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Income Investment Trust comments on Covid-19

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

#327631

Postby JuanDB » July 21st, 2020, 8:36 am

That’s a useful clarification Dod, thanks.

I could have easily checked the cash position and instead decided to leap to a conclusion based on the word “realised”. I have now looked at the monthly factsheet which reports the cash position at £-.

All is well in my world!

Cheers,

Juan

Dod101
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Re: Income Investment Trust comments on Covid-19

#327644

Postby Dod101 » July 21st, 2020, 9:55 am

Alaric wrote:
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.


Possibly to in effect reduce gearing, but that is another topic!

Dod

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Re: Income Investment Trust comments on Covid-19

#334211

Postby 88V8 » August 18th, 2020, 8:27 pm

Here's a comforting read for those invested in the dividend heroes
https://www.ii.co.uk/analysis-commentar ... E3NDE5OAS2 which as I predicted are not about to cut their payouts.
Not seen any statement of intent from Merchants yet, but I'll be amazed if they don't follow suit.

Although, as other posters have forecast some of the planned increases are going to be pretty nominal, am I complaining? No siree.

V8

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Re: Income Investment Trust comments on Covid-19

#336398

Postby mike » August 27th, 2020, 4:30 pm

Aberdeen Standard Equity Income (ASEI) have issued confirmation of their third dividend for their FY ending 30 September.

Along with the declaration, there was the following comment regarding the immediate future
The Board's intention is that the fourth interim dividend, which will be paid in December 2020, will be at least 5.0 pence per share, bringing the total dividend for the financial year to 30 September 2020 to 20.6 pence per share, an increase of 0.1 pence on the payment in 2019.

If the 0.1p annual increase is confirmed, then this will be the 20th succesive year of increasing the dividend, so entering onto the list of AIC Dividend Heroes.

The 0.1p increase equates to a 0.5% increase, so not great, but when you look at the current landscape of UK shares, then I'd be content with that. I would prefer more, but the overall situation is obvious.

I have pencilled in 25 November for their annual report.


For holders, 5.20p/share, ex-div 3 Sept, paid 25 Sept

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Re: Income Investment Trust comments on Covid-19

#336411

Postby swill453 » August 27th, 2020, 5:09 pm

I also noted that Apax Global Alpha (APAX) announced an interim dividend of 4.87p, an increase of 0.01p (yes, one hundredth of a penny) on last year's interim.

I got a chunk of these, a mainly private equity investment trust, in an IPO from AJBell a few years ago. Been pleased with them, and have bought more since.

To keep this on-topic, their Covid-19 comment is
The economic outlook remains highly uncertain. While countries have begun to rebound as they have reopened from lockdowns, levels of GDP remain well below pre-Covid levels in most economies. The speed of recovery will depend on the evolution of the pandemic, medical interventions, policy responses, and general consumer and business confidence. The recovery is unlikely to be linear and, for most economies, economic activity may not return to pre-Covid levels until 2022. The impact and recovery is, however, very different between sectors. Tech in general has proved more resilient and is expected to grow over the coming years driven by underlying trends. Offline retail has been severely impacted and is recovering more slowly.

With the portfolio proving resilient in the first half of 2020, we believe that the Apax Funds' focus on: i) drawing on the Investment Advisor's sub-sector expertise, particularly in those subsectors benefiting from digitisation trends; ii) driving business transformation, the pace of which has only increased in the past five months; and iii) investing with modest average entry leverage levels, will leave the portfolio well-positioned coming out of this current crisis.

https://www.theaic.co.uk/companydata/0P ... 3A05/0183X

Scott.

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Re: Income Investment Trust comments on Covid-19

#341137

Postby mike » September 18th, 2020, 8:43 am

City of London have today published their annual report for the year ending 30 June 2020.

Nice to see the confidence in the second paragraph in the report

CHAIRMAN'S COMMENT
"At a time when many of our investee companies cut their dividends, we increased ours by 2.2%. In respect of the current year ending 30 June 2021, we expect to pay a greater amount, thereby increasing the dividend for a 55th consecutive year."


