There is a residual holding in LBOW.

RGL are selling property to reduce their LTV, which will mean less income so expect a dividend reduction.

AGR only states a NTAV figure.

Current corporate action.

ADIG

TENT

VPC

Ian Cowie: this investment trust has a 7.4% yield and a big tailwind
Our columnist explains why a pledge this week by the Labour Party shows the continued direction of travel for a long-term trend that will benefit one of his investment trust holdings.

by Ian Cowie from interactive investor

It’s an ill wind that blows no good and renewable energy investment trusts stand to gain from wars in Gaza and Ukraine. The explanation is that violent conflict is disrupting the global supply of liquefied natural gas (LNG) and oil, boosting the strategic and market value of the energy self-sufficiency that solar and wind power can provide.

Sad to say, no amount of wishing will make the British Isles as sunny as Spain and so we have to make the most of what environmental energy we have got. That’s why this week the Labour Party leader pledged to invest £8.3 billion building offshore floating wind farms.

Sir Kier Starmer told voters in Holyhead, North Wales: “In an increasingly insecure world, with tyrants using energy as an economic weapon, Britain must take back control of our national energy security.

“Here in Wales, the potential for offshore wind is enormous, and the UK Tory government is squandering it. With public investment we can unlock billions more in private investment to turbocharge jobs and growth for Wales.”

To be fair to the Tories, they have also noticed the attractions of using wind to generate electricity. Former prime minister Boris Johnson briefly enthused about turning Britain into “the Saudi Arabia of wind”.

Unfortunately, Johnson soon moved on to the next photo call and hopes of government help for wind farms evaporated as swiftly as Labour shadow chancellor Rachel Reeve’s scheme to spend £28 billion per annum on a “green investment plan”. She lost interest when an expert pointed out that this was going to cost, er, £28 billion per annum.

Coming down from the clouds of hot air emitted by politicians, some renewable energy investment trusts are already generating green electricity – and decent dividends – here and now. Step forward, Greencoat UK Wind
UKW

Income-seeking investors might be more impressed by UKW’s success in raising dividends at least in line with inflation since the trust was formed in 2013. Independent statisticians Morningstar calculate UKW shareholders’ income has increased by an annual average of 8.1% over the last five years, to produce a current yield of 7.4%.

the self-descriptive pooled fund with total assets of £4.8 billion that claims its wind farms produced 4,362 gigawatt hours (GWh) of electricity last year, or sufficient to power more than 1.8 million homes.

It is important to beware that dividends can be cut or cancelled without notice and the past is not necessarily a guide to the future. However, if that historic rate of ascent is maintained, it would double shareholders’ income in less than nine years.

No wonder UKW is the top performer in the Association of Investment Companies (AIC) “Renewable Energy Infrastructure” sector over the last decade and five years with total returns of 126% and 29% respectively, although it continues to trade at a -17% discount to net asset value (NAV).

As discussed here before, a “perfect storm” of rising interest rates elsewhere, the Conservative government’s windfall tax on North Sea energy producers – and a bungled electricity auction – placed the sector under a cloud and pushed UKW into a negative “return” of -7.8% over one year.

That short-term setback left the one-year top slot vacant for Triple Point Energy Transition Ord
TENT

to grab with a total return of 5.26%. However, this £97 million fund will be too small and illiquid for many wealth managers and it lacks any five or 10-year track record.

Over the long term, UKW’s closest rivals include Bluefield Solar Income Fund
BSIF

which despite the British weather, produced total returns over the last decade, five years and one-year periods of 83%, and 6% before a shocking loss of -21%.

Another rival, Renewables Infrastructure Grp
TRIG

delivered 69%, 10% and -16% over the same three periods.

BSIF yields 8.8% dividend income, rising by nearly 3% per annum, and trades at a -27% discount to NAV. Meanwhile, TRIG yields 7.7%, rising by an annual average of just over 2%, and trades at a -24% discount to NAV.

Against all that, climate change deniers continue to argue that wind farms are expensive and unreliable in a debate that often generates more heat than light.

