| Are Big Dividend Paying Shares And Investment Trusts Too Boring? 1 Year Performance Of My Holdings.

30th Aug by ken mitchell

61 comments 3868 reads

Big dividend paying investments seem to be a minority interest among smaller investors, but I’ve been a big fan for a good while. Is this enthusiasm for them justified or does it take too long for them to give a good return? Rather than provide longer term evidence (John Lee, the first ISA millionaire who holds shares paying him over 100% just from the annual dividend and where the share has multibagged has done that) one year performance is perhaps a more useful guide for those wondering whether extreme patience is needed.

So below is the 1year performance of the shares and Investment Trusts I hold where the dividend at the current share price is 6% or more. I have excluded the holdings where I get a very big dividend thanks to that share or Investment Trust doubling and more but where the dividend at the current share price is under 6%.

All the gains and losses shown below are EXCLUDING those big dividends on top.

INVESTMENT TRUSTS.

GCP Asset Backed Income Fund (LON:GABI) Up 35%. Dividend 8.1%

Tritax EuroBox (LON:EBOX) Up 21% Dividend 6.3%

abrdn Property Income Trust (LON:API) Up 19% Dividend 7.2%

CQS New City High Yield Fund (LON:NCYF) Up 18% Dividend 8.7%

Alternative Income REIT (LON:AIRE) Up 17% Dividend 8.3%

Twentyfour Select Monthly Income Fund (LON:SMIF) Up 15% Dividend 8.7%

Amedeo Air Four Plus (LON:AA4) Up 10% Dividend 14%

Schroder Real Estate Investment Trust (LON:SREI) Up 14% Dividend 6.8%

Chelverton UK Dividend Trust (LON:SDV) Up 12% Dividend 7.5%

GCP Infrastructure Investments (LON:GCP) Up 11% Dividend 8.8%

Henderson Far East Income (LON:HFEL) Up 4% Dividend 10.7%

Henderson High Income Trust (LON:HHI) Up 4% Dividend 6.2%

abrdn Equity Income Trust (LON:AEI) Up 3% Dividend 7.1%

Foresight Solar Fund (LON:FSFL) Up 2% Dividend 8.5%

Supermarket Income REIT (LON:SUPR) Down 3% Dividend 8.1%

Bluefield Solar Income Fund (LON:BSIF) Down 5% Dividend 8.1%

NextEnergy Solar Fund (LON:NESF) Down 7% Dividend 10.5%

Aew UK Reit (LON:AEWU) Down 5% Dividend 8.5%

Of the 4 losing Trusts none are down over 1 year if including dividends. And just as an example I bought

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Cruachan Power Station: 'The Hollow Mountain'

Cruachan Power Station, affectionately known as the ‘Hollow Mountain’, resides deep inside Ben Cruachan mountain in Argyll and Bute.
https://www.drax.com/about-us/...

A magnificent bit of engineering in the perfect place for it that can produce 440 MW but to store the necessary amount to produce The most the grid has ever needed is 61 GW which would need a 120 of these

Will leave it there this subject needs its own thread really

The Phoenix

5th Sep

You often find the people running these story stocks don't really know what the objective of the company is but most of the time they are brilliant salespeople who can sell a great story to fund managers/investors to keep the monies coming in for 3-10 years before the game is normally up.

OldSchool05

9th Sep

Hi Ken, thanks for generating a good debate on this thread. I would say your results over the year are good, especially if you are looking for income from your portfolio. I wonder if you could get a similar result from fewer holdings, but if you are happy to monitor and add speculatively on dips then it can make a good return.

I wanted to add a note on Harbour Energy (LON:HBR) which I hold and completed its acquisition of the Wintershall Dea asset portfolio last week. I have been waiting for this transaction to complete as it has the benefit of diversifying the company away from the difficulties of UK north sea oil and gas. What struck me about this was that the $11.2 billion deal was 40% funded by the issuance of Harbour Energy (LON:HBR) equity with a valuation of £3.60 per share to BASF (subject to 6 month lock up). The current share price in the market is £2.76 per share. One would hope that this is a good indicator of the Harbour Energy (LON:HBR) stock being under-valued at present...

ken mitchell

Hi OldSchool05.

