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3 Dividend Hero Investment Trusts

General discussions about equity high-yield income strategies
Adamski
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3 Dividend Hero Investment Trusts

#404261

Postby Adamski » April 14th, 2021, 5:32 pm

Interesting article/report in Morningstar today... https://www.morningstar.co.uk/uk/news/2 ... rusts.aspx

3 Dividend Hero Investment Trusts

"I'm going to start off with the City of London Investment Trust (CTY), which has the longest track record of dividend increases, 54 years. It's been increasing its dividends since 1966. And to put that in some sort of context, that was the year that Sergeant Pepper launched its Lonely Hearts Club album, so a very long time, managed by an incredibly experienced manager, Job Curtis. He's been at the helm for nearly 30 years and it's in the U.K. equity income sector. It has a 5% yield, a considerable yield. Now, the U.K. has been out of favor. We've had Brexit and the pandemic. But we've seen it bounce back and hopefully we're seeing more recovery this year.

Then, I'd like to talk about Alliance Trust (ATST), again 54 years of dividend increases. Now, this is managed by Willis Towers Watson and it's a little bit special this company because Willis Towers Watson chooses the best managers to manage up to 20 companies in the portfolios and they have a number of these managers in place. So, you have very diversified global portfolio over different countries and different sectors. It has a 1.5% yield, so much lower than the City of London, but you're getting that global portfolio and that growth.

Then I want to talk about Bankers (BNKR). Now, the lead manager here is Alex Crooke. Now, Bankers, the name, it's been around since 1888 and the name comes because when they established the company, 7 out of the 9 original directors were bankers. Now, Bankers has a 2% yield, global portfolio and again, 54 years of dividend increases, really quite a record." Annabel Brodie-Smith, AIC (Association of Investment Companies)

NotSure
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Re: 3 Dividend Hero Investment Trusts

#404831

Postby NotSure » April 16th, 2021, 8:54 pm

Adamski wrote:"I'm going to start off with the City of London Investment Trust (CTY), which has the longest track record of dividend increases, 54 years. It's been increasing its dividends since 1966. And to put that in some sort of context, that was the year that Sergeant Pepper launched its Lonely Hearts Club album, so a very long time, managed by an incredibly experienced manager, Job Curtis. He's been at the helm for nearly 30 years and it's in the U.K. equity income sector. It has a 5% yield, a considerable yield. Now, the U.K. has been out of favor. We've had Brexit and the pandemic. But we've seen it bounce back and hopefully we're seeing more recovery this year.)


And still well below it's pre-Covid NAV and price. What is not to like? What am I missing?

It's stuffed full of unfashionable stocks (and certainly not ESG), but as a defensive purchase for someone who thinks US tech might be just a little bit frothy (well, already 'priced for perfection') it looks like a pretty solid pick. Thanks for the heads up (whatever that means....).

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Re: 3 Dividend Hero Investment Trusts

#404833

Postby Lootman » April 16th, 2021, 9:03 pm

NotSure wrote: Thanks for the heads up (whatever that means....).

Baseball term - enjoins the fielders to be alert to the next pitch.

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Re: 3 Dividend Hero Investment Trusts

#404838

Postby NotSure » April 16th, 2021, 9:11 pm

Lootman wrote:Baseball term - enjoins the fielders to be alert to the next pitch.


Thank you! I have used the phrase for a while without really having a clue what it meant (other than from the context in which it was used by others).

88V8
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Re: 3 Dividend Hero Investment Trusts

#404866

Postby 88V8 » April 16th, 2021, 10:53 pm

Yes, I think CTY can be described as a foundation in an IT income portfolio.

The other two I passed over when compiling my cohort, as a sub-2% yield did not strike me as very heroic, regardless how many years uncut.

V8

MDW1954
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Re: 3 Dividend Hero Investment Trusts

#404869

Postby MDW1954 » April 16th, 2021, 11:10 pm

Lootman wrote:
NotSure wrote: Thanks for the heads up (whatever that means....).

Baseball term - enjoins the fielders to be alert to the next pitch.


Also a term used in aviation, to describe critical information from the cockpit instruments being displayed on the windscreen, so the pilot doesn't have to look down to see the information.

MDW1954

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Re: 3 Dividend Hero Investment Trusts

#404886

Postby richfool » April 17th, 2021, 8:40 am

These may well be dividend heros, but I doubt very much they are capital appreciation heros!

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Re: 3 Dividend Hero Investment Trusts

#404889

Postby JuanDB » April 17th, 2021, 9:11 am

richfool wrote:These may well be dividend heros, but I doubt very much they are capital appreciation heros!


