Member Info for ade2a

Hi everyone

Did we receive our dividend payable on 19-Aug-2024?

MTC

You could ask / investigate where and how do they earn this very large income.

Datron,

I have said on this board many times I sold most of my holdings 3 years ago. The reaction to that news on this board was quite entertaining even though many asked the same question you are asking me now.

I do hold AAIF and SOI which have preferable features for me.

Mr Datron,

Thanks but you seem to be hung up on my opinion and trying to prove me wrong somehow. That is not te point of my point.

The point here is look at the data the fund is posting and come to your own conclusion.

I was hilighting the pre xd earnings and yield on the top 10 holdings these are just data. Opinion is secondary and in my view a distant second.

Darton

Everyone who comments on this board knows what yield is.

Out of interest can you post the Investment Trusts equity based that have these 10% + yields.

Gore Street Energy Storage Plc Ord GBP0.01 not sure what this holds, has a very high yield.

Most funds that have 10% + yields are infastructure and fixed interest, from

https://www.trustnet.com/fund/price-performance/t/investment-trusts?IsTrustnetITSpecialistVct=false&norisk=true&sortby=Yield&sortorder=desc&PageSize=25

Options trading has been part of HFEL strategy for some time now. It normally adds 10% or so to the earnings of the fund.

Are they saying they want to increase this in future. Whatever they intend if you follow the earnings it will give an indication as to the safety of the dividend.

I can understand if you think there is no risk to HFEL dividend. Some of us have a different opinion.

I will be happy if you post the link to your sources in addition to the video.

Dartron

Everyone should really come up with their own views then live and let live in my opinion.

To all

I really would encourage you not to get hung up on this or that opinion or trying to force your opinion on reality and other people. We can all follow the numbers and analysse the numbers as they present themselves.

Norse1961Manure

I consider the following as signs of overdistribution.

1. Very few if any Income focused and equity focussed investment can sustain a n income return of 10.6%, add income growth, and add capital growth to support the previous 2 requirements in the long term.

When I say long term I mean 10 or more years. I have been invested in this fund for over 30 years though I sold a large amount of my holding 3 years ago.

2. Against its own sector the yield is about double that availale on other funds.

3. This is the big one for me the underlying assets yield 4% approximately HFEL yield to asset value is 10.6% after charges of around 1%.

For those concerned about the dividend paying ability watch the pre xd earnings which I often post. They should exceed the proposed dividend ifor the August and November dividend substantially. At least they have in the company's past. There may be a transfer from reserves in the Feb and May distribution period but this is normal. This is the best Canary in the coal mine I can think of.

Management style was changed in 2007 it took about 15 years for the income to rise to approximately 2.5X the yield on assets. The company does have significant reserves to offset any deterioration in earnings which has not been set in stone yet. The dividend could be maintained for many, many years or could be cut early to give the Managers more freedom to improve returns.

Dartron

Everything you post is correct. Most board participants are aware of this information. Nobody on this board denied this information but we can have different opinions.

Believe it or not I am in fact not here for conflict.

The simple average yield on HFEL top 10 holdings is 4,22%

The weighted average yield on HFEL top 10 holdings is 4,00%

Top 10 shares account for 32.2% of the fund. I would guess these numbers are typical for the portfolio.

HFEL yield to NAV based on 24.4p is 10.6%. The dividend was recently increased so forecast yield will be a bit higher.

The income earnings in the last dividend period is 14p more than twice the 6.3p of 2023. The actual number may actually be better than this since HFEL transferred from reserves to pay the previous dividend. All depends on how they do the accounting.

Earnings of 14p in this period suggests the dividend is safe for now.

I believe this may even be record earnings.

Top 10 holdings can be seen here.

https://www.trustnet.com/factsheets/t/j408/henderson-far-east-income-ltd-ord'

There is a difference between numbers and opinions folks. The numbers say HFEL is earning an incredible amount of income.

My opinion is that this is not sustainable and a dividend cut is somewhere in HFEL''s future though not imediate future as the actual numbers suggest for now.

Yield and calculations can be seen below but the table does not copy to this format, sorry folks.

0 TSMC 1.24% 5.20% 0.06%

2 Samsung Electronics 1.71% 3.90% 0.07%

3 MediaTek 4.37% 3.50% 0.15%

4 HK Trust 8.33% 3.40% 0.28%

5 China Resources and Land 6.24% 3.40% 0.21%

6 Hon Hai Precision Industry 2.65% 2.80% 0.07%

7 Lenovo Group 3.73% 2.60% 0.10%

8 ASE Technology 3.04% 2.50% 0.08%

9 HDFC Bank 1.21% 2.50% 0.03%

10 PCCW 9.63% 2.40% 0.23%

Totals 4.22% 32.20% 1.29% 4.00%

NAV 230.60 yield 10.6%

Share price 236.00 dividend, 24.40 Yield 10.34%

LTI

You did not mention you only sold 4%. How could I know unless you mention it.

"Legal & General Group Plc commences an Equity Buyback Plan for 597,971,439 shares, representing 10% of its issued share capital, under the authorization approved on May 23, 2024"

https://www.marketscreener.com/quote/stock/LEGAL-GENERAL-PLC-4002140/news/Legal-General-Group-Plc-commences-an-Equity-Buyback-Plan-for-597-971-439-shares-representing-10-46970456/.

Depends which article you read we should be interested in how many shares are actually repurchased.

Zac

Hi my old friend. Hope you don't want shoot me or something.

So far 0,2% of the shares have been purchased so far. I might post the numbers after 6 months or so. Hard numbers no arguments required.

FRONAGE,

I would agree. They intend to buy back 10% of the shares that is 1.300,000,000 at roughly at 235p = £3,500,000,000 / 5,979,291,177 is about £0.585.

