There are two dividends to be declared in early September. When these are declared I will be able to update this year’s income fcast and target and pencil in next year’s income fcast and target.

No change in the top-three on Winterflood’s list of highest monthly movers. That means two new investment companies make it onto the list this week including one which could be a contender for having the longest name.

By Frank Buhagiar•19 Aug, 2024

The Top Five

Crystal Amber (CRS) retains top spot on Winterflood’s list of highest monthly movers in the investment company space after almost doubling its gain to +23.9% from +13.5% previously. That extra 10% came after the small-cap investor announced an Extension to its Share Buyback Programme. Since 8 December 2023, CRS has spent £8.4 million buying back its shares and between now and 31 October 2024 the £80 million market cap plans to spend another £1.6 million. Easy to see why – since the start of the buyback programme in December the discount to net assets at which the shares trade at has narrowed from -33% to -5%.

Jupiter Green (JGC) not only keeps hold of second place but also its +12.8% gain on the month. Still no news out from the environmental investor whose shares have been on the march ever since 25 July 2024. That neatly coincides with the publication of the fund’s latest doceo video update. Must have been something investment manager Jon Wallace said.

PRS REIT (PRSR), yet another to hold on to its position on the list – shares in the build-to-rent fund extended their gain to +12.7% from +12.2%. July’s well-received Fourth Quarter Update still working its magic, although the long-awaited cut in UK interest rates at the beginning of August probably didn’t hurt the REIT either.

ICG-Longbow Senior Secured UK Property Debt Investments Limited (LBOW), a contender for the investment company with the longest name, a new entry in fourth thanks to a gain of +12.3%. LBOW hasn’t issued a press release since a Result of AGM announcement on 18 June 2024 but a look at the graph shows the share price added +5.5% on 1 August 2024 – the day of that UK interest rate cut!

SDCL Energy Efficiency Income Trust (SEIT) completes the top five. An +8.7% gain enough to bag this week’s final spot. The fund’s only press release of the week a Holding(s) in Company announcement, highlighting how General Atlantic has increased its stake in SEIT to over 14%. The American growth equity investor has been regularly upping its holding in SEIT over the past year or so. Question is, will General Atlantic stop there or continue to increase its stake?

Scottish Mortgage

Scottish Mortgage’s (SMT) share price finished the week ended Friday 16 August 2024 off -4.2% on the month. That’s an improvement on the previous -7.6% deficit. The NAV monthly loss improved too, shrinking to -4.1% from -7.6%. Similarly, the wider global sector’s loss on the month narrowed to -2.1% from -4.1% seven days earlier. No surprise a good week was had by all, after all the tech-heavy Nasdaq put on +5.2%.

MoneyWeek finds two UK small-cap investment trusts that have growth potential, while The Telegraph believes Patria Private Equity Trust is worth considering for your portfolio.

By Frank Buhagiar

20 Aug, 2024

MoneyWeek: Two Small Cap Investment Trusts With Growth Potential

What to do when you find two funds from the same sector that both fit the bill – which one do you go for? It’s a problem faced by MoneyWeek after running the rule over Rockwood Strategic (RKW) and Odyssean (OIT), two UK small-cap investment trusts managed by Harwood Capital. Before revealing which one gets the nod, MoneyWeek first sets the scene, highlighting how UK small caps have a strong track record of outperformance – since 1955, the Numis Smaller Companies index has returned a compound +14.1% per annum compared to the FTSE All-Share’s +11%.

The article then goes on to describe what it looks for in a small-cap fund: “A small-cap manager needs to find companies with exceptional prospects to overcome political and fiscal headwinds, to take an active role in shaping the company’s management and strategy, and to guide the company towards a sale at a premium.” Cue £90million RKW and £230million OIT. Being stablemates, both funds have a fair bit in common. They have concentrated portfolios: OIT holds 20 companies; RKWbetween 25 and 30. One difference though, the type of companies they invest in: RKW typically invests in recovery plays found in the smaller end of the market (sub-£200 million market caps); OIT focuses on larger higher-quality growth stocks.

Both funds trade at a premium to NAV too, enabling them to issue new shares. That’s partly down to having strong long-term track records: over five years, OIT has returned +66% compared to the Numis index’s +26%; RKW +129%. MoneyWeek believes the two trusts’ outperformance is testament not only to the quality of the companies they invest in, but also the approach adopted by Harwood who “unlike most managers, takes an active role in guiding them in the right strategic direction, using considerable in-house private equity experience.” A lot in common then, but which of the two to buy? Over to MoneyWeek “The toughest call is to decide which one to buy. Perhaps both?”

