Merchants Share Discussion Threads

[zac0_4] 06/3/2021 22:07

ctrader3 - A couple of points - I agree that dividends do need to be taken into consideration when evaluating overall performance. The returns you state over a 20 year period seem to be backed up by your chart. However, this seems to pick a period between 1994 and 2015. How about 2001 to 2021?

In relation to the article by Thomas Moore, manager of the ASEI fund, I'd probably expect him to say what he's said ie promising jam tomorrow because he hasn't delivered a positive return over the past 5 years. If you'd have given him your money 5 years ago, even taking dividends into account, you'd be sitting on a negative return. He's sort of justifying his poor performance in my view!!

[superiorshares] 06/3/2021 20:22

Ctrader3
We have done all this before . Picking very favourable points from the past to push the theory .
Can we have a chart please . When MRCH was over 5 pound .
Then we can do what the future returns will be , rather than " If you had invested 10,000 in 2016 etc
Cheers

[ctrader3] 06/3/2021 10:26

The narrow focus of markets in 2020 may have left investors positioned for yesterday’s crisis rather than tomorrow’s recovery, says Thomas Moore, manager of the Aberdeen Standard Equity Income Trust.

A rotation in stock markets is being driven by the prospect of economic recovery as vaccinations allow economies to reopen
Stock markets are likely to move ahead of the economic data
There is a window of opportunity to benefit from low valuations as the wall of worry is set to be climbed

In potentially delivering a route out of the pandemic, vaccines have also brought a notably different mood to markets. For much of 2020, investors were narrow in their focus, concentrating on a handful of consumer staples and technology companies that could deliver strong earnings even as economies shut down. However, in recent months investors have started to broaden their horizons.

Given our focus on identifying under-appreciated UK income stocks with the potential for stock-specific change, the highly-charged macro environment that prevailed in 2020 was a difficult one for the Aberdeen Standard Equity Income Trust. Style analysis shows that there was general antipathy towards income stocks globally, with UK income stocks performing particularly badly on fears of a no-deal Brexit. However, as vaccines pave the way for economic recovery and an eleventh-hour EU-UK trade deal reduces political uncertainty, investors have started to appreciate the robust prospects and inherent value in many unloved and unfashionable UK stocks. We believe investors should take note.

We are still in the foothills of this rotation and many investors may be unprepared for what is to come. The strong performance of a handful of growth stocks has left global equity markets unbalanced, with many investors reluctant to shift away from the companies that have served them well through the crisis. However, it may be time to switch gears and think about recovery rather than crisis.

Positioning for economic growth
While there are risks to the vaccine rollout and the potential for resistant mutations of the virus, there are also reasons for optimism. For example, we see household finances as a powerful catalyst. For 12 months, many people have curbed their spending: holidays have been cancelled, commuting costs have disappeared and few have felt the need to update their wardrobe. A recent Bank of England survey showed around 28% of households had accumulated additional savings, mostly among wealthier and older people. Household savings ratios are at multi-year highs, hitting 16.9% in September 2020. We expect some of these savings to find their way into the economy once people have a little more certainty about the future.

At the same time, governments are likely to continue spending, particularly in the UK. As the architect of Brexit, the incumbent government will be keen to prove its success, which could see lower taxes and deregulation. The EU-UK free trade deal is not perfect, but it is a baseline. Subsequent free trade deals are likely to boost sentiment, highlighting that the UK remains open to the world. Gradually, this may start to unwind the Brexit discount that has been placed on the UK market.

The UK has undoubtedly been held back by the sector composition of its stock market as global growth was slowing. It has a higher weight in more economically-sensitive areas such as energy and financials. Just as this held the UK market back during a time of uncertainty, it should be supportive as the economy recovers and capital rotates into these unloved areas.

Cheaper growth
It is worth noting that many of the companies in our portfolio have been out of favour not because of underlying weakness in their business, but simply because they were unfashionable. The market has ignored many businesses whose operations have held up superbly well during the crisis.

The divergence in valuation multiples within the UK market has increased as investors follow simple rules of thumb that have worked very well during a prolonged period of falling bond yields, but which may come into question should the external environment ever change. The result is that investors could be over-valuing the earnings stream of certain businesses and significantly undervaluing the earnings stream of others.

The scale of the valuation opportunity is such that investors can position for recovery without taking on a huge amount of risk. We see many robust companies offering a combination of attractive yield and growth. Our experience tells us that the start of a new cycle offers the greatest opportunities, as this is when investors are at their most uncertain despite the burgeoning growth that lies ahead.

We are particularly excited about financial services companies which have weathered the downturn successfully and now look set to reap the benefits of the up-phase of the cycle. For example, emerging markets fund management group Ashmore turned out to be far more robust than the market anticipated, with a strong balance sheet supporting an attractive dividend and investment in growth.

Dividends
Covid-19 had a major impact on UK dividends and this has resulted in our portfolio income slipping back, requiring us to dip into reserves to support the payout to shareholders this year. We still have considerable reserves, but as a newly anointed AIC ‘dividend hero’, we are working hard to restore our portfolio income as soon as we can. Given the number of attractive income stocks available, we believe we can do so while remaining consistent in the investment process that we have set out. As well as adding to our holdings in attractively valued resilient income stocks, we are expecting around one fifth of our portfolio to reinstate dividends in 2021.

