Income Investment Trusts - are these the times they (relatively...) shine?

[monabri]

Murray International will be paying the next dividend. The final is "rebadged" as an interim. No change to the 17.5p divi...

https://www.londonstockexchange.com/exc ... 81540.html

[ADrunkenMarcus]

Murray International will be paying the next dividend. The final is "rebadged" as an interim. No change to the 17.5p divi...

https://www.londonstockexchange.com/exc ... 81540.html

Good stuff. But then it’s the dividend people hold it for.

Best wishes

Mark

[mike]

I mentioned up thread that Dunedin Income Growth (DIG) were due to release their end-of-year report for the FY ending 31/1/20 on 26 March, based on previous years.

They have today put out the following RNS

https://www.investegate.co.uk/dunedin-inc-growth--dig-/rns/delay-of-annual-report-for-year-ended-31-jan-2020/202003311509032744I/

In light of the unprecedented practical challenges for some companies and the audit profession arising from the COVID-19 pandemic, on 21 March 2020, the Financial Conduct Authority ('FCA') requested that all listed companies who publish their preliminary results around this time observe a moratorium on the publication of preliminary financial statements for at least two weeks.

[...]

The Company now expects that the Annual Report & Financial Statements for the year ended 31 January 2020 will be released around the middle of April 2020.

No indication of anything apart from the delay. My figures show over 16 months revenue reserve at January 2019, so hopefully that will be enough to see them through this period without a cut.

[mike]

And in addition, Schroder Oriental have declared their dividend at 1.90 as we would have forecast.

Indeed, there was no comment whatsoever on the current situation; it was just a dividend declaration as in normal times.

Schroder Oriental Income Fund Limited (the "Company") announces that the directors of the Company have declared the payment of a second interim dividend of 1.90 pence per share for the year ending 31 August 2020 on the ordinary shares of the Company.

https://www.investegate.co.uk/schroder-orientl-inc--soi-/rns/dividend-declaration/202003311520042765I/

[Itsallaguess]

And in addition, Schroder Oriental have declared their dividend at 1.90 as we would have forecast.

Indeed, there was no comment whatsoever on the current situation; it was just a dividend declaration as in normal times.

Schroder Oriental Income Fund Limited (the "Company") announces that the directors of the Company have declared the payment of a second interim dividend of 1.90 pence per share for the year ending 31 August 2020 on the ordinary shares of the Company.

https://www.investegate.co.uk/schroder-orientl-inc--soi-/rns/dividend-declaration/202003311520042765I/

Thanks for these updates mike - this is useful and confidence-building information generally, for those of us that hold collectives as a major part of our income-strategy.

I'm more nervous for those IT's that are much more UK-oriented, mind, so at this time the jury is still very much out on a wider view, I think...

Cheers,

Itsallaguess

[77ss]

And in addition, Schroder Oriental have declared their dividend at 1.90 as we would have forecast.

Indeed, there was no comment whatsoever on the current situation; it was just a dividend declaration as in normal times.

Schroder Oriental Income Fund Limited (the "Company") announces that the directors of the Company have declared the payment of a second interim dividend of 1.90 pence per share for the year ending 31 August 2020 on the ordinary shares of the Company.

https://www.investegate.co.uk/schroder-orientl-inc--soi-/rns/dividend-declaration/202003311520042765I/

And a 5.6% rise to boot.

Another declaration today:

BPET 'Final' of 3.92p - up 7.40%

No comment on the current situation, other than referring to the guidance issued by the Financial Reporting Council on 23 March 2020 requesting that all listed companies observe a moratorium on the publication of Preliminary Results Announcements for at least two weeks.....'.

[mike]

At last, we have a comment on the current situation.

Schroders Income Growith (SCF) issued their dividend declaration at 6:18 pm this evening and it was at 2.50p as we would have expected. However, they added this rider

This dividend is unchanged from the first interim dividend at 2.50 pence per share. In maintaining the dividend at this level, the board is very aware of the current unique circumstances and uncertainties and will therefore be keeping the future level of dividends under close review.

https://www.investegate.co.uk/schroder-inc-growth--scf-/rns/dividend-declaration/202003311818223039I/

My records show that at their last full year accounts (Y/E August 2019), they had 18 months of revenue reserve. I must say for a trust with such a reserve, I find that a rather negative outlook with no mention of their reserve to calm nerves. For comparison with other UK Income trusts, at their last full year accounts, that stalwart CTY had only 10.5 months of reserve (June-19), MRCH 12 months, but DIG had nearly 17 months (both Jan-19)

But then again, better to under-promise and come up smelling of roses

[ADrunkenMarcus]

I did some checking of my 'folio.

