Investment Trust Dividends
I’ve decided to add AGR to the portfolio for their ‘secure’ dividend.
I’ve decided against buying back SOHO, even though the price has fell since the recent sale as I don’t want to risk the earned profits.
SOHO trades at larger discount and a slightly higher yield but a similar Trust is Home REIT which is a disaster area, although with different management.
The AGR dividend looks ‘secure’ although no dividend is 100% secure, so I’ve decided to stick to the knitting.
I’ve bought 6k of Assura AGR.
Posted on 13th November 2024 | By Phil Oakley
Phil looks at the state of the US stock market following the presidential election and the reasons why it might continue to boom and why it might not.
Even if you don’t invest in US shares, what happens on Wall Street has a big say in how UK shares will perform. A high-flying US stock market can be a tide that lifts all boats. A sinking one usually means a strong headwind where most shares struggle to make gains.
Last week’s US presidential election win for Donald Trump has been greeted with euphoria on Wall Street, pushing the S&P 500 to fresh record highs. The bullish sentiment has been driven by the expectations of big tax cuts for companies and a bonfire of regulations which should give a big boost to company profits.
For some, this could usher in a bull market similar to the roaring 1920s when technological innovation and euphoria pushed stock prices to very lofty levels.
Most people know what happened to share prices at the end of the 1920s. The Wall Street Crash of 1929 led to a very long bear market and weak returns for shareholders for many years.
The current long winning streak of the US market often raises questions on how long it will last and if it will crash, but it seems there are some warning signs out there that investors should probably not ignore.
While some salivate over tax cuts and fewer regulations, others fret about what big government job cuts and a crackdown on migration might do to the US economy. Fewer jobs and pay packets sucks demand out of an economy as those affected have less money to spend.
The US economy has been very reliant on migrant labour. If a lot of workers suddenly find that they are told to leave the country under the new president’s plans then a labour shortage could cause chaos and push up prices.
The higher inflation that would result could push up interest rates. This is rarely good news for shares as higher interest rates reduce the value of future company profits expressed in today’s money which usually means lower share prices.
The same can be said for higher tariffs that are placed on imported goods. These are paid by consumers and push up inflation which reduces consumer buying power.
Interest rates could also rise if Trump does not bring down the size of the US government deficit. The current government has been spending considerably more than it takes in taxes and has been plugging the deficit by borrowing money from investors.
But what happens if the expected tax cuts don’t increase tax revenues and the deficit balloons?
The yield on the 10-year US treasury – the interest rate the US government has to pay to borrow money for 10 years – has risen significantly in recent years and could keep on doing so if investors believe that debt levels are getting out of hand.
Bond yields have actually been quite subdued after the election. However, it is worth recognising that they are a key determinant of the valuation of all financial assets, especially shares.
Low bond yields justified high price-to-earnings (PE) ratios on shares during the last decade but there will be a level when higher yields bring them down.
The current yield of 4.3% isn’t that level, but over 5% might start to bring them down. It won’t take much bad news on deficits or inflation to get there.
US shares have been expensive for a while, but this hasn’t stopped the market from going up.
Booming profits for technology companies have been a big help and have driven their valuations up and with it the value of the market. At the moment, the S&P 500 trades on a one-year forecast PE multiple of around 23 times which is punchy.
Put another way, the earnings yield (the inverse of the PE ratio) is 4.3% which is the same as the yield to maturity on the 10-year treasury which suggests that stocks are not great value when compared with bonds.
The Shiller PE which measures the value of the US market based on its rolling 10-year average earnings is also looking very elevated at 38.3 times. This is below the peak of 44 during the internet boom in December 1999 but somewhat higher than the 31.5 times seen in August 1929 before the Wall Street crash.
If you look at the biggest companies in the S&P 500, you will struggle to find any cheaply valued shares.
Source: SharePad
When compared with expected growth in earnings per share (EPS) – using a price-earnings growth or PEG ratio – high-flying NVIDIA could still be seen as cheap on a PEG of 0.7 – a PEG below 1 is often seen as good value – but not many shares are on this measure.
High valuations tend to be a forewarning of poor future returns from shares as a lot of future growth has already been priced in.
Investment bank Goldman Sachs points to these high valuations as the reason why it expects average annual returns of just 3% from US shares over the next decade which will be lower than those from US government bonds.
