How do thaey do that yield?21 Nov 2009 01:58
I've held this IT for quite a number of years and done well by it. What bothers me now is the size of the dividends - well over 8%. How do they do this? - there are almost no shares in their portfolio paying at this level. All I can think of is
1. lending shares to short sellers - that can make a bit, and
2. They have a revenue reserve which was running at 17.6 pence per share, which they could draw on to keep the dividends up. I assume they must be doing (2.). In which case it would be interesting to know how fast that is depleting and how long they can keep it up.
Something like Edinburgh IT has a broadly similar portfolio but pays out way less.
If it looks to good to be true then it usually is.