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Income Investment Trust comments on Covid-19

Closed-end funds and OEICs
Itsallaguess
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Re: Income Investment Trust comments on Covid-19

#317765

Postby Itsallaguess » June 12th, 2020, 7:14 am

Edinburgh Investment Trust (EDIN) -

Final Results -

Dividend

The Company flagged in its statement of 27 March that it would pay a third interim dividend in May. We also indicated that a final dividend would be paid in July. The Board is proposing, subject to shareholder approval, that this should be 9.45 pence and should be paid on 31 July 2020 to shareholders on the register on 26 June 2020. If this is approved, it would mean that shareholders will receive a total payout of 28.65 pence per share for the year. This compares with a total of 28.00 pence per share in the previous financial year, a rise of 2.3%, compared with an increase in the RPI of 2.6%.

Over the past few years, under the previous Manager, there has been strong income growth and as a result the Company’s reserves are strong. However, shareholders will be aware that even before the current economic crisis, the overall yield on the UK market had become increasingly dependent on the dividends paid by a small number of companies and sectors. In the previous decade, important dividend paying companies had been taken over, bank dividends following the 2008 crisis were smaller than before and a number of other companies cut dividends. The net effect is that before the current crisis, about 40 companies accounted for about 75% of total dividends in the Index.

During the current crisis, companies which account for a significant share of dividends paid out in the UK have cut or stopped their dividend payments, including Shell, BT and banks. This is further discussed in Manager’s Report. While there is considerable uncertainty over future payments from many of the companies that have temporarily stopped paying dividends, it is already clear that the underlying level of income generated by the UK market will decline.

The Board is working with the Manager to consider how best to give effect to the Company’s objective of growing dividends in excess of the rate of UK inflation given these circumstances, while also bearing in mind the Company’s reserves and the importance of dividends to our shareholders.


https://www.investegate.co.uk/edinburgh-inv--trust--edin-/prn/final-results/20200612070000PFDA8/

Cheers,

Itsallaguess

Itsallaguess
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Re: Income Investment Trust comments on Covid-19

#317766

Postby Itsallaguess » June 12th, 2020, 7:21 am

Aberdeen Diversified Investment Trust (ADIG) -

Half Yearly Financial Report -

Dividend -

A major component of our investor proposition is offering a dependable and regular dividend. The Company's revenue return for the six months ended 31 March 2020 was 2.46 pence per share, compared to 2.70 pence per share in the comparable period ended 31 March 2019.

For the year to 30 September 2020, a first interim dividend of 1.36 pence (2019 - 1.34 pence) per share was paid to shareholders on 27 March 2020. The Board declared on 8 June 2020 a second interim dividend of 1.36 pence per share to be paid on 10 July 2020 to shareholders on the register on 19 June 2020 with an ex-dividend date of 18 June 2020. These dividends, paid and declared, are equivalent to a dividend yield of 6.0% using the period end share price of 90.2p.

The Board continues to monitor closely the dividend strategy, liquidity and the level of share buybacks. In these uncertain times, the Company's revenue reserves of almost two years' dividend payments hopefully provide a level of reassurance from an income perspective. Understandably during these difficult times for investors, consistent income from an investment in a company like this is very important.

One advantage of the closed end structure is the nature of revenue reserves which have been built up over time and this will be an increasingly important differentiator for investors relying on dividend payments from UK companies and beyond.


https://www.investegate.co.uk/aberdeen-diversified--adig-/rns/half-yearly-financial-report/202006120700037369P/

Cheers,

Itsallaguess

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Re: Income Investment Trust comments on Covid-19

#317777

Postby Dod101 » June 12th, 2020, 8:26 am

Edinburgh IT

Thanks Itsallaguess. As a long term holder I am very interested in the new manager's comments. They make an interesting read and of course it is largely on the effects of Covid19. The new portfolio holds most of the usual suspects for a UK income trust and it will be interesting to see what the outcome is for the current year when the full effects of the dividend cuts becomes evident. They have strong Revenue Reserves.