Questor: This Index-Busting Trust Proves High Fees Can Be Justified

Sometimes it pays to, well, pay up. That’s the message of the above Telegraph Questor Column on Patria Private Equity Trust (PPET), formerly abrdn Private Equity Opportunities. Firstly, like other private equity funds, PPET provides investors with exposure to companies and sectors that are otherwise difficult to access. Secondly, PPET’s long-term performance record is well ahead of almost all global equity investment trusts, let alone the market: over 10 years, PPET has returned +279% compared to the MSCI All Countries World’s +204% and the FTSE All-Share’s +83%. Go longer and the numbers are even more impressive: over 20 years, the fund has returned +908%, not far off double the MSCI index’s +586%.

These returns have not been generated by just buying low and selling high. Rather PPET helps the managers of the companies in which it invests in to build their businesses. In all, the fund has a diversified portfolio of around 700 companies. Exposure to these businesses is largely gained via funds managed by specialists, although the portfolio does hold 30 direct investments. Despite the strong performance, like other private equity funds, PPET trades at a steep discount to the value of its investments, a nod to investor doubts over valuations assigned to underlying assets across the sector. But Questor believes “That is manifestly wrong, as most realisations of investments are struck at a sizable premium” – over the six months to 31 March 2024, PPET achieved a +27.3% average uplift on exit.

As for those high fees, Questor does not dispute these, “However, the bulk of these fees is determined by the success of the investment. All of the return figures quoted above are net of fees. The reality is that the underlying managers are paid on initial commitments and realised profits.” And then there’s the fund’s dividends. PPETis on track to increase its payout by 5% this year which would be the 10th successive year of dividend growth. As the article concludes “With a decent yield, a big discount that could close and a great track record, Questor believes that Patria Private Equity Trust is worth considering for your portfolio.”

The Motley Fool

by Sumayya Mansoor

2 dividend stocks I own recently paid out. Here’s why I’d love to buy more shares

Two dividend stocks I own for juicy returns are Primary Health Properties (LSE: PHP) and Warehouse REIT (LSE: WHR).

Within the past couple of weeks, I received dividend payments from both. I’ve decided I’d love to snap up more shares when I can. However, it is worth remembering that dividends are never guaranteed.

What they do
Both of these stocks are set up as real estate investment trusts (REITs). The draw of these types of stocks is that they must return 90% of profits to shareholders.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

They make money from property assets that they own, operate, and rent out.

In the case of Primary Health, the name gives away the game. It rents out healthcare facilities to providers such as the NHS for GP surgeries.

Warehouse also does what it says on the tin, as it specialises in warehousing and logistics facilities.

Primary’s investment case
Primary possesses excellent defensive traits, in my view. This is because healthcare is essential for everyone.

Furthermore, when you factor in that one of its biggest clients is the NHS, this helps the investment case. This is because the government is essentially paying the rent here. In turn, the likelihood of defaults is low, and multi-year agreements provide Primary with a sense of earnings stability.

Next, as the UK population continues to rise, and is ageing, I reckon demand for healthcare should remain robust.

Finally, a dividend yield of over 6% is very attractive. For context, the FTSE 100 average is closer to 3.6%.

From a bearish view, there’s been lots of coverage about professionals leaving the industry, or moving abroad in recent years. This is related to working conditions and pay disputes. One risk I’ll keep an eye on is Primary’s growth. It’s all well and good buying up new assets, but the NHS and other providers may lack the relevant workforce to staff them. This could hurt earnings and returns.

Warehouse’s investment case
The e-commerce boom has served Warehouse REIT well. It focuses on last-mile delivery hubs and rents these out to prominent retailers. I can see it continuing to capitalise on the current change in shopping habits.

However, from a bearish view, recent economic volatility is a worry, and I’ll keep an eye on developments. High inflation, as well as higher interest rates, have hurt commercial property values, and brought down net asset values (NAVs). Warehouse has had to sell some assets to shore up its balance sheet to cope with the current turbulence.

Moving back to the bull case, the first interest rate cut was confirmed this month. If this trend continues, economic pressures, as well as increased consumer spending and demand for Warehouse’s facilities could be good news. However, I do understand there’s no guarantee of further cuts or when they may occur.

Finally, a dividend yield of over 7% is enticing. Furthermore, the shares look good value for money on a price-to-earnings ratio of just over 10.