Perhaps one of the most cautious indicators of the fragile state of the US market is the fact that Warren Buffett has been selling shares and building up the cash reserves of his Berkshire Hathaway company.
Buffett has a canny knack for knowing when valuations are getting too high. He folded his investment partnership in 1969 because he could not see enough attractively priced shares, and he has done well subsequently by avoiding overpriced shares.
2024 has seen Berkshire be a net seller of almost $130bn of stocks which has boosted its cash balances to more than $300bn or practically one-third of its market capitalisation.
Big cash buffers saw Buffett profit handsomely from the fallout of the 2008 financial crisis as he picked up cheaper investments at very attractive prices. The fact that he has been stockpiling cash recently does not mean the US market is about to crash but if history is any guide, could be a sign that the risk-reward trade-off from investing in it is not very good right now.
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It’s usually better to follow than predict.
| Best performing funds in price terms | (%) |
|---|---|
| Life Science REIT | 7.2 |
| Residential Secure Income | 4.0 |
| PRS REIT | 3.1 |
| Phoenix Spree Deutschland | 2.6 |
| Globalworth Real Estate | 2.1 |
| Henry Boot | 0.9 |
| Target Healthcare REIT | 0.8 |
| Balanced Commercial Property Trust | 0.3 |
| Schroder European REIT | 0.1 |
| Triple Point Social Housing REIT | 0.0 |
Source: Bloomberg, Marten & Co
| Worst performing funds in price terms | (%) |
|---|---|
| Workspace Group | (14.9) |
| Great Portland Estates | (11.9) |
| Tritax Big Box REIT | (11.3) |
| Helical | (11.3) |
| IWG | (10.2) |
| SEGRO | (10.2) |
| Safestore | (9.8) |
| Hammerson | (9.6) |
| Derwent London | (8.8) |
| Sirius Real Estate | (8.5) |
Source: Bloomberg, Marten & Co
Speculation and apprehension over the contents of the budget dominated October and was reflected in the share price moves among real estate companies with a median decline of 4.8%. There were a handful of positive movers, however, with Life Science REIT leading the way. This follows an uplift in its share price last month after its chair commented that the board was willing to take any action necessary to address its steep discount to NAV, which still lingers at around 45%. Residential Secure Income decided to throw in the towel having battled a persistently wide discount for much of its life (see the corporate activity section for more detail). Meanwhile, PRS REIT hoisted a ‘for sale’ flag over the company following shareholder pressure to act on its wide discount. Investors seem to be appreciating the solid progress Phoenix Spree Deutschland is making in delivering on its strategy to sell condominiums at large premiums to book value, with the Berlin residential landlord’s share price up almost 14% over the past three months. Target Healthcare REIT’s share price move was in step with its NAV performance over the quarter to the end of September (see below for more detail), while Balanced Commercial Property Trust was up slightly following last month’s take-private offer.
Budget nerves saw some of the largest listed real estate companies suffer the most as concerns move from inflation and interest rates to economic growth. It was no surprise, then, to see some of the largest office investors and developers in the bottom 10. Flexible workplace providers Workspace and IWG both succumbed to double-digit falls in their value over the month while, similarly, London office developers Great Portland Estates, Helical and Derwent London also experienced sharp share price falls. There is an integral link between GDP growth and demand for office space and worries that growth will be anaemic under Labour have surfaced. It was not just office players that got hammered, all of the property big guns were on the wrong end of investor caution, with logistics heavyweights SEGRO (which now has a market cap of £10.6bn) and Tritax Big Box REIT (£3.4bn market cap) also losing just over 10% in value during October. Retail behemoth Hammerson’s recent positive share price momentum was stopped in its tracks despite continued operational and balance sheet strengthening, including the launch of a £140m share buyback programme. It was a torrid month all round, with property bellwethers British Land (down 8.5%) and Land Securities (down 7.6%) also suffering.