Dod

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Re: Income Investment Trust comments on Covid-19

#317828

Postby mike » June 12th, 2020, 11:12 am

It's like London buses today !

Dunedin Income Growth have issued a statement with their 1st Interim dividend declaration for FY to 31 Jan 2021
As has been widely reported, the impact of COVID-19 has seen a large number of companies suspending or cancelling their dividends, including some held within the Company's portfolio. There are many factors that will impact the speed with which those dividends will begin to resume, and at what rate, and that outlook is far from clear. It seems highly likely, therefore, that the Company's total dividends for the current year will not be covered by net revenue received. As shareholders are aware, however, the Company had revenue reserves at 31 January 2020 equivalent to 10.94p per share accrued from excess net revenue earned in earlier years, representing 86% of the current annual dividend cost. Future dividend decisions will be made based on the circumstances at the time, taking into account both dividend receipts and revenue reserves, but the Company's dividend policy remains to grow the dividend faster than the rate of inflation over the medium term.


And for holders
The Board has today declared a first interim dividend in respect of the year ending 31 January 2021, of 3.0p per share, which will be payable on 28 August 2020 to shareholders on the register on 7 August 2020, with an ex-dividend date of 6 August 2020.


https://www.investegate.co.uk/dunedin-inc-growth--dig-/rns/first-interim-dividend/202006121101228295P/

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Re: Income Investment Trust comments on Covid-19

#317919

Postby richfool » June 12th, 2020, 2:32 pm

This summarises the dividend policies of several IT's: Equity Income (Merchants, JPM Claverhouse and Henderson Far East Inc) and global growth (FCIT and Alliance).
Equity Income
Dividend Crisis: equity trusts tell investors, ‘we’ve got your backs’

Merchants, F&C, JP Morgan Claverhouse, Alliance and Henderson Far East Income pledge to use revenue reserves to protect their dividends in coronavirus crisis, but debt fund CVC Credit Partners cuts its payout.

https://citywire.co.uk/wealth-manager/n ... s/a1350186

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Re: Income Investment Trust comments on Covid-19

#318467

Postby DavidM13 » June 15th, 2020, 8:31 am

Scottish Investment Trust

https://www.theaic.co.uk/financial-advi ... 3A07/8548P

Dividend
We have unquestionably entered a more difficult environment for income generation given the curtailment of dividend payments across the stockmarket. However, we have long prepared for such a scenario by building, during more plentiful periods, a substantial revenue reserve amounting, at this interim stage, to more than 2.5 times last year's regular dividend.
The Board's intent with regard to dividends remains unchanged. The Board aims to maintain the Company's long track record of annual regular dividend increases and also its objective to provide regular dividend growth ahead of UK inflation over the longer term. Accordingly, the Board will, subject to shareholder approval, pay an increased regular dividend for the year ending 31 October 2020 which would be the 37th year of consecutive annual increases.
The Board announces a second quarterly dividend of 5.7p. The target is to declare three quarterly interim dividends of 5.7p in the year to 31 October 2020 and to recommend a final dividend of more than 5.7p for approval by shareholders at the Annual General Meeting in 2021. The first quarterly dividend payment, in respect of 2020, of 5.7p was made in May 2020.

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Re: Income Investment Trust comments on Covid-19

#318494

Postby mike » June 15th, 2020, 9:36 am

And from JP Morgan European Investment Trust

This is internally split into a Growth (JETG) and Income (JETI) trust, and FY results to 31 March 2020 were issued today. Although mildly encouraging, the comments are rather stark

The Board remain supportive of the style of investing and the thoroughness of the approach taken in investing in both share classes. In the Growth shares the belief is that market sentiment against value investing will change at some point and when that happens this portfolio will be positioned to benefit. In the Income leg, the Managers will endeavour to protect dividends as far as possible and the Board will ensure that the structure of the Company is utilised to its full extent to assist in maintaining dividend flow to investors. Notwithstanding that support, the Board and the Manager cannot ignore that these results are very disappointing. In-depth discussions are taking place as to the best way forward to capitalise on the long term investment opportunities in Europe.