Thanks.

I would probably get a better result if I held fewer holdings, and those in my header post are only the high dividend Investments in our portfolios. I’ve never had as many holdings before. I’ve already posted why I have (e.g see my post here on September 3rd in a reply to a similar post from timarr).

In addition to needing a portfolio that hopefully will look after itself in the event of my demise, the bigger the number of portfolio holdings so the less impact two or three disastrous holdings will have. A very large portfolio becomes more like a quasi Investment Trust and too many holdings increases the chances of roughly matching markets and benchmarks but decreases the chance of significant outperformance. BUT my emphasis on cashing in on the once in decades opportunity to lock in big annual returns (well over 10% a year for a few of my holdings) mean big regular substantial income and I’m not bothered if that comes at the expense of the portfolio outperforming.

As for Harbour Energy (LON:HBR) I agree with you about the potential upside and why, and luckily bought ahead of the bounce after the Wintershall Dea acquisition. Unfortunately Serica Energy (LON:SQZ) which is my biggest loser also needs to focus now beyond the North Sea. They report tomorrow so we’ll know more about the case for holding or not or averaging down very soon. Fingers crossed.

Tim Boucher

10th Sep

Serica Energy (LON:SQZ) has reported, and ~4% drop today. I can't decide whether this is time to average down , or to wait until the tax regime gets even worse in the Autumn budget....

As Tim Boucher has posted, the share price reaction to Serica Energy (LON:SQZ) Results today is to send the already bombed out share price even lower and down 4p to just 112p just now. A bit on the Results after a brief rant!

Obviously the key reason for Serica’s bombed out share price is the stupid North Sea oil policy of the current Government, that will cost big job losses along with many £ billions in lost revenues and mean importing that oil (probably from Countries who pollute more). The previous Government policy and huge windfall tax etc was bad enough and the big share price falls because of it started long before the Election. But the clueless Milliband being given his head means it’s now even worse, as explained in the Serica Results commentary today, and that’s mostly behind the relentless share price falls.

I’ll probably continue to hold until the Budget as imo neither Rachel Reeves nor Kier Starmer are idiots (unlike Milliband who is) so there might be an outside chance that there will be some reigning back of the current extreme North Sea idiocy. And if there is that could give the share price a good lift.

Also the car industry is facing similar idiotic policy with for starters those huge fines for not hitting electric car sales targets. This idiocy looks unsustainable but whether the Budget makes it even worse or is the start of common sense prevailing is a 50/50 bet.

Anyway briefly to a few points from the Results.

1. Free cash flow is down and cash itself down from £562 mIllion to £362 million and net cash down from £292million to £131million.

2. A LOT of cash is being spent on the massive annual dividend! The interim has been held at 9p (that’s an 8% yield) . The final is 13p IF HELD. That’s a 20% yield at the current price and is surely unsustainable?

3. Serica Energy (LON:SQZ) have so much committed to the North Sea. This comment from the commentary suggests no non North Sea acquisition is imminent.

“The Company has been and will continue to be very active in screening cash-generative M&A opportunities at home and in the wider North Sea, as well as increasingly in other geographies, but we will remain disciplined and will only conclude such transactions where we are confident of the potential to deliver value to shareholders.”

So much bad news is priced in, yet still the share price hasn’t bottomed!

Is Serica Energy (LON:SQZ) a sitting duck for a bid? Probably not before the Budget.

Whether to stick with it or cut the loss is a tricky decision…..but perhaps less so for longer term holders who have now had so much of the stake back in dividends.

Maybe there are negatives I haven’t spotted? If so please post.

EDIT.

Serica Energy (LON:SQZ) is now getting covered on the Small Cap Report threads including a good balanced post from johnsmith68.

af20001

You obviously have more faith in these clowns than I do Ken!

A windfall tax is all very well in the case of a monopolized market, but when the so-called windfall is due to the actions of the politicians, who themselves created the energy shock & the resulting high prices it's a bit much to penalize the likes of Serica Energy (LON:SQZ) with a 78% tax rate.

You might well be right about me having too much faith in the new Government seeing sense af20001.