Based on the current tax year, about 37% of dividends are from investment trusts and they both have a year or more in reserve. I also looked at what I'd term 'defensives' such as AstraZeneca, Diageo, Kone and Unilever, which I would expect/hope to continue dividend payments. Adding these on as well, altogether, they amount to about 73% of my dividend income. Assuming the other 27% cut the dividend by half, then my dividends for the year would be down 13.5%, which is not too bad. Time will tell, of course...

Best wishes

Mark.

[77ss]

And in addition, Schroder Oriental have declared their dividend at 1.90 as we would have forecast.

Indeed, there was no comment whatsoever on the current situation; it was just a dividend declaration as in normal times.

Schroder Oriental Income Fund Limited (the "Company") announces that the directors of the Company have declared the payment of a second interim dividend of 1.90 pence per share for the year ending 31 August 2020 on the ordinary shares of the Company.

https://www.investegate.co.uk/schroder-orientl-inc--soi-/rns/dividend-declaration/202003311520042765I/

And a 5.6% rise to boot.

Another declaration today:

BPET 'Final' of 3.92p - up 7.40%

No comment on the current situation, other than referring to the guidance issued by the Financial Reporting Council on 23 March 2020 requesting that all listed companies observe a moratorium on the publication of Preliminary Results Announcements for at least two weeks.....'.

And today, another of my ITs declared - with no reference to current issues:

JCGI (was JMC) Q1 of 3.6p - up 491%! Down to a major change in dividend policy, but very welcome nevertheless.

https://www.investegate.co.uk/jpmorgan- ... 23554740I/

Since the 27/2/2020, that makes 6 of my 13 ITs chugging along nicely (on the dividend front at least). None of them UK focussed.

[richfool]

Wouldn't it be more logical to put this thread on the Investment Trust board (which is where I went looking for it)?

It could include all IT's then, whether income orientated or not.

[Itsallaguess]

Wouldn't it be more logical to put this thread on the Investment Trust board (which is where I went looking for it)?

It could include all IT's then, whether income orientated or not.

But this High Yield Shares & Strategies board is primarily focussed on income-strategies, and I think it's fair to be able to differentiate between 'Income-related' Investment Trusts, and others that don't provide the sort of yields income-investors might be seeking.

I've clearly marked this thread in that regard, so I hope that isn't an issue.

Cheers,

Itsallaguess

[mike]

That daddy of UK income trusts CTY has spoken this afternoon. The quarterly dividend has been held at a time we could normally expect an increase at 4.75p (although still on track for an annual increase), and then this statement

Philip Remnant, Chairman, said: "In our Interim Report in February, I said that the Board was confident that it would be able to increase the dividend for a 54th consecutive year. Since then, a number of companies in which we are invested have cancelled their dividends. We continue to recognise the importance of dividend income to our shareholders. Over the last 10 years, we have set aside over £30 million into revenue reserves to underpin future dividends in circumstances such as we face now. Those reserves stood at £58.3 million at 30 June 2019, our last financial year end. If in July we need to draw on those reserves to maintain our unique record of annual dividend growth, then it is our intention to do so."

https://www.investegate.co.uk/city-of-london-it--cty-/rns/dividend-declaration/202004021552596379I/

Far more encouraging than the Schroders comment a couple of days ago https://www.lemonfool.co.uk/viewtopic.php?p=296246#p296246, even with a much smaller revenue reserve (CTY 10.5 vs SCF 18 months)

[Julian]

That daddy of UK income trusts CTY has spoken this afternoon. ...
...
Far more encouraging than the Schroders comment a couple of days ago https://www.lemonfool.co.uk/viewtopic.php?p=296246#p296246, even with a much smaller revenue reserve (CTY 10.5 vs SCF 18 months)

I wonder whether this crisis will add more food for thought on the debate I've seen crop up on Motley and now LemonFool discussion boards regarding whether it makes sense to hold multiple ITs with broadly similar remits and top 10 holdings or whether one should stick to only 1 or 2 to avoid duplication. I've seen some criticisms of LUniversal's baskets on the basis of too much duplication of similar ITs.

Personally I have always been in the diversify-even-if-similar camp (I'm perfectly comfortable holding 3 or 4 or more seemingly similar ITs) because (a) it exposes me to different manager opinions, I don't want my one manager to call some big trend wrongly and (b) the tails of the holdings (i.e. looking beyond the top 10) are often quite different.

Your compare and contrast would seem at least to me to potentially play to point (a) although admittedly Schroder's comments are only less encouraging than CTY's and there is no actual divergence of behaviour on display at this point.

- Julian

[Itsallaguess]

That daddy of UK income trusts CTY has spoken this afternoon.