https://www.investegate.co.uk/jpmorgan-euro-it-plc--jetg-/rns/final-results/202006150727559352P/


The JETI income shares have declared a 1st quarterly equal to last year's, with no additional comment. JETI pay 3 equal quarterlys and a larger final dividend. The JETG growth shares only pay half-yearly dividends, so are not due a declation.
A first interim dividend of 1.40 pence per Income share, for the year to 31st March 2021, will be paid on 31st July 2020 to shareholders on the register at the close of business on 26th June 2020. The ex-dividend date will be 25th June 2020.

https://www.investegate.co.uk/jpmorgan-euro-it-plc--jetg-/rns/dividend-declaration/202006150840149455P/

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Re: Income Investment Trust comments on Covid-19

#319707

Postby swill453 » June 19th, 2020, 10:42 am

Mercantile Investment Trust (MRC)

No specific mention of Covid-19, but:

The Directors have declared that a first quarterly interim dividend for the year ending 31st January 2021 of 1.35 pence per share will be paid on 3rd August 2020 to shareholders on the register as at the close of business on 26th June 2020. The ex-dividend date will be 25th June 2020.

The Board confirms that its current intention is at least to maintain last year's total dividend of 6.60p per share for this financial year.


https://www.theaic.co.uk/companydata/0P ... 3A34/3921Q

Scott.

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Re: Income Investment Trust comments on Covid-19

#320788

Postby SalvorHardin » June 23rd, 2020, 3:16 pm

Henderson Far East Income has just reported an increase in the third quarterly dividend, from 5.7p to 5.8p. Ex-dividend 30th July. Paid 28th August.

The managers made no comments about the Coronavirus, or about anything other than the dividend (see the RNS, linked below).

That said, raising the dividend makes quite a statement in itself.

https://www.investegate.co.uk/hendersonfare-incltd--hfel-/rns/dividend-declaration/202006231500348327Q/

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Re: Income Investment Trust comments on Covid-19

#320893

Postby JuanDB » June 23rd, 2020, 9:01 pm

The increase from HFEL is very welcome news. Assuming that is the annual increase done, I make it a 1.75% increase y/y.

I know Mike Kerley has been pretty bullish on dividends from the region and its good to see that reflected in this increase.

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Re: Income Investment Trust comments on Covid-19

#320956

Postby mike » June 24th, 2020, 9:26 am

The Merchants Trust (MRCH) has issued its first interim dividend notice today for its YE January 2021, along with a very reassuring statement of intent.

A key objective of the company is to pay an increasing dividend each year. There have been a large number of dividend cuts in the stock market, including within the investment portfolio, due to the coronavirus pandemic. Taking these into account, the income received by the company will be significantly lower both this year and probably next year compared to the last financial year.

The company has more than one year's total dividend payment in revenue reserves, which the board is prepared to use to cover any shortfalls. The great advantage of investment trusts is that they can put away money in good times for use in bad times. The board has prudently built up the company's revenue reserves and considers that these are exactly the kind of times in which reserves should be called upon.


Details of the payment
The board has declared a first interim dividend of 6.8p per share, payable on 19 August 2020 to holders on the register at the close of business on 10 July 2020. This dividend is in line with the fourth interim dividend paid last year, and represents an increase of 1.5% on the first dividend paid last year.


https://www.investegate.co.uk/merchants-trust---mrch-/rns/first-interim-dividend/202006240700048582Q/

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Re: Income Investment Trust comments on Covid-19

#320968

Postby monabri » June 24th, 2020, 9:58 am

+1.75% and +1.5% uplifts...better than a kick in the HYPs!