Later statements include a friendly little boast at Unit Trusts/OEICS
Shareholder returns will continue to be derived from a mixture of capital growth and income. The dividend cuts which abound in the market today have an inevitable impact on the income received by City of London, and so on the dividends which we ourselves can pay out of current income. Our open-ended cousins have no choice but to cut the amounts which they can distribute to their members. By contrast, one of the benefits which we, as an investment trust, enjoy is the ability to supplement our annual income with income both from revenue reserves, squirrelled away in past years, and, if required, from capital reserves established through realising gains on our investments.

The ability to do this allows the Fund Manager additional flexibility in how he manages the portfolio for the long term. He will continue to have a bias towards income producing stocks, but he has no need in the current environment to chase a dwindling group of higher yielding corporates, running the inherent risk of dividend traps, in order to build on City of London's unique dividend record. He can continue to focus too on holdings selected for their above average growth potential, albeit on lowish yields, some of which may well be listed overseas, providing greater diversification and which have contributed positively to City of London's outperformance over the years.

[...]

It has been a very difficult period for company profits and dividends because of the Covid-19 virus and associated lockdowns of economies. There are clear signs that the worst point has been experienced and an improvement should be seen going forward.


https://www.investegate.co.uk/city-of-london-it--cty-/rns/annual-financial-report/202009180700023603Z/

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Re: Income Investment Trust comments on Covid-19

#341141

Postby mike » September 18th, 2020, 9:11 am

North American Income Trust (NAIT) have released their half-year report for their financial year ending 31 January 2021

There are Covid comments relating to their market (89% US, 11% Canada) as follows

The revenue return per Ordinary share rose by 27.0% from 5.35p to 6.80p. The Board has declared a second quarterly dividend of 1.8p per share, giving total dividends for the first half of the year to 31 January 2021 of 3.6p (2020 - 3.4p), a 5.9% increase. The second quarterly dividend is payable on 30 October 2020 to shareholders on the register on 2 October 2020.

[...]

As many countries, including the US, began their phased-in re-openings of their economies during the second quarter, the market has been more optimistic that the economy can eventually move past the impact of the initial lockdowns. With the reporting of some of the larger retail companies a few weeks ago, the US corporate earnings season has all but come to a close. Generally, financial performance throughout the earnings season fared better than the market had initially feared and was helped by the government's stimulus package, which benefitted consumer health and provided a lifeline to many businesses.

Despite the recent performance, visibility regarding future earnings remain cloudy as a lack of systemic approach to containing the pandemic fuels concerns with regards to the likelihood of a second wave. In the US, unemployment benefits have begun to roll-off and an additional stimulus package is likely to be needed for many who have been unable to return to work. If future stimulus remains held up by political wrangling in Washington, there are greater concerns with regards to the health of the consumer in the near term, but we understand the incentive to continue some of these programs as we enter the November election season. Furthermore, while the overall goal is to build an all-weather portfolio, the election season has the potential to provide a wide range of outcomes and the Manager will look to shape the portfolio to help insulate it from these risks.

[...]

The Manager has undertaken a detailed review of the investee companies in the Company's portfolio to assess the impact of COVID-19 on their operations such as employee absence, reduced demand, reduced turnover and supply chain breakdowns and will review carefully the composition of the Company's portfolio and will be pro-active where necessary. The Manager has implemented extensive business continuity procedures and contingency arrangements to ensure that they are able to continue to service their clients, including investment trusts.

And then surprisingly, a paragraph regarding Brexit. Despite CTY's UK focussed market, their report this morning only mentioned Brexit obliquely in the report regarding shares with overseas earnings, but they did list Brexit under the "Risks" section.

The outcome and potential impact of Brexit remains an economic risk for the Company. As an investment trust with a North American mandate, the Company's portfolio is unlikely to be adversely impacted as a direct result of Brexit although some currency volatility could arise. The uncertainty surrounding Brexit could impact investor sentiment and could lead to increased or reduced demand for the Company's shares, which would be reflected in a narrowing or widening of the discount at which the Company's shares trade relative to their net asset value. Aberdeen Standard Investments has a significant Brexit program in place aimed at ensuring that they can continue to satisfy their clients' investment needs post Brexit.


