23 July 2020, to be paid on 30 October 2020, and the Board currently anticipates a fourth interim dividend for the year at the same level, providing a total dividend for the year of 9.90p per share representing a 1.0% increase over the previous year.

It is difficult in these uncertain conditions to forecast the Company's revenues with much accuracy for the years ahead. David Smith, the Fund Manager, runs frequent stress testing of the company's revenue account under different scenarios and this gives the Board reassurance of the relative robustness of the company's revenue reserves in the medium term. As the timing and the level of investee companies' dividends become clearer in the future, we will be able to provide further guidance on the Company's dividend."

[petewy] 11/9/2020 08:08

Disappointing results

[superiorshares] 25/7/2020 08:45

wskill.. with 10 months of dividend reserve. You are hard pushed to get that to secure
dividend for 2-3 years ?.
Even if all of the bonds pay their dividend ( its not guaranteed ). You have trust expenses to pay out of that.
I think you would be foolish to be too complacent .

[wskill] 12/6/2020 12:23

managed to top up a few today at 145.5p seems a tad too cheap to me xd next week as well.

[wskill] 09/6/2020 10:47

What I like about HHI is around 18% is in bonds so for a start they have a decent amount of dividend guaranteed and 10 months of dividend in reserve.

So with the bonds and reserve I would think dividends will be secure for at least 2 or 3 years.

By which time this virus will have been forgotten entirely .

[speedsgh] 11/5/2020 07:57

HENDERSON HIGH INCOME INVESTMENT TRUST: The fund valiantly battling to live up to its name -

[hastings] 12/3/2020 12:01

Problem is, bigger the hit to the global economy, more pressure on dividends, so I for one am very wary when it comes to what appear highly attractive yields.

[speedsgh] 12/3/2020 10:17

Current offer 146.0p = 6.8% yield (based on 9.90p div in current FY)

[andyj] 05/8/2019 17:31

I am in, at 167 for the long term.

[whilstev] 24/7/2019 14:12

It certainly is looking cheap with a 5.5% div I think they are looking very tempting.

[andyj] 24/7/2019 10:09

In terms of the share price, they are marginally below the price they were in 2006. I agree, tempting, but the historical sharp falls persuaded me that there will be better times ahead to buy in.