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Re: Income Investment Trust comments on Covid-19

#321635

Postby SalvorHardin » June 26th, 2020, 7:34 am

Henderson Far East Income has just released an RNS about its recent dividend increase. My summary:

They expect the economies in the Far East to recover much more quickly than the UK and Europe.
Much less dividend cutting in the Far East compared to the UK and Europe.
They will use the revenue reserve if needs be to support the dividend "should the need arise".

"The Board believes that the impact from Covid-19 does not change the structural growth story for Asian dividends and has reasons to be confident that the positive trajectory will resume once the virus has been contained. The companies held within the portfolio are cash generative, with strong balance sheets and have the ability to continue to pay dividends during times of stress and to grow them once normality returns"

https://www.investegate.co.uk/hendersonfare-incltd--hfel-/rns/message-to-shareholders-regarding-the-dividend/202006260700041418R/

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Re: Income Investment Trust comments on Covid-19

#327557

Postby mike » July 20th, 2020, 5:34 pm

City of London have just published their final dividend for the year ending 30 June 2020 and intentions for next year. Note this is not their results for the year, just the dividend and intentions.

This year's 19p was virtually certain after the 3rd quarter dividend was held at 4.75p. This is the quarter when dividends are normally adjusted to give the increase for the year. I would assume we will see 4.75p for the 1st and 2nd quarters for the YE 6/2021, and then we'll see.

https://www.investegate.co.uk/city-of-london-it--cty-/rns/dividend-declaration/202007201347425193T/

(a) Dividend on the Ordinary Shares

A fourth interim dividend of 4.75p per ordinary share of 25p, in respect of the year ended 30 June 2020 will be paid on 28 August 2020 to holders registered at the close of business on 31 July 2020. The Company's shares will go ex-dividend on 30 July 2020.

The total dividend for the year to 30 June 2020 is 19.00p per share, an increase of 2.2% over the previous year.

[...]

(c) Future dividends

For the current financial year ending on 30 June 2021, the Board expects to pay ordinary dividends in excess of 19p per share, thereby increasing the dividend for a 55th consecutive year. This is likely to be funded from a combination of income received during the year and revenue reserves.

The Board notes, further, that the Company holds capital reserves arising from gains realised from investments sold, and therefore available for distribution to shareholders, estimated to be in excess of £270 million at 30 June 2020 (unaudited).


I would read that as rather confident.

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Re: Income Investment Trust comments on Covid-19

#327581

Postby JuanDB » July 20th, 2020, 7:39 pm

mike wrote:This year's 19p was virtually certain after the 3rd quarter dividend was held at 4.75p. This is the quarter when dividends are normally adjusted to give the increase for the year. I would assume we will see 4.75p for the 1st and 2nd quarters for the YE 6/2021, and then we'll see.


Sorry to nitpick but I believe Q3 is the usual quarter for the annual increase and so with this declaration is now 6 months overdue.

Still, better than a cut!

Cheers,

Juan.

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Re: Income Investment Trust comments on Covid-19

#327598

Postby mike » July 20th, 2020, 9:59 pm

JuanDB wrote:
mike wrote:This year's 19p was virtually certain after the 3rd quarter dividend was held at 4.75p. This is the quarter when dividends are normally adjusted to give the increase for the year. I would assume we will see 4.75p for the 1st and 2nd quarters for the YE 6/2021, and then we'll see.


Sorry to nitpick but I believe Q3 is the usual quarter for the annual increase and so with this declaration is now 6 months overdue.

Still, better than a cut!

Cheers,

Juan.


I am not looking at a dividend increase as being overdue at all. Yes, it is a lower annual increase than recently, but current circumstances dictate.

Normally Q3,Q4,Q1 & Q2 are equal, and then the divi is raised in Q3 to the following Q2. They didn't increase at Q3 this year but in keeping it the same, the annual divi was increased from 18.6 to 19p. (2x4.55 + 2x4.75 as against 4x4.75). Based on what they have stated for the coming year, I am assuming the upcoming Q1 & Q2 to be also 4.75, and from Q3 we will hopefully see a small increase.