How this ‘best ideas’ strategy has beaten the global index
Under-the-radar stock pickers to back this tax year
By contrast, the biggest fund manager in the world this week called for a more “pragmatic” approach to energy strategies. Larry Fink, chief executive of BlackRock, reported in his annual letter to investors that he visited 17 countries last year, meeting senior figures from business and politics. He observed: “These leaders were far more pragmatic about energy than dogmatic. Nobody will support decarbonisation if it means giving up heating their home in the winter or cooling it in the summer. Or if the cost of doing so is prohibitive.”

On the fossil fuels versus renewable energy debate, Fink concluded: “The world still needs both.” Such even-handed common sense won’t impress the keyboard warriors but seems our best hope of keeping warm and in work, whatever happens next in Gaza and Ukraine.

Ian Cowie is a freelance contributor and not a direct employee of interactive investor.

Ian Cowie is a shareholder in Greencoat UK Wind (UKW), as part of a globally diversified portfolio of investment trusts and other shares.

This week’s Discount Watch sees 32 Investment Companies trading at 52-week high discounts. Down five from last week. Three of which are trading at discounts of over 60%.

By
Frank Buhagiar

We estimate there to be 32 investment companies whose discounts hit 12-month highs over the course of the week ended Friday 22 March 2024 – five less than the previous week’s 37.

Interest rate sensitive sectors such as renewables, equity income and UK smallers all well represented among the 32 names (see table below). The prospect of interest rate cuts being been pushed further out this year weighing on sentiment perhaps? After all, Q1 is drawing to a close.

The top-five discounters

Investment Company Sector 52-week high discount

Gresham House Energy Storage (GRID) Renewables -68.69%
LMS Capital (LMS) Private Equity -66.90%
Hydrogen One Capital Growth (HGEN) Renewables -60.19%
Menhaden Resource Efficiency (MHN) Environmental -42.58%
Apax Global Alpha (APAx) Private Equity -35.70%

The full list

Investment Company Sector 52-week high discount
Pacific Assets (PAC) Asia Pacific -13.76%
Asia Dragon (DGN) Asia Pacific -19.53%
Schroder Asian Total Return (ATR) Asia Pacific -8.91%
Fidelity Asian Values (FAS) Asian smaller companies -12.03%
Real Estate Credit Investments (RECI) Debt -18.93%
Utilico Emerging Markets (UEM) Emerging markets -19.99%
Impax Environmental (IEM) Environmental -10.83%
Jupiter Green (JGC) Environmental -27.23%
Menhaden Resource Efficiency (MHN) Environmental -42.58%
Baillie Gifford European Growth (BGEU) European -15.97%
European Assets (EAT) European smaller companies -13.21%
Ruffer (RICA) Flexible -7.08%
Schroder BSC Social Impact (SBSI) Flexible -19.94%
Baillie Gifford Shin Nippon (BGS) Japan -17.58%
Baillie Gifford Japan (BGFD) Japan -13.14%
North American Income (NAIT) North American equity -15.99%
LMS Capital (LMS) Private equity -66.90%
Apax Global Alpha (APAX) Private equity -35.70%
Downing Renewables and Infrastructure (DORE) Renewables -33.06%
Gresham House Energy Storage (GRID) Renewables -68.69%
Hydrogen One Capital Growth (HGEN) Renewables -60.19%

Weekly 360 – the week’s Investment Trust results
According to the AIC which fund is the third best performing investment trust since the launch of ISAs 25 years ago? And which Investment Trust has bounced back impressively after a difficult 2022?

By
Frank Buhagiar

Octopus Renewables Infrastructure (ORIT) sends a message?

ORIT’s full-year highlights include a 2.1% NAV Total Return, 28.6% total return since the Dec 2019 IPO; and a 4% increase in the 2024 dividend target. Chairman Phil Austin thinks “ORIT has demonstrated resilience”. Meanwhile, on the previously announced possible tie-up with Aquila European Renewables, Austin thinks “a larger, more liquid combined vehicle would benefit both sets of shareholders and help address some of the continuing challenges in the investment trust sector.” A message not just to ORIT shareholders?

Liberum sees “exceptional earnings visibility for investors and together with the NAV upside from declining discount rates makes us BUYers of the fund with a TP of 115p.”

US Solar Fund (USF) on a firmer footing

USF puts a 20% decline in NAV to $258.2m for the year down to “discount rate widening ($36.7m), updates to operating cost assumptions ($41.9m) and dividend payments ($18.7m)”. Chair Gill Nott is happy to see the back of 2023 “The last 12 months will be remembered as a challenging year.” Wasn’t all bad though “The end of 2023 sees the Company in a stronger position having secured a new Investment Manager, Amber”, putting the fund on a firmer footing.

