Dod101 wrote: It is because EAT committed itself to 6% of NAV that its problem arises.
I think this is only a problem if you demand a smoothly increasing dividend year on year. If you are prepared to accept a more 'jerky' dividend payout, albeit rising steadily along with capital NAV in the longer term, it is not as much of a problem as with some dubious single HYP shares which stop and start dividends completely.
If one wants a growth IT and to extract an income from it, often there is a problem that the total return might be 8% pa but the free dividends only 1 or 2%. In order to get a reasonable income of say 4%, it would be necessary for the individual holder to sell an amount of capital each year, incurring transaction costs. ITs like JAI (JP Morgan Asian - 5 year total return 92%), JPGI (JPMorgan Global Growth & Income - 5 year total return 77%) and IBT (International Biotechnology - 5 year total return 123%) do this for you at no apparent cost. They aim to provide a 'modest' 4% pa out of their total return, but even on this 'safer' yield, JAI had to reduce the actual dividend this quarter from 3.90p to 3.70p to follow its NAV, after paying 4.00p in this quarter last year. I was grateful for the 4.00p and 3.90p quarterly dividends while they lasted but the drop to 3.70p is not too painful and may recover in a few more quarters.
Perhaps EAT's 6% yield was an overly optimistic choice (5 year total return 36% and 10 year total return 325%), but it invests in the smaller companies area which tend to give larger episodic growth. However, much of mainland Europe seems to have been hit this year.
If the dividend jerkiness is a worry, you just need a bigger income reserve, as recommended by our sage Luniversal.
Happy New Year!