Thursday 22 August

abrdn Asia Focus PLC ex-dividend payment date
Hammerson PLC ex-dividend payment date
JPMorgan UK Small Cap Growth & Income PLC ex-dividend payment date
Land Securities Group PLC ex-dividend payment date
Personal Assets Trust PLC ex-dividend payment date
Rights & Issues Investment Trust PLC ex-dividend payment date
RM Infrastructure Income PLC ex-dividend payment date
Temple Bar Investment Trust PLC ex-dividend payment date
Tritax Big Box REIT PLC ex-dividend payment date
Witan Investment Trust PLC ex-dividend payment date

Third Interim Dividend

The Third Interim Dividend of 2.20 pence per Ordinary Share (August 2023: 2.10 pence per Ordinary Share) will be payable to Shareholders on the register as at 30 August 2024, with an associated ex-dividend date of 29 August 2024 and a payment date on or around 30 September 2024.

Dividend Guidance Reaffirmed

The Board is pleased to reaffirm its guidance of a full year dividend of not less than 8.80 pence per Ordinary Share for the financial year ended 30 June 2024 (2023: 8.60 pence). This is expected to be covered by earnings and to be post-debt amortisation.

If it’s nearing the time to start to spend some of hard your earned profits, de-accumulation.

Some Trusts to consider.

MRCH, CTY dividend heroes. A safe dividend as u can get in the market with the chance of capital gains.

AGR, PHP secure dividends, until they aren’t.

SMIF, SDIP pay a monthly dividend. SDIP the more risky but a higher yield, SMIF total yield depends on any surplus paid as a final dividend.

10K invested in

SMIF a monthly dividend of £56 plus the final undetermined dividend

SDIP a variable monthly dividend of £68

It’s likely u may lose some capital with all of the above Trusts at some stage of your holding but as long as the dividends are paid, u have no intention to sell, the value matters very little.

But as always best to DYOR

The income target for 2024 is 9k, which will be beat.

If we use the figure of 9.5k, re-invested at 7% compound growth this would equate to a ‘pension’ of 19k in ten years time. Much better if u have longer in your accumulation stage.

An option would be use the funds to buy an annuity currently around 7% per annum. The figure in ten years time is the unknown, it could be higher or it could be the same as 2022

Canada Life figures show the 65-year-old with a £100,000 pension pot could buy an annuity linked to the retail price index (RPI) that would generate a starting annual income of £3,896. That’s up from £2,195 in the New Year following a 77% spike in rates this year.

That’s a huge gamble on the income for the rest of your life.

I forget to mention if u buy an annuity u have to donate all of your hard earned but with a dividend de-accumulation plan u keep all your capital.

The amount of capital will be substantial as u re-invest your dividends but the actual figure is of no interest as u never intend to sell any of your Trusts unless in an unseen emergency.

As u approach your de-accumulation stage u might want to invest some of your earned dividends in Government Gilts if u want to withdraw a specific sum on a specific date. It’s your hard earned and there are no pockets in shrouds.

Stick to your plan until it sticks to you.

No 30%+ or 20%+ monthly gainers to report this week – the top performer on Winterflood’s list of highest monthly movers could ‘only’ manage a 13.5% gain. Is the recent spike in market volatility taking its toll?

By Frank Buhagiar•13 Aug, 2024

The Top Five

Crystal Amber (CRS) jumps from fourth to top spot on Winterflood’s list of biggest monthly movers in the investment company space. And that’s on the back of no news. In fact, nothing out from the small-cap investor since the 31 July 2024 Investee company update: Morphic Medical. The update highlighted an independent valuation of CRS’ equity interest in Morphic that came in at around US$75.8m (£59.1m). This would increase CRS’ unaudited NAV per share to 172.67p from 117.85p. Interestingly, CRS’ ‘mere’ +13.5% gain on the month (down from +32.9% previously) enough to secure top spot – a symptom perhaps of the uptick seen in market volatility this past week or so.

Jupiter Green (JGC), a new entry into the top five – a gain of +12.8% good for second place. As with CRS above, no news out from the environmental investor, but a look at the graph shows the shares started their move higher on 25 July 2024, round about the time of the latest doceo video update from investment manager Jon Wallace. The power of a good communications strategy there for all to see – the discount has since narrowed from -26% to around -15%.

Downing Strategic Micro-cap (DSM) managed to keep its place on the list despite a more than halving in the share price gain to +12.2% from +29.9%. There was yet another twist in the micro-cap investor’s tussle with activist investor Milkwood. Quick recap: DSM looking to wind itself up and return capital to shareholders; Milkwood looking to stop the realisation strategy in its tracks and get its nominees appointed to the board at the 5 August general meeting. The result of the general meeting though saw a clean sweep for the existing DSM board. As announced by the company “None of the Requisitioned Resolutions were carried.” Ball back in Milkwood’s court.