Numis “The Board and manager are currently analysing available options to return capital, including share buybacks, as well as the refinancing of existing debt to optimise capital structure and improve operational cash flows.”

Princess Private Equity (PEY), farewell Princess hello Partners?

PEY clocked a 32.6% share price total return for the full year. NAV performance was more sedate, including dividends paid, NAV total return came in at 1.8%. Short and sweet announcement, although there was room for a detailed capital allocation statement and news of a possible name change to Partners Group Private Equity Limited.

Jefferies focuses on the capital allocation policy “once the share price is at a discount of more than or equal to 30% to the last reported NAV, 75% of ‘Free Cash Flow’ will be used to acquire issued shares until the discount is less than 30%. Where the discount is between 20% and 30%, 50% of ‘Free Cash Flow’ will be used to acquire issued shares until the discount is less than 20%.” Everyone get that?

Baillie Gifford Shin Nippon (BGS) has been here before

BGS’ new Chair Jamie Skinner “had hoped to report an improvement in performance by the end of it. However, this has not materialised. ‘NAV’ per share declined by 14.9% and share price by 20.5%. The comparative index (MSCI Japan Small Cap Index, total return in sterling terms) appreciated by 6.3%.” The investment managers blame the underperformance on the outperformance of Japanese large-cap value stocks – BGS has a philosophy of investing in high growth small caps. But the investment managers have been here before and think “that investor interest will refocus on the prospects for dynamic small cap growth companies in Japan”.

Winterflood “We think that there is scope for a notable re-rating if underlying NAV performance improves, while the newly introduced performance-related tender offer should also be supportive for the rating over the next three years”.

JPMorgan “Our Overweight recommendation has proven to be somewhat overoptimistic, but we are inclined to give the managers the benefit of the doubt”.

JP Morgan UK Small Cap Growth & Income (JUGI) hearing positive noises

JUGI had a busy half year – name change, merger with JPMorgan Mid Cap – but still managed to outperform. Chairman Andrew Impey “total return on net assets of +8.5% outperformed the benchmark which returned +1.0%.” As for the outlook “Overall the message we are hearing from our holdings is a positive one”.

Winterflood “JUGI will introduce an enhanced dividend, paying out 4% of NAV as at 31 July each year”.

VinaCapital Vietnam Opportunity (VOF) broadly unchanged

VOF’s NAV per share for the half year was broadly unchanged. Chairman Huw Evans said: “Taking account of the dividend paid in December, the total return was 1.9% in USD terms and 1.0% for sterling investors.” Still beat the index though which was off 1%. Evans thinks things are looking up “liquidity is beginning to return to the market and confidence is being restored. Against this background, the Board is cautiously optimistic”.

Numis “The NAV is up 8.5% year to date, however share price returns have been impacted by a large holder reducing exposure to Vietnam. This has resulted in the shares trading on a c.23% discount to NAV, which we believe offers an attractive entry point.”

BioPharma Credit (BPCR) delivers again

BPCR posted a 1.5% increase in NAV per share from 101.39 cents to 102.93 cents for the full year, while total dividends paid amounted to 10.21 cents per share. The investment managers “are happy to have again delivered dividends that were in excess of our annual target with 10.21 cents per share paid to shareholders as a result of income received during the period”.

JPMorgan sounds underwhelmed by the new Discount Control Mechanism (DCM) “We believe that NAV total returns will be attractive and although the new DCM is clearly softer than before, it is more flexible, and on balance we remain Overweight.”

JPMorgan American (JAM), comfortably ahead

JAM clocked up a 24.7% NAV total return for the year, comfortably ahead of the S&P500’s 18.9%. The longer-term performance is not bad either “Since the change in investment approach on 1st June 2019 to the end of February 2024, JAM has generated a NAV total return of +116.3% compared with +97.3% for its benchmark”.

JPMorgan “relative to peers we continue to like JAM that offers a diversified proposition and one consciously balanced between value and growth”.

