Last checked at 
20 Dec 2021 07:00
London, UK, 20 December 2021
Edison issues review on Henderson Far East Income (HFEL)
Henderson Far East Income (HFEL) is differentiated from its Asian income peers by its high dividend yield (c 8% versus a peer average of c 4%), fully covered by income in each of the last 10 years except FY21 (99% covered). During the COVID-19 period, HFEL's capital performance has come under pressure as investors have eschewed the sort of cash-generative companies with high or growing dividends favoured by manager Mike Kerley, preferring the allure of companies promising future growth. However, HFEL's own shareholders remain keen on its consistent income generation, keeping it trading close to par or at a small premium to NAV with more than 8.3m new shares issued in the past 12 months.
While HFEL's capital performance has suffered since early 2020, its attractive and (almost) fully covered dividend yield continues to attract investors, driving a small average premium to NAV and regular share issuance. We see considerable appeal for those seeking investment income. As an example, a £200k annuity could pay a lifetime income (not index linked) of £7,700 in return for a total loss of capital, whereas the same amount invested in HFEL at a conservative 6% dividend yield would pay an annual income (not guaranteed) of £12,000. Over the long term HFEL seeks capital appreciation as well as income, and £200k invested in the trust 10 years ago would be worth £223k today, having also generated £151k in dividends.
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