Unfortunately these days there are so many closed minds on so many things including that there are plus and minus points for every share, and this seems to be at its most extreme on politics.

e.g comments we’re seeing now that this is the worst Government ever? How can it be after only 2 months and before it’s known whether or not they learn from recent big mistakes?

Is this Government already worse than anything the previous Government threw at us like the Truss chaos? And the £48 billion wasted on useless PPE. That’s twice the current black hole Labour have supposedly found and that made worse by over generous pay settlements done far too quickly.

Isn’t the big problem the very low quality and experience of so many of our politicians in all Parties, who unlike in the past have no experience outside of politics. . That’s got worse ever since the expenses scandal and more recently the abuse and threats politicians now get, meaning police protection for some. That puts off cleverer people with business and other experience, not prepared to face it. Hence the Labour and Conservative giants of the past are a thing of the past. Truss surely wouldn’t have got near to being elected as Tory leader and as a result become Prime Minister in those days.

The media is just as bad. The sudden stopping of the winter fuel allowance (which does hit some pensioners hard but doesn’t the many including £multi millionaires and people with sizeable investment portfolios who can easily afford to manage without it) has dominated news headlines. Meanwhile the crazy current North Sea policy that will cost £billions in lost revenues etc (compare that with the piffling £1 billion saved by stopping the winter fuel allowance) hardly gets any coverage.

Why I’ve not given up on Serica Energy (LON:SQZ) is because Starmer and Reeve are not idiots and Rachel Reeve is arguably one of the best qualified Chancellors for a long time, including her Bank of England experience. And though the media don’t cover it, surely the Government are getting endless pressure from the oil industry, including from Serica Energy (LON:SQZ) to see sense.

Hence I’m prepared to wait for the Budget and risk yet further share price fall between now and then.

Charles Mitchell

Agree Ken. At least we have a Government who give the impression of being at work. I am personally sitting on my portfolio and will watch with interest.

bullhead

This comment is under review

timarr

Hi ken

Meanwhile the crazy current North Sea policy that will cost £billions in lost revenues etc (compare that with the piffling £1 billion saved by stopping the winter fuel allowance) hardly gets any coverage

I'm not convinced that's true:

Increased taxes are currently increasing government revenues and there's no obvious reason why oil companies should reduce their existing operations because their overall returns are lower;
Development of future oilfields will clearly stall but as they take 5 to 10 years to bring online that doesn't impact current revenues, only future ones. If in 10 years time we haven't figured out how to reduce our fossil fuel usage we're probably looking at worse problems than reduced oil revenues;
Regardless of how ingenious we are it's clear that fossil fuels will be exhausted in the lives of our grandchildren, if not our children. As depletion gets closer market forces will increase the open market price for oil and simultaneously make the costs of moving to alternatives ever higher:
- Therefore it makes sense to try to get ahead of that curve by aiming for net zero early, regardless of your views on global warming, as moving sooner will be less expensive than later on;
- The value of any oil left in the ground will increase over time, as fossil fuels deplete.

As a Serica Energy (LON:SQZ) holder it's not a comfortable experience, but I don't think it's a position entirely without merit, even from an economic perspective, if we look over the immediate horizon.

JollyBiologist

Hi Ken. I understand people getting upset at the thought of their shares in North Sea Oil companies getting hit by government policy. But a lot of the arguments made in support of North Sea Oil are based on mis-information. Here's just a few of them:

North Sea Oil gives us energy security

The UK goes through around 578,000,000 barrels of oil a year. The North Sea has reserves of around 2,754,685,000 barrels - or 5 years' worth of UK consumption. Not exactly a long term solution.

Ah, but North Sea Oil and Gas is OUR oil and gas, so it makes energy bills cheaper!

North Sea Oil is extracted by private companies (e.g. the Rosebank Oil field is operated by a Norwegian firm) and sold on the international market - which is where the UK buys its oil/gas. In any case, North Sea production is so small, relative to everywhere else, that it cannot have influence on international prices.

The longer term answer, for energy security at least - though maybe not cheaper prices - is to increase efficiency (e.g. insulation) and invest in renewables (wind currently generating 30% of UK electricity) and, crucially, storage. Not only does this increase energy security, but it contributes to our international commitments and obligations to reduce carbon emissions.