Fidelity Japan’s (FJV) long-term record remains intact

FJV’s +12.2% NAV total return for the year fell marginally short of the TOPIX Index’s 13.3% (sterling terms) but that hasn’t derailed the longer-term track record. As Chairman David Graham explains, since fund manager Nicholas Price took over “in September 2015 and up to the end of December 2023, the NAV has returned 112.5% against the Index Return of 95.5%.” Underperformance this year is down to large-cap value names outperforming higher-growth small-caps. Still, Graham doesn’t sound overly concerned “We share the Portfolio Manager’s view that there is significant scope for a rerating of these businesses which now look undervalued”.

Winterflood “FJV has authority to invest up to 20% of assets in unlisted companies, but given weak IPO market the Board has limited this to 10% at present”.

abrdn Asian Income (AAIF) outperforms over 1, 3 and 5 years

AAIF’s 2.5% NAV total return for the year, a tad higher than the MSCI AC Asia Pacific ex Japan Index’s 1.6% return. That means “NAV and share price total returns have now outperformed the Index over one, three, and five years. Our structural underweight exposure to China continues to contribute to performance”.

Chairman Ian Cadby doesn’t sound surprised about the continued outperformance “the Investment Manager has a strong record of finding those proven, quality companies that benefit from structural trends while generating healthy income and capital growth for investors”.

Winterflood “As previously announced, fund has reduced its management fee by 23%, expected to reduce OCR from 1.00% to 0.83%, resulting in one of the lowest fees in the peer group”.

Aurora (ARR) bounces back

ARR’s 36.3% NAV per share total return for the year, easily beat the FTSE All Share’s 7.9% and more than made up for 2022’s 19.1% decline. Good news for the investment managers at Phoenix who, as Chair Lucy Walker explains “uniquely receives no annual management fee. Instead, they are solely remunerated from an annual performance fee, equal to one third of any outperformance of the Company’s NAV against its benchmark”.

Question is does Phoenix’s Gary Channon have a ball of elastic bands on his desk? “If intrinsic value keeps growing without an accompanying rise in share prices, the invisible elastic that connects them becomes stretched. That’s where we were when we wrote at the end of 2022, and in 2023 that force finally resulted in the price of the Company’s portfolio holdings performing ahead of the growth in intrinsic value. That said, the elastic remains very stretched, with 130% upside in our view”.

Winterflood “Annual dividend of 3.45p per share proposed (FY22: 2.97p), in line with expectation to distribute substantially all net revenue proceeds”.

abrdn Asian Focus (AAS) the third best-performing investment trust over 25 years

AAS’s -0.7% NAV total return per share (sterling) for the half year fell between the MSCI AC Asia Pacific ex Japan Small Cap index’s +4.5% and the MSCI AC Asia ex Japan index’s 7.3% fall. Over the long-term though, AAS is a stand out. As Chair Krishna Shanmuganathan notes “According to the Association of Investment Companies (AIC), as the 25th anniversary of the inception of the Individual Savings Account (ISA) approaches, the Company is ranked third best performing investment trust. Based upon a single investment of the full £7,000 ISA allowance on 6 April 1999, the day ISAs came into existence, with dividends reinvested until 5 March 2024, an investment in the Company’s shares would have generated a tax-free pot of £273,758”.

Winterflood “The managers note that ‘In the short term, the active nature of the portfolio can often lead to divergence from the index’”.

U want to invest for a passive income stream, to buy and forget about and use the income stream to re-invest in the market, either for growth or more passive income.

The first consideration is how safe is the income stream, understanding that only Government gilts and deposit accounts are truly safe.

U are prepared to to take the risk for some or part of your capital.

The future dividends are fcast to be secure and gently increasing.

The consensus is of no interest better if it’s positive but not a requirement.

Commenting on the results, Alexander Ohlsson, Chairman of Foresight Solar, said:

“Foresight Solar delivered resilient performance with record electricity production and cash distribution against a challenging market backdrop. Our operational strength, the powerhouse behind our progressive dividend, enabled us to comfortably meet our dividend target of 7.55p per share for 2023 and allows us to propose an above inflation increase of 6.0% for the 2024 target dividend of 8.0p per share.

The companies chair is confident that the dividend will be paid, u have to believe the management, until there is a reason not too.

Dividend cover.

 Total dividend of 7.55 pence per share declared for the full year, in line with the Company’s target. Dividend cover for 2023 was 1.61x.