At the moment, I will be happy with that, very happy.

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Re: Income Investment Trust comments on Covid-19

#327602

Postby Dod101 » July 20th, 2020, 10:23 pm

I would say that as, under Future Dividends, they highlight the fact that they have distributable capital gains in excess of £270 million, they intend to keep their record of increasing annual dividends intact even if they run through their Revenue Reserves in future years.

As someone pointed out today though, the dividend is only part of the return. If they cannot produce a decent capital return as well, then the dividend is what I call 'dearly bought'. This applies to Edinburgh IT, the subject of comment earlier in this thread, and seems to be the case with City of London as well although I have not checked the figures. And paying the dividend from capital would not be very clever if there are pretty well no capital gains.

This is all in the future though and may never happen. I guess I would be happy enough with the current outcome, were I a shareholder.

Dod

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Re: Income Investment Trust comments on Covid-19

#327603

Postby JuanDB » July 20th, 2020, 10:37 pm

The £270m statement did seem a little incongruous, when taken relative to the revenue reserve of £58m.

What I’m sure was intended to be a statement of strength comes across as slightly desperate.

Why is a trust with a market cap of £1.6b and gearing of 11% sat on £270m of cash? Put my money to work please. It’s what I’m paying you for. Presumably being near 20% in cash doesn’t exactly help drive the dividend income either.

I’ve always viewed CTY as the safest of UK income trusts. That RNS is giving me cause to stop and think for the first time...

Cheers,

Juan.

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Re: Income Investment Trust comments on Covid-19

#327606

Postby Dod101 » July 20th, 2020, 10:54 pm

JuanDB wrote:The £270m statement did seem a little incongruous, when taken relative to the revenue reserve of £58m.

What I’m sure was intended to be a statement of strength comes across as slightly desperate.

Why is a trust with a market cap of £1.6b and gearing of 11% sat on £270m of cash? Put my money to work please. It’s what I’m paying you for. Presumably being near 20% in cash doesn’t exactly help drive the dividend income either.

I’ve always viewed CTY as the safest of UK income trusts. That RNS is giving me cause to stop and think for the first time...

Cheers,

Juan.


My dear friend, the £270 million is working for you, invested in the assets of the trust. It is simply a book keeping entry. They are not sitting on £270 million of cash. That is the accumulated realised capital gains from the investment portfolio over many years. I cannot start going through IT accounting arrangements again, certainly not now but if you get hold of the City of London Annual Report you may see that figure quoted under realised capital reserves or it may be part simply of the capital reserves, realised and unrealised on the liabilities side of the Balance Sheet. That side is made up of share capital and a series of reserves, of which the realised capital reserve is part.

What the Chairman is getting at is that dividends from ITs are normally paid from current revenue. If that is insufficient to cover the dividend they can use all or part of the revenue reserves (that is the accumulated revenue which has not been distributed in earlier years. ) If they use all of these reserves they can if they wish distribute capital up to the amount of the realised capital reserves. These are the accumulation of net gains from the investment portfolio over many years. You can look at these reserves as balancing items for the assets on the other side and they are simply book keeping entries. They do not represent piles of cash.

Dod

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Re: Income Investment Trust comments on Covid-19

#327613

Postby Alaric » July 20th, 2020, 11:56 pm

Dod101 wrote:What the Chairman is getting at is that dividends from ITs are normally paid from current revenue. If that is insufficient to cover the dividend they can use all or part of the revenue reserves (that is the accumulated revenue which has not been distributed in earlier years. ) If they use all of these reserves they can if they wish distribute capital up to the amount of the realised capital reserves. These are the accumulation of net gains from the investment portfolio over many years. You can look at these reserves as balancing items for the assets on the other side and they are simply book keeping entries. They do not represent piles of cash.


ITs have useful tax concessions which arguably allow them to convert gains into distributable income if they should desire. They would hold a pile of cash only if they felt it justified for portfolio management in the context of a perceived economic outlook.


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