I was happy to see their revenue reserve value increase by just under 5% over the six months, last year being broadly equal in the same period.

https://www.investegate.co.uk/north-american-it--nait-/rns/half-yearly-results/202009180700023507Z/

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Re: Income Investment Trust comments on Covid-19

#341142

Postby Dod101 » September 18th, 2020, 9:12 am

Good for City of London but it would have been disappointing for shareholders had they not done so considering that they made it clear earlier that they were very willing to use some of their revenue reserves to supplement current income in order to support the dividend (and of course their record) Nice comment, the comparison with OEICs.

Dod

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Re: Income Investment Trust comments on Covid-19

#341144

Postby Dod101 » September 18th, 2020, 9:17 am

mike wrote:And then surprisingly, a paragraph regarding Brexit. Despite CTY's UK focussed market, their report this morning only mentioned Brexit obliquely in the report regarding shares with overseas earnings, but they did list Brexit under the "Risks" section.

The outcome and potential impact of Brexit remains an economic risk for the Company. As an investment trust with a North American mandate, the Company's portfolio is unlikely to be adversely impacted as a direct result of Brexit although some currency volatility could arise. The uncertainty surrounding Brexit could impact investor sentiment and could lead to increased or reduced demand for the Company's shares, which would be reflected in a narrowing or widening of the discount at which the Company's shares trade relative to their net asset value. Aberdeen Standard Investments has a significant Brexit program in place aimed at ensuring that they can continue to satisfy their clients' investment needs post Brexit.




Which of course tells us nothing. 'Brexit....could lead to increased or reduced demands for the Company's shares'. You don't say!

Dod

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Re: Income Investment Trust comments on Covid-19

#342325

Postby 88V8 » September 23rd, 2020, 6:21 pm

Despite a forecast fall of 14% in income, Murray Income Trust MUT raised their divi for the 47th year. Only 0.7%, but still............

The year's divi of 34.25p was funded 30.5p from current revenue, and 3.75p from reserves.
Remaining reserves amount to 24.1p, or 70% of a full year.

A comforting read for holders, including me.

https://www.lse.co.uk/rns/MUT/annual-fi ... 0styq.html

V8

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Re: Income Investment Trust comments on Covid-19

#343648

Postby mike » September 29th, 2020, 9:53 am

Aberdeen Smaller Companies (ASCI) issued this statement today with their 3rd interim dividende for their FY ending 31 December 2020 (my paragraphing for ease of reading)

As we said when we declared the first and second interim dividends, the Board has always regarded a key purpose of our Trust as the generation of income for our shareholders. The economic uncertainty has continued and we do not expect much clarity about the outlook for 2021 until the fourth quarter. But we continue to believe that helping shareholders cover an income decline elsewhere in the market will be more valuable to them than conservatively mirroring market improvement over time.

We have added significantly to our revenue reserves over recent years and we prefer to reduce these reserves, at least this year, to alleviate the decline of dividend income elsewhere. We shall of course continue to monitor this situation each quarter and may have to take a different decision, once greater clarity emerges of the outlook for 2021 and 2022.

There does seem to be an element of doubt here regarding future income stream to ASCI that I have not noticed in other trusts before. Others seem to be thinking that their income stream is visible and their reserves should be enough to overcome the income drought until something near normal resumes.

For holders
The Board of Aberdeen Smaller Companies Income Trust PLC declare a third interim dividend of 2.06p per share in respect of the year to 31 December 2020 (third interim 2019: 1.95p) payable on 30 October 2020 to shareholders on the register at close of business on 9 October 2020. The ex-date is 8 October 2020.

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Re: Income Investment Trust comments on Covid-19

#343676

Postby Dod101 » September 29th, 2020, 11:27 am

88V8 wrote:Despite a forecast fall of 14% in income, Murray Income Trust MUT raised their divi for the 47th year. Only 0.7%, but still............

The year's divi of 34.25p was funded 30.5p from current revenue, and 3.75p from reserves.
Remaining reserves amount to 24.1p, or 70% of a full year.

A comforting read for holders, including me.

https://www.lse.co.uk/rns/MUT/annual-fi ... 0styq.html

V8


Thanks for that. The latest Annual Report does not appear on their website yet as far as I can see, anyway.