·   Target dividend of 8.00 pence per share for 2024, an increase of 6% compared to the previous year. The 2024 target is expected to be 1.50x covered from cash generated in the period, with around 1.35x cover for 2025 – assuming current revenue forecasts.

The ability to pay a dividend if trading is worse than the fcast.

A solid history of dividend payments

Next dividend payment date 24/05.

The xd date is 25/04, if u buy before the date u will receive the next dividend.

Current share price 84.4p to buy dividend fcast 8p

On a 10k investment, u should receive income of £940.00

In around ten years u should have received all your capital back as income and the Trust would sit in your account earning interest at zero, zilch, nothing.

The share price may have recovered but u will not be overly concerned about that as u have no intention to sell, unless circumstances change.

Trading at discount of 28% to Net Asset.

The chance to make a capital gain as well as the dividend stream.

FSLF currently have a share buyback programme to try and close the discount.

Finally the chart

GL

Dividends received £3,139.00

Fcast for 2024 dividends received of £8,000

Target for 2024 dividends received of £9,000

Cash for re-investment £1,301.00

Cash for re-investment for April £721.00

Target of cash for re-investment of 7k, which should add around another £500 to the Snowball for next year after it’s re-invested.

All according to the plan at the current time.

Baldrick

I have a cunning plan.

LABS have re-based their dividend and will be leaving the watch list portfolio.

The Motley Fool

How I’d make passive income for life with just £5 a day

Story by Harshil Patel

One of my favourite ways to earn passive income is by owning dividend shares. Receiving a chunk of company profits in the form of dividends sounds appealing, as I can let companies do all of the heavy lifting for me.

Once I’ve made my purchases, I can sit back and watch those quarterly payments roll in. It would be great if that was all, but there are a few points to consider.
What I’d look for in stocks
First, companies pay dividends from earnings. So investors would need to find dividend stocks that are likely to grow their income over time. I’d focus on solid, established and profitable business models.

I’d also concentrate on areas that benefit from strong underlying trends like population growth and healthcare.

Although the dividend yield is important, I’d also look for consistent payment history and dividend growth. With several FTSE 100 shares currently offering over 8%, there’s no shortage of potential shares I could buy.
Supersizing passive income
The good thing about dividend investing is that it’s possible to start with a relatively modest sum. Even just £5 a day is enough to get started. That amounts to £1,825 a year.

With that I could buy a bunch of dividend shares and start receiving quarterly payments shortly thereafter. I’d reinvest them to buy more shares. That way, I’d not only earn dividends on the original shares, but also on these new ones.

By continuing this process, my investment should grow in a snowball effect. It’s called compounding and Albert Einstein famously referred to it as the eighth wonder of the world.

I’d also continue investing £5 a day, or £1,825 a year. By delaying when I cash in my dividends to spend on treats, my total pot should grow larger over time.

Next, let’s turn to which stocks to buy to achieve an 8% dividend yield. If I didn’t already own enough dividend stocks, I’d buy Phoenix Group, Legal & General, Imperial Brands, NatWest and SSE.

This selection averages 8% and is spread across different industry groups. With an average dividend history of over 20 years, it shows management’s policy towards distributing cash to shareholders.

But in addition to looking at the past, I’d need to keep an eye on the present. Even established businesses can be affected by change. For instance, new competition or regulation can change a company’s prospects and future profits.

That said, right now I’m happy with how these shares are faring. And if that changes, I’m confident there will be many others to replace them. Either way, I’d expect my passive income plan to reap dividends.

PHP currently yields 7.2%. If/when the price rises the yield will fall.

As the Trust is currently printing a profit and as PHP only has 6k invested, it will most probably be sold to buy a higher yielding Trust.

It’s easier to explain with an example.

Trust A 10k invested yielding 7%.

As long as the dividend remains the same the portfolio should receive £700 pa in dividends, the price makes no difference.

If the price rises by 10%, the trust still receives the buying yield, dividends

of £700 pa.

The running yield would fall to 6.4%, still £700 pa.

If the Trust A was sold and the11,000 re-invested in a Trust yielding 8%

the dividend would be £880.

In a rising market, as long as there are Trusts out of favour, there are

usually a few, The Snowball can be grown thru Trading.

Many a mickle makes a muckle.