The long period of sluggish economic growth and low bond yields has conditioned investors to believe that there is only one formula that works. This has resulted in many well managed companies being left behind. While there are early signs of a shift in tone, we believe there is a very long way to go. Investors need to consider whether they are positioned for the economic recovery that lies ahead or the crisis that has just happened.

[ctrader3] 06/3/2021 09:42

The £600million Henderson Smaller Companies trust is yielding 11 per cent, meaning a £10,000 investment a decade ago would have given you an income of £1,101. Furthermore, if dividends were reinvested, the growth of that pot would today be worth. £53,214.

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the current yield is
buying yield 11% income £1,101
current yield 2.15% income £1,144 approx

an option would be take £43,00 and re-invest in a higher yielder
lets say MRCH yielding 5.72% income £2,459
or a couple of high yielders to spread the risk and
then sit back and hope that Henderson Smaller Companies
can repeat the performance.
u will not achieve similar returns buy ducking in and out
of markets, feeling lucky ?

[ctrader3] 06/3/2021 09:28

Four investment trusts are yielding more than 10 per cent based on today's income and buying the trust a decade ago according to new research from investment platform AJ Bell

Out of the 40 Association of Investment Companies current and next-generation 'dividend heroes' - trusts that have increased their dividend every year for at least 20 and 10 consecutive years, respectively - half are yielding more than 7 per cent at today's dividend per share level compared to the price that would have been paid ten years ago.

Three are yielding more than 10 per cent, including UK small cap specialists Henderson Smaller Companies and BlackRock Smaller Companies.

The £600million Henderson Smaller Companies trust is yielding 11 per cent, meaning a £10,000 investment a decade ago would have given you an income of £1,101. Furthermore, if dividends were reinvested, the growth of that pot would today be worth. £53,214.

Meanwhile, BlackRock Smaller Companies has a yield of 10.3 per cent, providing an income on a £10,000 investment of £1,0303. The total return is just shy of 520 per cent resulting in a whopping £61,986.

UK equity income trust British & American is also a top yielder with 10.1 per cent. However it saw a share price fall during the ten year period, down more than 58 per cent, and so £10,000 would have only seen an increase of £1,695 over that time.

[ctrader3] 06/3/2021 09:25

when u draw your 'pension' from your investments u will be
glad u invested part of your portfolio in a dividend
paying share.
here from 2016
u re-invested the dividends and
u sat thru all the market collapses, real and imagined.
10k would now be worth 14k yielding 5.72% so another £800
to be re-invested over the next year.

The sooner u start the more chance of the eight wonder
of the world working for u.
u could then even invest in some trusts for growth only

[superiorshares] 05/3/2021 03:54

PS.
" US bond yields causing a sell off in US markets ".
Causing a sell off everywhere , open your eyes !
Will the sell off be meaningful ?
That's another matter .
Regards Investors

[superiorshares] 05/3/2021 03:34

I have no shares at present because I think the markets will go a long way down .

I don't do this negative comments stuff . It's s creation of Lefties , indoctrinated Uni people and Europhiles .
The fact something is happening , by not mentioning it , doesn't mean it's not happening .
You can apply that to everything . Murder with the murder weapon being a knife. Terrorism, mortgages 10 times your earnings !.. Debt levels , The BBC and it's failure to feature News if it's not left wing . The incredibly successful EU. It applies to everything .
I like to short at present .
So as far as high yielding stocks go , I think over the next two years or so the majority of them will get clobbered .
Is that ok by you ??

[zac0_4] 04/3/2021 23:07

Superiorshares - yes, US bond yield causing a sell off in US markets, especially in tech stocks. I'd be interested to know if you're actually invested in anything as all as you seem to do is post negative sentiment for all indices! Where's your money invested?!!!!

[superiorshares] 04/3/2021 18:26

Here comes the US 10 year !

[ctrader3] 04/3/2021 14:36

Closed-ended funds on the other hand have fared much better so far. Out of the 22 trusts that compose the AIC UK Equity Income sector, only one cut their dividend for the 2020 financial year, Temple Bar. Two more have committed to rebasing it in the next financial year to a more sustainable level, Edinburgh Investment Trust and Troy Income & Growth. Of the remaining 19, 16 have managed to grow their pay-out between their 2019 and 2020 financial year; and of these 16 a further six have indicated that their 2021 dividend will be higher than 2020. Two trusts have already paid higher interim dividends in their 2021 financial year, Chelverton UK Dividend Trust and Merchants Trust. The other 14 trusts which have paid a 2021 financial year dividend have maintained their pay-outs from last year, with Troy Income & Growth the only one to have cut theirs. While the pandemic is not over, and 2021 is likely to see continued pressure on UK dividends, investment trusts have served income seekers well so far, which has been rewarded with high ratings for the shares. It looks increasingly likely their revenue reserves will be equal to the task of maintaining pay-outs through this crisis.

Kepler

[superiorshares] 04/3/2021 07:53

ctrader3 :-)


" WHAT GOES UP MUST COME DOWN "

... Winston Churchill....

[ctrader3] 04/3/2021 07:15

now I know the above post is a mistake, similar
to if u are sitting on a bus and there are
loads of empty seats and someone sits next
to u.
they are carrying a plastic carrier bag and produce
from that a tin, u realise he's a nutter and
if u respond to him, it's normally a man, your
journey will be a nightmare.
a mistake I will not be repeating.

[superiorshares] 03/3/2021 18:55

Mister MD . You should follow Ctrader3 buys at exactly all the low points on the chart.