Broad­en­ing your hori­zons in the hunt for in­come

In­vest­ment trusts en­able you to ad­dress a whole world of dif­fer­ent div­i­dend op­por­tu­ni­ties

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An in­vestor on the hunt for div­i­dends does not have to limit their search to the UK. The lat­est global div­i­dend in­dex from as­set man­ager Janus Hen­der­son shows global div­i­dends surged 12.9% in the sec­ond quar­ter of 2018 reach­ing a record $497.4bn.

Div­i­dends hit new record lev­els in 12 coun­tries, in­clud­ing France, Ja­pan and the US, which are among the largest con­trib­u­tors to the in­dex. The in­dex it­self closed the quar­ter at a fresh high of 182, mean­ing global div­i­dends have risen by more than 80% since 2009.


In­vest­ment trusts are a sim­ple way of ac­cess­ing the in­come which is pour­ing in from around the world. Ex­am­ples of trusts with a fo­cus on global div­i­dends in­clude JPMor­gan Global Growth & In­come (JPGI) and Hen­der­son In­ter­na­tional In­come (HINT).

The lat­ter has been steered by Ben Loft­house since its launch in 2011. It targets a sim­i­lar yield to UK eq­uity in­come trusts but ex­cludes the UK from its port­fo­lio en­tirely.

The ap­proach is to re­main gen­uinely di­ver­si­fied so that not one of its three re­gional port­fo­lios, in North Amer­ica, Europe and the Far East, ac­counts for more than 50% of its hold­ings.

Loft­house is on the hunt for value op­por­tu­ni­ties – look­ing to buy unloved stocks which can de­liver cap­i­tal growth and ris­ing div­i­dends. Cur­rent hold­ings in­clude Coca-Cola and Deutsche Telekom. The shares cur­rently trade at a 0.7% discount to net as­set value (NAV) and the on­go­ing charge is 0.9%.

The JPMor­gan trust is man­aged by Jeroen Huysinga and Ti­mothy Wood­house. In­ter­est­ingly, they in­vest in a port­fo­lio of global stocks which pro­vide the best to­tal re­turns rather than those pay­ing the big­gest div­i­dends. To­tal re­turn refers to losses or gains from shares proce change plus div­i­dends.

By us­ing prof­its booked on in­vest­ments along­side the un­der­ly­ing yield from th­ese com­pa­nies, Huysinga can gen­er­ate a healthy div­i­dend yield for in­vestors in the re­gion of 3.8%. Top hold­ings in­clude Google­owner Al­pha­bet, soft­ware firm Mi­crosoft, in­surer Pru­den­tial (PRU) and pay­ments busi­ness Visa.

The fund trades at a mod­est 1% pre­mium to NAV and has an on­go­ing charge of 0.57%, ris­ing to 1.23% with per­for­mance fees (charged if it hits cer­tain per­for­mance targets).


As well as look­ing to dif­fer­ent


ge­ogra­phies for in­come, you could con­sider us­ing in­vest­ment trusts to gain ac­cess to a va­ri­ety of dif­fer­ent as­set classes such as in­fra­struc­ture.

The re­cent rec­om­mended £1.45bn takeover bid for John

Laing In­fra­struc­ture (JLIF) by a pri­vate eq­uity con­sor­tium has helped lift other in­fra­struc­ture trusts such as HICL In­fra­struc­ture

(HICL) and BBGI (BBGI) and led to spec­u­la­tion of fur­ther M&A in the space.

Th­ese trusts had been lan­guish­ing at dis­counts to NAV thanks to the per­ceived risk of a crack­down on pri­vate in­volve­ment in big pub­lic projects.

How­ever, the John Laing bid demon­strates the ap­peal of the highly vis­i­ble cash flows as­so­ci­ated with in­fra­struc­ture projects, which are of­ten linked to, and there­fore pro­tected from, inflation.

An­other al­ter­na­tive as­set class linked to in­fra­struc­ture and which can of­ten gen­er­ate a healthy in­come is re­new­able en­ergy.

The col­lec­tion of in­vest­ment trusts in this area prin­ci­pally in­vests in wind farm and so­lar projects. Spe­cific ex­am­ples in­clude The Re­new­ables In­fra­struc­ture Group (TRIG)

which has a bias to­wards projects which are al­ready in op­er­a­tion in the UK and north­ern Europe. It gen­er­ates a yield from this port­fo­lio in the re­gion of 5.9%. Fore­sight So­lar (FSFL), which fo­cuses on ground-based so­lar as­sets, pre­dom­i­nately in the UK, also of­fers a prospec­tive yield of 5.9%. The in­vest­ment trust has nearly 40 as­sets in the UK and a hand­ful in Aus­tralia. It raised £48m in an over-sub­scribed share plac­ing this sum­mer to in­vest in new projects. (TS)


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