PRS REIT (PRSR) also in third place after exactly matching DSM’s +12.2% rise. Shares in the build-to-rent fund have been on the march ever since the 18 July 2024 Fourth Quarter Update. Second half of the press release’s title says it all “Continued Strong Portfolio Performance”. As for what strong portfolio performance looks like, how about an 11.7% increase in like-for-like rental growth compared to 12 months earlier. That’s not all, “The estimated rental value of the 5,396 completed homes at 30 June 2024 was £65.1m per annum, an 18% increase on the same point last year.”

JPMorgan US Smaller Co. (JUSC) returns to the list after a one-week absence. Two weeks ago, the shares were up +13.5% on no material news flow. Two weeks on and the monthly gain stands at +10.5% on no material news flow. Not much to report on the corporate front then. Different story in terms of markets. Take the Russell 2000. 31 July, the US small-cap index stood at 2254; by 7 August, it was nursing a 10% fall. JUSC couldn’t buck the trend, but it did outperform – over the same period the shares were off only -5.5%. Keep that up and the fund could be on course for another year of outperformance.

Scottish Mortgage

Scottish Mortgage’s (SMT) share price finished the week ended Friday 9 August 2024 down -7.6% on the month. That’s an improvement on the previous -8.6% deficit. The NAV monthly loss stretched to -7.6% from -5.6%. The wider global sector’s loss meanwhile increased marginally to -4.1% from -3.8% seven days earlier. With the tech-heavy Nasdaq largely flat, SMT’s ongoing buyback programme making the difference perhaps, enabling the global growth investor’s share price to outperform.

The Results Round-Up – The Week’s Investment Trust Results

Impax Environmental Markets is staying optimistic after a difficult half year; Witan looks like it’s going out with a bang after posting an 11% NAV total return for what could be its last half year subject to completion of the merger with Alliance; while, JPMorgan American does even better, clocking up a +19.1% NAV total return.

ByFrank Buhagiar•16 Aug, 2024Share

Impax Environmental Markets (IEM) Staying Optimistic

IEM reported a flat(ish) NAV total return per share of -0.5% for the half year,some way off the MSCI World’s +12.2% and the FTSE Environmental Technology 100 Index’s +7.4%. The investment managers put this down to the fund’s bias to mid and small caps, “IEM invests in companies which generate at least 50% of their revenues from Environmental Markets. These tend to be mid and small caps. Small and mid-cap companies have suffered disproportionately from the ‘higher for longer’ interest rate environment, underperforming their large cap counterparts by over 8% over the Period.” And the underperformance was not just down to what IEM held, but also what it didn’t have, specifically notholding AI chip-designer Nvidia, along with Apple, Microsoft, Amazon, Meta and Alphabet, accounts for a -5.7% drag on relative performance.

Despite the shortfall, Chairman, Glen Suarez, continues to have “great confidence that the hypothesis underpinning the Company’s investment strategy – that sustainability pressures create opportunities for companies providing environmental solutions – remains well positioned to deliver financial outperformance over the long-term.” Until then, the investment managers are taking comfort from the fact that performance within the portfolio has been encouraging. Earnings growth has been above that of the broader market. And then there is valuation, “the portfolio’s valuation premium relative to global equity markets has fallen to below its ten-year average.” Underlying portfolio company growth, below average valuation, no surprise “the Manager remains optimistic.” So too does the market, it seems – share price tickled higher over the course of the week.

Investec: “we believe that entrenched secular drivers continue to strengthen. However, this specialist sector is now experiencing a painful valuation normalisation process after a wall of liquidity drove valuations to unsustainable levels. We maintain our Buy recommendation.”

Witan’s (WTAN) Final Results?

WTAN released what could be its last Half-year Report as a stand alone investment company. That is, if its proposed combination with fellow global multi-manager investor Alliance (ATST) gets the green light from investors. And if it is the last, then the fund is going out with something of a bang after reporting a +14.3% shareholder total return and an 11% NAV total return for the half year compared to the benchmark’s +11.7%.

Easy write-up for Chairman, Andrew Ross, but when it came round to writing the outlook section of his statement, was the Chairman in the middle of his supper? “Notwithstanding a sharp bout of volatility in early August, equity markets as a whole seem to have taken the view that, whatever flies there may be in their proverbial soup, they are focused on the substance, not the swimmer. This insouciance, complacency to some, is helped by the increased proximity of easier monetary policy, after the prospect of rate cuts retreated for much of early 2024.” Investors weren’t put off by talk of flies, the results were good for a marginal uptick in the share price.