Would I rather have a 58p dividend paid as a special rather than the buy back. Yes I would rather have the special. Given how companies operate these days if they are going to have a buy back I prefer they do it when shares are cheap. Apple is not the same as the shares are highly priced.

I sympathise with those who do not like buy backs and thanks for your comments.

Am I the only one who likes what L&G is doing.

Buying back cheap shares and reducing the share count will reduce the future cost of the dividend.

Even the reduction in dividend growth is poasitive as this will reduce the strain on the balance sheet.

My only concern is that they do not then expand the share count by issuing too many shares to managers and employees.

Of couse this all assumes the company continues to perform in a satifactory manner.

LTI

I wonder if you were trying to sucker other people in before you sold?

Motorbikez

What is the yield on the stocks you invest in, what is the yield you get on your capital invested?

Actuary 63

It is not likely that the practice of buying cumd and selling xd has ended.

If you analise the fund as we did AAIF I guess you will find significant overdistribution compared to the underlying holdings. I quote top 10 average yields and pre xd earnings the conclusion is clear from these two peices of information. Despite the welcome recovery in capital price a dividend cut is still likely if not inevitable.

Security Name Yield Weighting Yield*Weighting Weighted Yield

Taiwan Semiconductor Manufacturing1 1.64% 5.07% 0.0831%

Samsung Electronics2 1.88% 3.52% 0.0662%

Hyundai Motor2 5.03% 3.17% 0.1595%

Samsonite 2.98% 3.13% 0.0933%

Samsung Fire & Marine 5.17% 3.11% 0.1608%

DB Insurance 5.32% 2.86% 0.1522%

MediaTek 5.42% 2.86% 0.1550%

Midea Group 4.29% 2.69% 0.1154%

BHP Group Limited 5.46% 2.66% 0.1452%

VinaCapital Vietnam Opportunity Fund 2.36% 2.47% 0.0583%

Top Ten Investments 31.54% 1.1889%

Totals Simple yield 3.96% Weighted Yield 3.75%

NAV 223.20

Share price 227.00 Yield 10.84%

Dividend 24.40

We have a simple yield of 3.96% and a weighted yield of 3.75% from top 10 holdings.

"As at close of business on 23 April 2024, the unaudited net asset value per share, calculated in accordance with the AIC formula (including current financial year revenue items and excluding shares held in treasury), was 227.8p.

As at close of business on 23 April 2024, the unaudited net asset value per share (excluding current financial year revenue items and shares held in treasury) was 224.7p."

Pre xd earnings are 3.1p

"As at close of business on 26 April 2023, the unaudited net asset value per share, calculated in accordance with the AIC formula (including current financial year revenue items), was 248.4p.

As at close of business on 26 April 2023, the unaudited net asset value per share (excluding current financial year revenue items) was 246.8p."

In 2023 the pre pre xd earnings were 1.6p.

So 3.1p earned pre May dividend compared to 1.6p in 2023 certainly looks good without digging into the numbers. We might check how those earnings are generated in the report.

Also note that the majority of HFEL earnings are earned in the second half of the year 22p or so of earnings required here to cover the dividend.

Actuary63,

I have always had respect for you technical ability and you have put more effort into your investigation than I did.

However by different methods we both come up with a similar number for capital return 1.4% against 1.5 - 1.6% but then I had a lower portfolio yield. These numbers I think can now be taken as a reasonable estimate of AAIF capital return.

Name Yield Weighting Yield*Weighted Yield

TSMC 1.67% 8.20% 0.136940%

Samsung Electronics (Pref) 2.71% 6.60% 0.178860%

BHP Biliton 5.30% 4.50% 0.238500%

DBS 5.33% 3.50% 0.186550%

Oversea-Chinese Banking Corporation 6.08% 3.30% 0.200640%

MediaTek 4.60% 3.00% 0.138000%

Power Grid Corp 4.35% 2.80% 0.121800%

Venture Corporation 5.26% 2.60% 0.136760%

United Overseas Bank 5.80% 2.50% 0.145000%

Rio Tinto 5.37% 2.40% 0.128880%

Totals Average yield 4.65% 39.40% 1.611930% WEIGHTED YIELD 4.09%

NAV 238.59 Yield to assets 5.00%

Share price 208.00 Yield to share price 5.60%

Earnings 11.97

Dividend 11.75

We can see that the weighted yield for the top ten holdings is 4.09%. I am assuming these fundamentals are typical for the rest of the holdings. If charges were taken from income rather than capital the fund would yield about 3.2% we might want to add about 0.25% = 3.45% for gearing in favourable conditions.

The yield to NAV is about 5% therefore 1.6% let us say 1.5% of our income return one way or another will come from the capital account.

Many UK income funds distribute more than the yield on the underlying assets. There is no free lunch here and part of the income return from many funds is simply a return of our own capital.

2023/24 Final Results

Managers seem somewhat candid about the way the fund is managed.

Good news is that the total return matched the benchmark return. Of course the reduction in management fees is positive for the fund. Earnings did exceed dividends as expected but I think we need to dive deeper into those earnings.

As the managers reported a part of those earnings were from companies that paid a special dividend. Of course this dividend will not be repeated in following years. Furthermore as the Managers report some stocks were sold ‘xd’ this special dividend. The share price will obviously fall leaving less capital to replace this income somewhat weakening the income account in future.

It will be reasonable to estimate that future earnings growth will at best fall or we may have a year or two of lower earnings depending on management and market conditions.

Turnover at 40% is a little high for my liking. This implies the entire portfolio will be replaced in 2.5 years.

Maybe some of you have a different opinion.