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Hfel report that turnover of shares was over 100%, this was down on the previous 120% turnover. So buying and selling seems to be more of a norm, well for the past couple of years. You might have noticed a change at some point.
I suppose it depends on what happens with China and if this follows any improvement their.
As for dividend levels, a certain Mr Buffet would argue not to pay any at all and reinvest all income into the business.
Zac
Then you should be interested in how the income is generated and its likely effect on capital.
ade2a - oh, I'm fully aware that today's 7.7% yield is at the expense of capital reduction for long-term holders! I certainly don't need reminding of that!!
It's what do I do from here? My capital, irrespective of whether I'm sitting on a profit or loss, will deliver just short of 8% in dividends over the next 12 months. The big question is what will the share price do over the same period? Well, I'm not expecting much but do hope(!!!) there'll be some recovery. Even a slow climb over the next 12months to £3.10 would provide a total return of 11%. On that basis I'll sit it out. Of course the share price could fall further . . . . !!!!!
Zac
I am not sure how many people realise, I have mentioned earlier but the poor capital performance and the outsized yield is related. You lament the capital performace but that is the price to pay for a 7.7% yield even though the running yield is of no benefit to previous holders.
ade2a - thanks for replies. As you can see I'm comfortable simply tracking income per share received and comparing that with dividends paid out per share. Up to now things look ok with just a small shortfall.
I'm more concerned with the share price decline over recent times. Over the last 2 years we've received approx. 13% in dividend payments but the share price has declined by 17%. On that basis this has not proved to be a good investment.
Thanks Gerry,
Nothing surprising of course but the worst of all worlds locking in a large capital loss for a dividend that is smaller than the lost capital.
Rio Ex divi Paid
Interim 12/08/2021 23/09/2021 376.00¢
Special 12/08/2021 23/09/2021 185.00¢
Special 04/03/2021 15/04/2021 93.00¢
Final 04/03/2021 15/04/2021 309.00¢
BHP
Final 02/09/2021 21/09/2021 200.00¢
Interim 04/03/2021 23/03/2021 101.00¢
thanks LSE for getting rid of all the spacing's making it difficult to read
Ade2a
From the monthly factsheets, % of fund and fund top 10 positions
RIO BHP
31 May 3.8% 2 3.7% 3
30 June 3.9% 2 3.8% 3
31 Jul 4.9% 1 4.2% 2
31 Aug 3.5% 4 4.4% 1
30 Sep 3.1% 6 3.2% 5
31 Oct 0% 0%
Looking at rough SP for each, both have dropped over 20% in the time period. It looks like they were building up then selling off before getting rid of the lot. I suspect some were sold at a loss. They might have rules to limit losses and the falls in SP triggered the sales.
The floor is open for other interpretations
Zac
My appologies I made an error.
Here you go. HFEL have around 150m shares in circulation. They currently receive approx. 23.22p per share in dividend income. This equates to around £35m. You claim this is around a 5% yield to HFEL.
The fund earns £35m as you claim.
The market cap 150,000,000 * 300p per share is a market cap of £450,000,000.
150 million shares * approx £3 per share = market cap.
35/000,000 / 450,000,000 = 0.077 or 7.7% yield.
This is the earniongs of the fund as claimed in the managers report.
https://www.edisongroup.com/company/henderson-far-east-income/
Shows the market cap as we calculated.
https://www.edisongroup.com/publication/consistently-high-and-growing-income/29746
Scroll down to Investment process at a reasonable price shows the HFEL yield at 4.8% historical 5.2% forward
This yield and earnings of the fund are not the same.
The theoretical point you make about income to previous holders not being dependent on the current yield is of course correct.
Zac
"Here you go. HFEL have around 150m shares in circulation. They currently receive approx. 23.22p per share in dividend income. This equates to around £35m. You claim this is around a 5% yield to HFEL. Let's assume the holdings in their portfolio double in value. Therefore the yield would reduce to 2.5%. However, they would still receive £35m income. Therefor, as I say, the yield on holdings is irrelevant, it's the monetary value that's important".
What you say is correct.
I am not sure if you mean current holders or previous holders.
For previous holders the current yield is irrelevant.
The yield compared to the market I would argue is significant . I will explain this later.
Gerry,
I forgot to mention about the sale of Rio et al.
As I do not manage the fund I cannot say if they sold at a profit. This is not the most significant issue. It is a recent holding or addition prior to a very large diviend and sale shortly thereafter. This is the difinition of dividend washing when I do my model I can add an explanation and explain why it is usually negative for capital growth.
jamesmaggs
"Surely if the income they receive covers the dividends they pay us bar a small shortfall as documented which is comfortably covered by the stated reserves there is no problem here"?
This is factually correct. Nobody who commented on this post or any of my previous post denied this fact including me.
So why are we debating it? Why the interest and why all the comments?
When I start the new thread you may want to chime in, respectably.
Gerry,
"Yes the overall return has been poor, partly why I joined, hopefull that there would be a turnaround and things would improve".