Dod

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Re: Income Investment Trust comments on Covid-19

#351731

Postby mike » October 29th, 2020, 2:58 pm

Henderson International (HINT) released their final results to 31 August yesterday, and some interesting points above the generics we have seen before

https://www.investegate.co.uk/henderson-int-income--hint-/rns/annual-financial-report/202010281629175257D/

On HINT itself
In the half year report, we noted the fact that some of the companies held in the portfolio had been asked by their respective governments or regulators to delay or moderate their dividends until the impact of the current pandemic was clearer. We also indicated that the board intended to utilise the Company's revenue reserves to smooth any temporary shortfall between the Company's distributions and portfolio income. Whilst the majority of the portfolio's holdings have paid dividends, a number have reduced or withheld dividends and it has been necessary to use a relatively moderate amount of the reserves to support dividend payments this year (£917,000 of the £8,081,000 at the start of the year). Earnings have been retained every year since launch for a rainy day, so it is appropriate that they are used now in these unprecedented times.

We continue to recognise the importance of dividend income to our shareholders and will continue to use reserves to complement the income generated by the portfolio. The current revenue reserves would provide several years of dividend support based on 2020 results.


And on specific constituent holdings which can carry accross to other ITs
Dividend cuts were a headline topic in 2020, but the trends varied significantly across regions and sectors [...]. Of the top ten holdings, nine increased dividends and one company (ABB) paid the same as last year. The most significant increases came from technology companies Taiwan Semiconductor Manufacturing and Microsoft, which announced 25% and 10% quarterly increases respectively. Increases were not limited to technology companies: Nestlé announced a 10% increase and Novartis 3.5%. These examples highlight the fact that not all companies have been impacted in the same way by the pandemic. Some divisions of companies are benefiting from new trends, such as the move towards remote working and higher levels of food consumption at home. The utility companies and telecommunication companies owned in the portfolio will see much less of a direct impact than industrial and oil and gas sectors.

The biggest negative impact on portfolio income has come from the financial sector. Several holdings had announced dividends but were forced by their regulators to cancel them before they were due to be paid. Where dividend cuts have occurred, we are in communication with the companies to determine the drivers and the potential duration of the cuts. Insurance company AXA did pay a dividend, although at a lower rate than first announced. It was one of the few French financial companies to be allowed to pay. The portfolio owns three financial companies which have not been allowed to pay, but continue to accrue their 2019 dividends and are hopeful that they will be allowed to pay them in 2021.


Taiwan Semiconductor Manufacturing with its 25% increase seems to be held in many trusts that cover the Asia-Pacific area, and it is the largest constituent holding in MYI at 5.2%; HFEL 5.1%; SOI 10.1%; AAIF 9.8% (all from latest factsheets). This should auger well for these dividends although China/Taiwan tensions are a possible downside to TSMC. The final, and much larger, dividend for Schroder Oriental's (SOI) year ending 31 August is due for announcement any day now.

And for holders of HINT, the annual dividend is confirmed at the previously indicated 6.0p with the 4th interim of 1.5p, ex-div 5 Nov, paid 30 Nov
https://www.investegate.co.uk/henderson-int-income--hint-/rns/dividend-declaration/202010281150355001D/

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Re: Income Investment Trust comments on Covid-19

#351759

Postby richfool » October 29th, 2020, 4:37 pm

Thanks for that update Mike and for highlighting other trusts holding TSMC, several of which I hold.

I hope that HINT's results, dividend information and comments might move the share price a little more positively!

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Re: Income Investment Trust comments on Covid-19

#351915

Postby richfool » October 30th, 2020, 9:52 am

mike wrote:Taiwan Semiconductor Manufacturing with its 25% increase seems to be held in many trusts that cover the Asia-Pacific area, and it is the largest constituent holding in MYI at 5.2%; HFEL 5.1%; SOI 10.1%; AAIF 9.8% (all from latest factsheets). This should auger well for these dividends although China/Taiwan tensions are a possible downside to TSMC. The final, and much larger, dividend for Schroder Oriental's (SOI) year ending 31 August is due for announcement any day now.

Mike, thanks for your informative post above.