The quarterly dividend has been held at a time we could normally expect an increase at 4.75p (although still on track for an annual increase), and then this statement

Philip Remnant, Chairman, said: "In our Interim Report in February, I said that the Board was confident that it would be able to increase the dividend for a 54th consecutive year. Since then, a number of companies in which we are invested have cancelled their dividends. We continue to recognise the importance of dividend income to our shareholders. Over the last 10 years, we have set aside over £30 million into revenue reserves to underpin future dividends in circumstances such as we face now. Those reserves stood at £58.3 million at 30 June 2019, our last financial year end. If in July we need to draw on those reserves to maintain our unique record of annual dividend growth, then it is our intention to do so."

https://www.investegate.co.uk/city-of-london-it--cty-/rns/dividend-declaration/202004021552596379I/

Thanks for that mike, and I think that final section of Philip Remnant's statement that I've highlighted in bold really underpins why I wanted to start this thread in the first place.

They've previously bought their fancy umbrella, and they are looking to have no issues in using it now that it's properly raining..

Cheers,

Itsallaguess

[moorfield]

Thanks Mike, that's really useful to know.

Also note that the CTY 2019 annual report (see https://cdn.janushenderson.com/webdocs/ ... rt2019.pdf , page 51) lists £66.9 million of dividends paid for last financial year, so we can surmise they have at least three quarters' worth of payments in the tank while their all holdings are misfiring.

I'm not sure we will see a normal resumption of dividends across every industry, at whatever level, before the end of 2021. So I wouldn't rule out a "rebase" from CTY in the next couple years if they do empty their tank, but for now I think I may start buying some of these.

[nmdhqbc]

Thanks Mike, that's really useful to know.

Also note that the CTY 2019 annual report (see https://cdn.janushenderson.com/webdocs/ ... rt2019.pdf , page 51) lists £66.9 million of dividends paid for last financial year, so we can surmise they have at least three quarters' worth of payments in the tank while their all holdings are misfiring.

I see quite a lot of issues of equity on Investegate for CTY. I presume this increases the dividend cost while the reserves remain static? Not quite sure how it all works.

[ADrunkenMarcus]

The building of reserves reduced dividend growth in good times but we'll see the benefit now!

Best wishes

Mark.

[Itsallaguess]

I wonder whether this crisis will add more food for thought on the debate I've seen crop up on Motley and now LemonFool discussion boards regarding whether it makes sense to hold multiple ITs with broadly similar remits and top 10 holdings or whether one should stick to only 1 or 2 to avoid duplication.

I've seen some criticisms of Luniversal's baskets on the basis of too much duplication of similar ITs. Personally I have always been in the diversify-even-if-similar camp (I'm perfectly comfortable holding 3 or 4 or more seemingly similar ITs) because

(a) it exposes me to different manager opinions, I don't want my one manager to call some big trend wrongly

and

(b) the tails of the holdings (i.e. looking beyond the top 10) are often quite different.

I'm of the same view as you Julian, in that I'm more comfortable having at least a pair of IT holdings covering the themes I'm wanting to consider with this section of my income-portfolio, although I wouldn't personally head towards having more than a couple of IT's per theme, or certainly at least with the size of my current portfolio.

I can though see some value in heading towards more of an overlap if my portfolio were to grow to a more substantial size, however, but that particular issue seems to be reducing somewhat at the moment, or certainly was the last time I looked!

As my single-share income-portfolio grew, and I started to look towards income-IT's to help as part of my income-diversification strategy, one of the big benefits that I also saw was the implicit ability to 'contract-out' some of my 'portfolio-management' to different IT-managers, with a view that I was simply never going to want to investigate in detail some of the thematic or geographical areas that many of the income-IT's I was interested in were dealing with, and whilst, as owners of such IT's, we're clearly going to be paying a management fee to allow them that privilege, I'm personally very happy to pay those costs when I now know the overall benefits such an approach has given me, and that goes far beyond any pure 'financial benefit', if indeed there is any, and well into the 'personal arena' for me, which is a big, big plus for the approach..

Cheers,

Itsallaguess

[jackdaww]

schroders SCF charges are higher (87) than MRCH (59) and CTY (39) .

[Dod101]

Interesting reading from an investment trust (CITY) with a seemingly awful total return performance in the recent to medium term, not uniquely so, I admit. I recently bought into Merchants IT for the first time, too early in the meltdown, as usual. So I am now underwater with it. If City of London is the daddy, Merchants is it's cousin? Anyone know what Merchants position is regarding dividends over the next few months? Thanks.

Don't forget that ITs are required to pay out at least 85% of their Revenues in dividends in order to maintain their IT status so that puts a floor under their dividend but otherwise they are just like the rest of us, dependent on dividends from their investments and most have a Revenue Reserve to make up for any shortfall if they choose to use it. In the short term at least, I think most ITs will probably want at least to maintain their dividend, making up any shortfall from their Revenue Reserve if they can afford it.

Dod