Wasron wrote:Last year I had European Assets Trust (EAT) and Funding Circle Income Fund (was FCIF, now renamed) reducing their dividend.
FCIF was a sector-specific IT, so let’s set that aside, but EAT is a regional IT, so one could reasonably have picked that as one of a handful of ITs to make up the portfolio. I think the cut was around 25%, so if it had made up 20% of the portfolio income then that would have been an income reduction of 5%.
From the AIC website, EAT mainly paid its dividend from capital, not income. It also has a zero revenue reserve currently shown. This leaves it particularly open to problems caused by market falls.
https://www.theaic.co.uk/companydata/232 Click on "View dividend history" for more dividend info.
Higher up this thread, in an effort to ensure stability of income as far as is reasonable, I noted that the financial criteria for ITs I look at are
- yield
- increasing dividend
- how many months of revenue reserve
- increasing revenue reserve (unless there is an 'event' such as 2008)
- paying dividend only from income, not capital.
I cannot see a reason to deviate from these criteria to try to avoid cuts as happened to EAT.