| Company | Sector | NAV move (%) | Period | Comments |
|---|---|---|---|---|
| AEW UK REIT | Diversified | 3.0 | Quarter to 30 Sept 24 | 2.9% like-for-like valuation increase for the quarter to £215.6m |
| Target Healthcare REIT | Healthcare | 0.9 | Quarter to 30 Sept 24 | Like-for-like valuation increased by 0.6% to £916.4m |
| Alternative Income REIT | Diversified | 0.5 | Quarter to 30 Sept 24 | Value of portfolio up 0.4% to £103.1m |
| PRS REIT | Residential | 10.9 | Full year to 30 June 24 | Value of group’s portfolio was £1.1bn, up from £1.0bn in 2023 |
| Town Centre Securities | Diversified | (2.4) | Full year to 30 June 24 | Like for like portfolio valuation down 4.7% to £256.0m |
| Grit Real Estate Income Group | Rest of world | (20.5) | Full year to 30 June 24 | NAV impacted by high debt levels and debt costs |
Source: Marten & Co
Tritax EuroBox’s board recommended a cash offer for the company from Canadian private equity giant Brookfield that usurps SEGRO’s bid for the company. Brookfield’s bid of 69.0p per share values Tritax EuroBox at around £557m. This represents a premium of 6% to the implied value of the SEGRO offer of 65.1p at 9 October 2024. The offer price also represents a premium of 28% to the closing price of 53.8p per Tritax EuroBox share on 31 May 2024 (the last business day prior to the commencement of the offer period), but a discount of 12% to its last reported NAV.
British Land raised £301m in a placing, retail offer and subscription and will use the proceeds to part fund the acquisition of a portfolio of retail parks for £441m (see below for details). In aggregate 71,227,309 new ordinary shares were placed at a price of 422p, which represents a discount of 3.6% to the closing price on 2 October 2024.
Empiric Student Property raised £56.1m in a placing and retail offer.
A total of 59,686,950 new ordinary shares representing 9.9% of the company’s existing share capital were placed at a price of 93p, raising proceeds of £55.5m, with an additional £0.6m raised via retail investors. The proceeds will be used to acquire two operational assets in Manchester and Edinburgh for combined £30m, while the company has a broader pipeline of a further eight assets under negotiation.
PRS REIT announced that it was undertaking a strategic review to consider the future of the company following shareholder pressure. The review will explore all the various strategic options available to the company, which may include a potential sale. This follows the requisition notice made by a number of shareholders to replace the chairman, Steve Smith, and another director with Robert Naylor and Christopher Mills. The shareholders were unhappy at the award of a multi-year investment management contract to current manager Sigma without proper shareholder consultation and the lack of action to narrow the company’s discount to NAV. In September, Smith announced he would step down at the next AGM, while both Naylor and Mills were appointed to the board.
The board of Residential Secure Income proposed a managed wind-down of the company following a review of options for maximising shareholder value. The company’s persistent and material share price discount to NAV and its small market cap of around £101m (which it said may be a deterrent to some potential investors due to lower share liquidity) led the board and manager (Gresham House) to conclude that executing a managed wind-down and portfolio realisation strategy is the best course of action for shareholders. To implement this proposal, the board said that it intends to propose resolutions to change the company’s investment policy.
Impact Healthcare REIT changed its name to Care REIT plc to align with the Financial Conduct Authority’s updated sustainability disclosure requirements. Its stock market ticker is now CRT.
Hammerson commenced a £140m share buyback programme, with the sole purpose of reducing the company’s share capital. Shares purchased will be cancelled
The current expected dividend total for 2024 is now £10,978.00.
The earned dividends total is subject to 2 Trusts declaring their dividends and the payment for either could slip into 2025.
Based on current earned dividends there is no change to the 2025 figures.
Dividends to be received fcast £9,120.00. Target 10k.
VPC Specialty Lending Investments PLC
(the “Company”)
DIVIDEND DECLARATION
The Board of Directors of the Company has declared an interim dividend of 1.34 pence per share for the three-month period to 30 September 2024. The dividend will be paid on 19 December 2024 to shareholders on the register as at 22 November 2024. The ex-dividend date is 21 November 2024.
As noted in the previous dividend announcement, the dividend in respect of this period is materially lower than the prior quarter. The 1.34 pence per share dividend represents 1.04 pence generated by the net revenue return earned for the three-month period to 30 September 2024 and 0.30 pence from existing revenue reserves.
In future periods, dividends will be no less than 85% of earned net revenues which, as previously noted, are likely to fall as the portfolio composition changes.
The Company has elected to designate all of the interim dividend for the three-month period to 30 September 2024 as an interest distribution to its shareholders, thereby “streaming” income from interest-bearing investments into dividends that will be taxed in the hands of shareholders as interest income. No income tax will therefore be deducted at source from this, or from future interest distributions.