You might not agree with this as policy, you might not like Labour (though I think it's been established that Stockopedia is not the place to endlessly moan about it), but there is method and reason in their apparent madness. And given that the world economy must decarbonise in the coming decades, there's considerable economic advantage in being at the forefront of this technology.

Personally, I like a government that takes a long term view and ministers who understand their brief - which Miliband, whatever his limitations in bacon sandwich eating - clearly does (witness his evisceration of Johnson at PMQs a few years back).

All the best

Paul

Thanks Timarr. I am not a holder os SQZ but looks interesting- even if the dividend was cut.

Hi Paul

Thanks for your message I am actually in favour of renewable power and have held shares in Drax (LON:DRX) Greencoat UK Wind (LON:UKW) Renewables Infrastructure (LON:TRIG)although I own none of them now mainly for the reasons I have stated elsewhere

I do believe you think the government policy is for the best and in everyone’s interests the trouble is it’s hard to make it work in practice the trouble is you need so much redundant capacity as solar produces little in winter and when the wind doesn’t blow we get no wind power

There is stored energy

The best way to store energy is pumped hydro Drax (LON:DRX) has the biggest system that does that in the UK

https://www.nationalgrid.com/e...(the,TWh%20are%20generated%20and%20consumed.

Thanks for the thought provoking contrary replies timarr and Jollybiologist which include info I didn’t know and others who are so critical of Milliband in particular, possibly didn’t know either. BUT. I’m not anti the move to green/renewable energy and hold green Investment Trusts like NextEnergy Solar Fund (LON:NESF) and Bluefield Solar Income Fund (LON:BSIF) but simply the inordinate rush to get there before alternatives are ready, along with reverting to 2030 when the previous Government had realised that was a mistake and moved to a far more sensible 2035.

Agree that longer term there is no future for North Sea, but why abandon it while there are several years to go before that happens and valuable oil resources to be exploited? And fwiw I don’t agree with punishing Companies like Serica Energy (LON:SQZ) with punitive windfall taxes. There is more of a case for them with the big oil shares like BP (LON:BP.) and Shell (LON:SHEL) who, if they can afford to spend multiple £billions on buybacks, can afford windfall tax.

Trident

13th Sep

A bit off topic in reference to Portfolio's and dividends, but I recommend as a good and instructive read Ed Conway's: Material World, about some key mineral resources the world relies on in some surprising ways.

John LA

16th Sep

all I can say is well done your research and selections are on point as they say. Serica is a great company well managed really great sub surface team, spiked by the government and the insane net zero policy

littledavesab

7th Oct

A bit late now but I remember Mr Train on an IC podcast either Dec 2022 or 2023 and I was hit by how beaten up he sounded on UK stocks. eg he could only choose Burberry but a worldwide manager could choose LVMH etc

Tue 1:08pm

Any thoughts on Liontrust Asset Management (LON:LIO) SP drops recently - seems an excessive punishment for their continued outflows, although as they have several UK funds they could be seen as a leveraged play on UK stock price recovery. I'm looking for a floor to top up at, but each day a new low is reached!

Tue 3:15pm

I’m still holding Liontrust Asset Management (LON:LIO) but am now down 26%, though the big dividends have reduced that loss. The excuses for the outflows each time they update are wearing a bit thin now.

Is a dividend cut coming? LThe yield is 15% at the current 480p share price. I’m going to continue to hold as the share price falls look excessive now, and this is a sector that has seen bids. I don’t want to sell and then a bid the following day! But Liontrust Asset Management (LON:LIO) is the weakest of the Fund Managers I hold with e.g Polar Capital Holdings (LON:POLR) doing much better and with more diversified Funds too.

Tue 3:36pm

Thanks Ken - I've continued to hold as well (~12% loss), although I have to tell you that I had the Ken voice in my head at 515p ("sell on the first sign of bad news"). I should have listened, as buying back in at 480p would have been nice!

Are big dividend paying shares and Investment Trusts too boring? 1 year performance of my holdings.

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Ken Mitchell

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Cruachan Power Station: 'The Hollow Mountain'

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