Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Cancelled Dividends

General discussions about equity high-yield income strategies
Arborbridge
The full Lemon
Posts: 10373
Joined: November 4th, 2016, 9:33 am
Has thanked: 3603 times
Been thanked: 5231 times

Re: Cancelled Dividends

#351238

Postby Arborbridge » October 28th, 2020, 8:28 am

Alaric wrote:
Alaric wrote:The equivalent Ishares ETF shows a similar pattern.


I wonder what the state of play is with income orientated OEICs.

With ITs, it's clear enough that they can and do maintain their dividends by using the accounting reserves.

With OEICs like ETFs, they are supposed to distribute all their dividends. Unlike ETFs which are passively managed, actively managed OEICs can indulge in some creativity by selling stocks once they go xd and buying stocks where the dividend is imminent. It's probably at the expense of capital performance, but it does provide a means of maintaining a dividend should that be an investment management objective.


With OEICs like ETFs, they are supposed to distribute all their dividends.
Maybe ETFs are supposed to, but I have an anecdote that suggests they don't always. I had a holding in (I think it was) UKDV as a HYP-ish substitute. There came a time when I noticed the dividend had reduced when my own HYP dividends in similar companies had increased. After a couple of dividends when not much had changed, I telephoned the manager's office. It was explained to me that they had reinvested some income instead of paying it out. Why? Because the marketing team felt the chart would look better. I sold my holding soon after that.

As regards OEICS, my income from them is well down on the same periods in 2019.

Arb.

funduffer
Lemon Quarter
Posts: 1330
Joined: November 4th, 2016, 12:11 pm
Has thanked: 122 times
Been thanked: 833 times

Re: Cancelled Dividends

#351245

Postby funduffer » October 28th, 2020, 8:59 am

Arborbridge wrote:
Alaric wrote:
Alaric wrote:The equivalent Ishares ETF shows a similar pattern.


I wonder what the state of play is with income orientated OEICs.

With ITs, it's clear enough that they can and do maintain their dividends by using the accounting reserves.

With OEICs like ETFs, they are supposed to distribute all their dividends. Unlike ETFs which are passively managed, actively managed OEICs can indulge in some creativity by selling stocks once they go xd and buying stocks where the dividend is imminent. It's probably at the expense of capital performance, but it does provide a means of maintaining a dividend should that be an investment management objective.


With OEICs like ETFs, they are supposed to distribute all their dividends.
Maybe ETFs are supposed to, but I have an anecdote that suggests they don't always. I had a holding in (I think it was) UKDV as a HYP-ish substitute. There came a time when I noticed the dividend had reduced when my own HYP dividends in similar companies had increased. After a couple of dividends when not much had changed, I telephoned the manager's office. It was explained to me that they had reinvested some income instead of paying it out. Why? Because the marketing team felt the chart would look better. I sold my holding soon after that.

As regards OEICS, my income from them is well down on the same periods in 2019.

Arb.


My experience of this is with Fidelity's Moneybuilder Dividend fund, which is HYP-like, although it has 84% UK assets and 14% US assets. Historic Yield is over 5%, but the current price is low, so is normally between 3% and 4%. Top UK assets are the usual UK HYP suspects - AZN, BATS, RIO, ULVR, GSK etc. Top 2 US assets are Apple and Amazon.

Overall, total dividends in 2020 are higher than in 2019, by about 1%, although the last 2 distributions in July and October have been 12% lower than the equivalent ones in 2019 (the fund distributes income 4 times a year, with the largest payout in April)

In terms of income, much better than my HYP, but worse than my IT's. Remains to be seen what happens next year of course.

FD


Return to “High Yield Shares & Strategies - General”

Who is online

Users browsing this forum: No registered users and 14 guests