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The dividend has been reduced and the yield will fall to around 10% and continue to fall. The payment was expected in January but will now be paid this year.
REGIONAL REIT Limited
(“Regional REIT”, the “Group” or the “Company”)
Q3 2024 Trading Update and Dividend Declaration
9.3% Uplift in New Letting Income in 2024
Regional REIT Limited (LSE: RGL), the regional property specialist, is pleased to announce a trading update for the three-month period from 1 July 2024 to 30 September 2024 and a dividend declaration for the third quarter of 2024. Additionally, the Group provides an update on its positive ESG progress, with a continued strengthening of its EPC and GRESB rating.
The Company is now on a much stronger financial footing, following the successful £110.5m equity fund raise, which was completed in Q3 2024 and strongly supported by shareholders. Proceeds were used for the repayment of the £50m retail bond, and of the remaining net proceeds: £26.3m is in the process of being used to reduce bank facilities; and £28.4m will be used in repositioning the portfolio to capture the accretive opportunities from capital expenditure, enhancing earnings in the near term and value in the mid to long-term, further underpinning dividend payments going forward.
Q3 2024 Trading Update
The Group traded well during the period under review and made good progress, completing a number of lease renewals during Q3 2024. Retention remained high with 77.7%* of rent roll up for renewal remaining let.
* Includes tenants that are currently holding over, lease renewals, and the acquisition of new replacement tenants.
Rental uplift of 9.3% against December 2023 ERVs has been achieved. Since 1 January 2024, the Group has exchanged on 55 leases to new tenants totalling 161,668 sq. ft. providing £2.6m per annum (“pa”) of rental income when fully occupied. Of this total, 11 leases have been exchanged since 30 June 2024, totalling 39,536 sq. ft. and will provide £0.5m pa of additional rental income.
Capital expenditure programme highlights
The deployment of the capital raise proceeds into capital accretive projects has commenced with eight projects in course for a total investment of £15.0m.
A full refurbishment of Ashby Park, Ashby De La Zouch has recently completed at a cost of £2.7m. These works have already led to a new 10-year lease with Ashfield Healthcare Ltd. and Q Collection (UK) Ltd. generating an aggregate £0.5m pa rental income.
Q3 2024 Dividend Declaration
As previously indicated, the Company is pleased to declare that it will pay a dividend of 2.20 pence per share (“pps”) for the period 1 July 2024 to 30 September 2024. The entire dividend will be paid as a REIT property income distribution (“PID”).
The key dates relating to this dividend are:
| Ex-dividend date | 21 November 2024 |
| Record date | 22 November 2024 |
| Last day for DRIP election | 17 December 2024 |
| Payment date | 10 January 2025 |
Prior to the capital raise and share consolidation** the Company declared a Q1 2024 dividend of 1.2pps. Post the capital raise and subsequent share consolidation the Company declared a Q2 2024 dividend of 2.2pps on 10 September 2024 and is now declaring a Q3 2024 dividend of 2.2pps. The Board will target a dividend of 2.2pps for Q4 2024.
**On 29 July 2024, the shares in issue were consolidated by ratio of 1 new share for every 10 shares.
The level of future payment of dividends will be determined by the Board having regard to, among other factors, the financial position and performance of the Group at the relevant time, UK REIT requirements, the interest of shareholders and the long-term future of the Company.
“Average UK house prices nudged up 0.2% in October, continuing the positive momentum of recent months,” Ms Bryden said. “This brought the annual growth rate to 3.9%, slightly lower than in September.
“The average property price has reached a record high of £293,999, surpassing the previous peak of £293,507 set in June 2022, towards the end of the pandemic-era ‘race for space’.”
EarnestBip
fghgenkaVeiSp@gmail.com
45.86.202.51
Hey I know this is off topic but I was wondering if you knew of any widgets I could add to my blog that automatically tweet my newest twitter updates. I’ve been looking for a plug-in like this for quite some time and was hoping maybe you would have some experience with something like this. Please let me know if you run into anything. I truly enjoy reading your blog and I look forward to your new updates.
££££££££££££
Can anyone help ?
Cash for re-investment £6,437.00, plus dividends to be received this week currently earmarked for re-investment in SOHO.
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