I have since spotted that TSMC is also held by these trusts:

JAGI: 8.71%
SAIN: 2.94% and Microsoft: 2.6%
MWY: 1.7% and Microsoft: 2.1%

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Re: Income Investment Trust comments on Covid-19

#352984

Postby richfool » November 3rd, 2020, 1:28 pm

SOI - Fourth interim dividend

For the year ending 31 August 2020
Schroder Oriental Income Fund Limited (the "Company") announces that the directors of the Company have declared the payment of a fourth interim dividend of 4.60 pence per share for the year ending 31 August 2020 on the ordinary shares of the Company.
The total dividends for the year will be 10.30 pence per share, representing an increase of 2% on the total dividends of 10.10 pence per share paid last year.

Ex-dividend date: 12 November 2020

Record date: 13 November 2020

Payment date: 30 November 2020

Dividend per share: 4.60 pence

https://www.investegate.co.uk/schroder- ... 22360901E/

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Re: Income Investment Trust comments on Covid-19

#353887

Postby ADrunkenMarcus » November 5th, 2020, 8:03 pm

For the half year to 31 August 2020:

BlackRock UK Smaller Cos.

RETURNS AND DIVIDENDS

The COVID-19 pandemic and associated lockdown measures have wrought havoc on significant sectors of the global economy, impacting dividend yields both in the UK and throughout the world.

As at 31 August 2020, a substantial portion of companies in the portfolio had reduced or cancelled dividends in response to the impact of the pandemic. This resulted in a fall in the Company's revenue return per share for the six months ended 31 August 2020 to just 4.57p per share (a 79% decrease compared with 22.20p for the corresponding period in the previous year). After adjusting to remove special dividends (which fell to virtually nil compared to 2.00p per share for the six months ended 31 August 2019) regular dividend income from portfolio companies decreased by 68%.

Whilst the Board is mindful of the importance of financial prudence and has, to date, ensured that dividend payments have been covered by portfolio income, it is also aware of the importance of yield to shareholders. This is particularly the case in the current situation where a low interest rate environment is likely to persist for some time and investors are struggling to maintain income levels. The Board is also cognisant of the benefits of the Company's investment trust structure which enables it to retain up to 15% of total revenue each year to build up reserves which may be carried forward and used to pay dividends during leaner times. The Company has substantial distributable reserves (£634.7 million as at 31 August 2020, including revenue reserves of £17.5 million). After extensive deliberations and taking note of your Company's current reserves, the Board has decided to declare a dividend of 12.80p per share as an interim dividend, maintaining our payout at the same level as in 2019. The interim dividend will be paid on 2 December 2020 to shareholders on the Company's register as at 13 November 2020.

In the current uncertain environment, the Board is monitoring the Company's income levels and projected future dividend income streams closely as the year proceeds. To the extent that income levels continue to be depressed as the COVID-19 pandemic evolves and economic recovery is delayed, the Board may need to re-assess the level of the final dividend in due course.


Best wishes


Mark.

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Re: Income Investment Trust comments on Covid-19

#354321

Postby richfool » November 7th, 2020, 12:05 pm

From Citywire article (17th September), re STS dividend:
Securities Trust of Scotland (STS) shares jumped nearly 5% today after its board appointed Troy Asset Management to replace Martin Currie and indicated it was looking to grow the £191m global equity income trust, although the move came with less welcome news of a dividend cut.

However, there was a sting in the tail as investors were told to expect a 14% cut in this year’s dividend as the trust resets payouts to a level Harries believes is more sustainable.

Investors can now expect to receive at least 5.5p per share in the current financial year to 31 March 2021, down from previous guidance of 6.41p, from which it is expected to grow.

https://citywire.co.uk/wealth-manager/n ... e/a1402094

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Re: Income Investment Trust comments on Covid-19

#391500

Postby swill453 » March 2nd, 2021, 12:43 pm

swill453 wrote:I also noted that Apax Global Alpha (APAX) announced an interim dividend of 4.87p, an increase of 0.01p (yes, one hundredth of a penny) on last year's interim.

Six months later they seem to have shrugged off the effects of Covid on their particular mix of private equity and other investments. Final dividend is 5.28p, up from last years final dividend of 4.68p.

https://www.theaic.co.uk/companydata/0P ... nts/106705

Share price up about 90% since its March/April 2020 low too.

Scott.


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