Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Blackrock North American Income (BRNA)

Stocks and Shares ISA , Choosing funds for ISA's, risk factors for funds etc
Investment strategy discussions not dealt with elsewhere.
bailey56
Posts: 35
Joined: November 4th, 2016, 1:30 pm
Has thanked: 53 times
Been thanked: 2 times

Blackrock North American Income (BRNA)

#125302

Postby bailey56 » March 16th, 2018, 9:40 am

Blackrock North American Income (BRNA) recently increased their quarterly dividend from 1.25p to 2p. Based on a share price of 158p, this is a yield of 5%.

Reading the annual financial report https://www.investegate.co.uk/blackrock-north-amer--brna-/prn/annual-financial-report/20171213180936P8025/ this seems to be a change in dividend policy from December last year rather than a one-off special.

My understanding is that this is a relatively new IT, but it is unusual to find one yielding this amount with a North American focus. Middlefield Canadian (MCT) is the only other one I know of.

I'm considering investing in either MCT or BRNA. From the little I know about American stocks, generally dividend yields seem to be lower, so there perhaps there is less choice on where fund managers can invest. Concerned also that the US market may be overpriced, and therefore a sharp fall might put the new dividend policy at risk.

Views anyone?

Thanks

bailey

Lootman
The full Lemon
Posts: 18681
Joined: November 4th, 2016, 3:58 pm
Has thanked: 628 times
Been thanked: 6563 times

Re: Blackrock North American Income (BRNA)

#125341

Postby Lootman » March 16th, 2018, 12:03 pm

When I looked into BRNA a couple of years ago, it was claimed that the income is boosted by selling options. This would include selling puts to get into positions and selling calls to get out of them.

That will have the effect of boosting the income, but of course at the expense of future gains. Call-writing, in particular, is popular with US individual investors as well as funds. Selling puts is less common because of margin requirements,

Other than that, to get a dividend yield of 5% from US shares would involve being very concentrated in things like royalty trusts, MLPs and Reits, which might not be what you really want if you seek exposure to the more dynamic parts of the US markets.

CryptoPlankton
Lemon Slice
Posts: 786
Joined: November 4th, 2016, 12:12 pm
Has thanked: 1544 times
Been thanked: 873 times

Re: Blackrock North American Income (BRNA)

#125388

Postby CryptoPlankton » March 16th, 2018, 2:39 pm

bailey56 wrote:Blackrock North American Income (BRNA) recently increased their quarterly dividend from 1.25p to 2p. Based on a share price of 158p, this is a yield of 5%.

Reading the annual financial report https://www.investegate.co.uk/blackrock-north-amer--brna-/prn/annual-financial-report/20171213180936P8025/ this seems to be a change in dividend policy from December last year rather than a one-off special.

My understanding is that this is a relatively new IT, but it is unusual to find one yielding this amount with a North American focus. Middlefield Canadian (MCT) is the only other one I know of.

I'm considering investing in either MCT or BRNA. From the little I know about American stocks, generally dividend yields seem to be lower, so there perhaps there is less choice on where fund managers can invest. Concerned also that the US market may be overpriced, and therefore a sharp fall might put the new dividend policy at risk.

Views anyone?

Thanks

bailey

Interesting, thanks for the link. I have been looking for another North American income play for some time (I do hold MCT). The yields on the likes of NAIT, SCAM and HINT* aren't very appealing (all around 3%) because of their impressive capital appreciation since two or three years ago (when, as it turns out, they would have been a great investment for both capital and income!). The chairman explicitly states in the report that this move by BRNA is designed to address this very problem and thereby attract income investors, so it would be rude not to give it some consideration.

My biggest reservation is the source of the dividend. Last year's net revenue was 3.73p per share so more than half of the 8p annual dividend will come from "capital profits". I share your concern that the US market may have got ahead of itself and, together with the low yields on offer, that has certainly been a factor in my reluctance to invest. Although it is tempting, I think I am more inclined to wait and see how things go for a while (I'm not greedy, I'd settle for a more sustainable yield of around 4% after a 25% drop in the SP of NAIT!). But I'm not in a hurry and if the opportunity never comes then I'll just have to do without - I can live with that far more happily than buying only then to see the suspected correction materialise soon afterwards!

CP

*NAIT - North American Income Trust
SCAM - Scottish American Investment Company
HINT - Henderson International Income Trust

bailey56
Posts: 35
Joined: November 4th, 2016, 1:30 pm
Has thanked: 53 times
Been thanked: 2 times

Re: Blackrock North American Income (BRNA)

#125566

Postby bailey56 » March 17th, 2018, 8:39 am

Thanks to Lootman and CP for their thoughts and insights.

I might look at BRNA again in a few months, but share CP's thoughts that there may be better income opportunities to look at.

Thanks

bailey

BrummieDave
Lemon Slice
Posts: 818
Joined: November 6th, 2016, 7:29 pm
Has thanked: 200 times
Been thanked: 378 times

Re: Blackrock North American Income (BRNA)

#125592

Postby BrummieDave » March 17th, 2018, 12:02 pm

Excellent OP and good replies. I find myself agreeing with everything above.

This will be an interesting thread to resurrect in a year or so and see how the Trust, its performance and outlook are then.

Darka
Lemon Slice
Posts: 773
Joined: November 4th, 2016, 2:18 pm
Has thanked: 1819 times
Been thanked: 704 times

Re: Blackrock North American Income (BRNA)

#125616

Postby Darka » March 17th, 2018, 1:31 pm

I bought around £3000 of BRNA before reading this thread, not sure I would have done now :)

Anyway, probably keep them and see what happens...


Return to “Investment Strategies”

Who is online

Users browsing this forum: No registered users and 13 guests