This is why I am asking in this post who can remember how the fund was managed prior to 2007 and for some time after.
It really had a different style of management even though the stated objective was similar but not exactly the same.
Previously income and capital growth were given equal significance compared to today where the emphasis is skewed towards income.
As mentioned in a previous reply I might consider a more detailed explanation of the relationship between income on the portfolio and income on the underlying holdings. I think by now we all know these two are not the same.
Everyone is of course welcome to comment.
Zac
"Perhaps you could share a model showing how the current yield received is well short of dividends paid out as you indicate".
I might tackle this one in a new post.
Might be quite detailed which is why I did not share the opinion earlier and are you fully aware of the previous posts such an explanation would have been impossible.
There are a multitude of issues here not just one.
You have cleared up the dividend and performance issue as you see it that is now clear.
I can provide a model but since I do not actually manage the fund I may not be able to fill in all the minute details.
You did not say why the underlying yield of the holdings does not matter.
Hi ade2a.
Yes I can see that they have been sold. Unfortunately I don't know when they were bought so its a little difficult to determine what is actually happening from my point of view.
Yes the overall return has been poor, partly why I joined, hopefull that there would be a turnaround and things would improve. You could always ask the question to Henderson.
I'm not sure the ship has been steadied just yet or if its almost there. Managment seem to think investors are happy with the high yield assuming the SP is steady. This leads me to think that the SP won't be going too far in the near future.
I'm minded to ride this out a bit more to see some improvements but you can sell up and move into aaif or soi.
Out of interest did they sell RIO and bhp for more than they paid?
Surely if the income they receive covers the dividends they pay us bar a small shortfall as documented which is comfortably covered by the stated reserves there is no problem here?
I would think most invested here are for income and their income is from dividends,buying/selling holdings and options trading(aware of it but not au fait with it and frankly don’t care) and the only current issue is the SP which doesn’t want to play over the stated nav at the moment…..is there a fundamental change in SP because there’s a fundamental change in the way they operate or is it just a blip on China et al?
Personally I see no reason to reduce unless the SP is higher as I’ve mentioned in previous posts and every reason to add under 3 as has one of the Directors recently.
ade2a
"Was this you Zac?"
Yes. You know full well it was me! And I stand by my statement. The overall total return here over recent times is appalling. I'm not aware that I've stated that I'm happy with the way the fund is managed. I've simply pointed out that dividend income received is robust compared to dividends currently paid out.
Perhaps you could share a model showing how the current yield received is well short of dividends paid out as you indicate. I'll be happy to debate. But, please, provide factual monetary data.
ade2a
"The yield received on holdings is irrelevant".
"Here we do not agree.
You understand we do not have to agree.
if you have a model to explain your position I will be happy to debate it."
Here you go. HFEL have around 150m shares in circulation. They currently receive approx. 23.22p per share in dividend income. This equates to around £35m. You claim this is around a 5% yield to HFEL. Let's assume the holdings in their portfolio double in value. Therefore the yield would reduce to 2.5%. However, they would still receive £35m income. Therefor, as I say, the yield on holdings is irrelevant, it's the monetary value that's important.
Zac
"They need to address something. Total returns are appalling. The last 3 years individual performance are as follows: +10.4%, - 15.5% and -2.5%. An overall total return over the last 3 years of -9.0%. And we're paying for this! What an appalling return for investors".
Was this you Zac?
I am confused are you happy with the way managers manage the fund and generate dividends?
I would suggest the capital performance and the outsized yield is connected perhaps you see it differently let us know.
Gerry
"They were expecting other share income to rise approx 15% which should offset some. Is this evidence of washing you were on about"?
No. It is the purchase of RIO/BHP cum div and sale of RIO/BHP ex div.
https://www.janushenderson.com/en-gb/investor/product/henderson-far-east-income-limited/
You can see Rio and BHP is no longer included.
"I think it was you that highlighted a drop in iron ore prices. Add to that the delisting of BHP then you can reasonable assume that their respective SP's might fall".
Not necessarily these stocks are on historic yields of over 10%.
Dividends can be cut in half and share prices still rise depending on market expectations.
The whole style of management is now different. It seems not many current share holders remember how this company was run prior to 2007 and some years afterwards.
Zac
"The yield received on holdings is irrelevant".
Here we do not agree.
You understand we do not have to agree.
if you have a model to explain your position I will be happy to debate it.
Nice to see a director spending £120k on shares!
The monthly fact sheet 31/1021 shows 3.5%. The RNS 3.61%
This implies more added assuming a stable base line, which is almost not correct
Factsheet NAV (cum income) 293.6p NAV (ex income) 291.5p
Hendersons website puts Estimated NAV 296.35p As of 01/12/2021
Looks like they are following this thread lol.
Rns says they have bought VinaCapital Vietnam. Thought they had some already so maybe they have added more.
Is VinaCapital Vietnam the same as VOF?
If it is then according to HL its on 20% discount with 2% yield. Worryingly it has over 7% charges. I half expected a move into dividend paying financials. Will have to look back at previous holding to compare changes.