Winterflood: “Proposed merger with Alliance Trust (ATST) to create c.£5bn multi-manager investment trust, following current ATST strategy. Assuming shareholders approve the transaction, total dividends for FY24 are expected to be at least 6.28p per share, +4% from FY23 (6.04p), marking 50th consecutive year of dividend increases.”

JPMorgan American (JAM) Today and Tomorrow

JAM’s new Chairman, Robert Talbut, had a relatively straightforward first half-year statement to write courtesy of a +19.1% total return on net assets per share in sterling terms. That’s 3% above the total return of the S&P 500’s +16.1% in sterling terms. According to the Investment Managers “The large cap portion of the portfolio, which, at over 94% of the Company’s assets is its biggest allocation, added the most value over the period. Gearing was also slightly additive given the market’s rally. The Company’s small cap allocation, which averaged approximately 5.7% over the period, modestly detracted from relative returns.”

In terms of outlook, the Investment Managers went all nautical “with economic growth solid, unemployment low, most of the journey back to 2% inflation completed, and rates set to decline, the US economy should continue to provide a rising tide to support most investment boats for the rest of this year and into 2025.” JAM one of those investment boats on the rise – share price tacked on 13p on the day of the results to close at 1002p.

Numis: “JAM has built a strong track record since a strategy change in May 2019, shifting to a higher-conviction approach for the large cap component, combining the ‘best ideas’ from JPM AM’s growth and value investment teams. Since then, it has produced NAV total returns of 124.0% (16.5% pa), which compares to 107.2% (14.8% pa) for the S&P 500 and the fund has been one of the standout performers in the universe in recent years.”

abrdn Asian Income (AAIF) – Incoming!

AAIF’s +6.8% NAV total return for the half year, a little behind the MSCI AC Asia Pacific ex Japan’s +9.6% increase. Tables turned over longer timeframes though: AAIF has outperformed the Index over 3 and 5 years in both NAV and share price total return terms. According to Chairman, Ian Cadby, income is playing an increasing role in both the markets and the company’s respective total returns. That’s because “More than 50% of Asian equity total returns now come from dividends and dividend growth.” And in terms of AAIF, based on lastyear’s 11.75p dividend, as at 30 June 2024, the shares were trading on a 5.5% dividend yield. Income by name, income by nature.

And yet, as Cadby points out, “we believe little of this significant progress is priced into markets, with the MSCI Asia Pacific ex Japan Index trading on just 13xPE, compared to the S&P 500 Index on nearly 21xPE. We believe that the often overlooked dividend credentials of Asian equities will become ever more attractive, with investors increasingly recognising the income potential of some of the world’s most exciting companies.”Based on the positive reaction of AAIF’s share price to the results, perhaps investors are now starting to take note.

Winterflood: “Board intends for FY24 dividend to exceed FY23 (11.75p). Net gearing at period-end 7.1% (31 December 2023: 7.5%), as £32.2m of £50m RCF drawn. Ongoing charges 0.86% (FY23: 1.00%) following fee reduction.”

Invesco Bond Income Plus (BIPS) Adopting a Defensive Stance

BIPS’ NAV and share price total return for the first half came in at +3.6% and+3.9% respectively – pretty much in line with the ICE BofA European Currency High Yield Index’s +3.9%. According to the Portfolio Managers’ Report credit-risk assets, rather than bonds, were the main drivers over the period. “The better performance for credit-risk assets reflected changing investor perceptions of the key macroeconomic drivers – growth and inflation. Data on economic activity has generally been a bit stronger than predicted, increasing confidence in corporate earnings and the consequent ability of companies to repay.”

Looking ahead, the portfolio managers are prepared for potential bumps in the road “there is potential for economic activity to weaken. This poses a challenge to corporates, who could face a difficult re-financing environment along with weaker earnings. The balance sheets of more leveraged or weaker businesses may come under strain in these conditions.” As a result “We have reduced our exposure to credit risk in this environment while also maintaining liquidity so that we can take advantage of opportunities that may arise in such weaker market conditions.” Share price too adopting the wait and see approach – shares largely unchanged on the day.

Winterflood: “Managers noted that investment grade market total returns were largely flat in H1, while sovereign (Gilt) returns were mildly negative. High yield spreads over government bonds tightened over the period, reflecting increased risk appetite as economic data was somewhat stronger than anticipated.”