Not so sure about that.

5 years share price returns
VWRL 77%
ATST 89%
BNKR 95%

CTY, yes, 3.58%

monabri
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Re: 3 Dividend Hero Investment Trusts

#404905

Postby monabri » April 17th, 2021, 10:27 am

Share Price

Image

Total Returns

Image


All graphs from Hargreaves Lansdowne

https://www.hl.co.uk/funds/fund-discoun ... ion/charts

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Re: 3 Dividend Hero Investment Trusts

#404922

Postby JuanDB » April 17th, 2021, 11:41 am

ReallyVeryFoolish wrote:So, pretty solid if unexciting (sometimes that's exactly what's required) total return portfolio? I wouldn't consider VWRL in the same sentence myself, but that's maybe just me.


I included it precisely because it is different. A passive, low cost world tracker that is a good default choice as a core holding (I personally have about 15% in it).

ATST and BNKR may not be the best performers out there, but they outperformed a reasonable baseline.

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Re: 3 Dividend Hero Investment Trusts

#404923

Postby NotSure » April 17th, 2021, 11:42 am

ReallyVeryFoolish wrote:So, pretty solid if unexciting (sometimes that's exactly what's required) total return portfolio?


Indeed. Things that go sideways while spitting out 4% can be a nice component of a portfolio IMHO. A similar instrument in some ways in VEMT (Vanguard EM Bond index), which I am also considering. It too has been very poor at growing and is well below it's peak. The concensus seems to be that we are in the late stages of this 12 year bull market, so the fact it has not jumped back post-Covid could even be seen as an advantage - it may n ot have as far to fall when the next bear arrives.


ReallyVeryFoolish wrote:I wouldn't consider VWRL in the same sentence myself, but that's maybe just me.


I assumed that was there as a benchmark? It certainly illustrated how poor City had been in growth terms. (edit: as now confirmed in a cross-post)
Last edited by NotSure on April 17th, 2021, 11:43 am, edited 1 time in total.

richfool
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Re: 3 Dividend Hero Investment Trusts

#404924

Postby richfool » April 17th, 2021, 11:43 am

Comparing them with each other doesn't prove a great deal. One should compare them with their peers in the same sectors

For example, compare Bankers and Alliance with the likes of Monks or Mid Wynd (in terms of capital performance), and compare City of London with the likes of Murray Income Trust (MUT) or pretty much any trust you like in the UK Equity Income sector.

Accepted I would have less of an issue with Bankers and Alliance than I would with CTY, which I sold over a year ago, because of its poor capital performance.

https://citywire.co.uk/wealth_manager/i ... Period:36;

https://citywire.co.uk/wealth_manager/i ... Period:36;

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Re: 3 Dividend Hero Investment Trusts

#404932

Postby Dod101 » April 17th, 2021, 12:14 pm

richfool wrote:Comparing them with each other doesn't prove a great deal. One should compare them with their peers in the same sectors

For example, compare Bankers and Alliance with the likes of Monks or Mid Wynd (in terms of capital performance), and compare City of London with the likes of Murray Income Trust (MUT) or pretty much any trust you like in the UK Equity Income sector.

Accepted I would have less of an issue with Bankers and Alliance than I would with CTY, which I sold over a year ago, because of its poor capital performance.

https://citywire.co.uk/wealth_manager/i ... Period:36;

https://citywire.co.uk/wealth_manager/i ... Period:36;


Then of course you need to look at the risk profile and so on. We all have our prejudices but I am very happy to hold Alliance particularly under its new outsourced investment style and have in the last few years been very happy to look at total return rather than just income. The graph clearly shows that my prejudice against City of London is well justified. Its result is no surprise as it is basically invested in HYP type shares and we know what they have done in terms of capital.

Dod

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Re: 3 Dividend Hero Investment Trusts

#404939

Postby monabri » April 17th, 2021, 12:44 pm

ReallyVeryFoolish wrote:Thanks monabri, a picture tells a thousand words as they say. Never really been a City of London fan. Recommending it always seems a bit of a cop out to me.

I suspect Merchants TR graph would sit somewhere in the middle of the green and blue lines.

RVF


Image

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Re: 3 Dividend Hero Investment Trusts

#404999

Postby forrado » April 17th, 2021, 9:09 pm

I ceased being concerned about such matters years ago. Since then, all I’ve collectively asked of my ISA portfolio of usual suspect income paying ITs is the maintenance over time of real spending power in terms of both capital and income. Also, over time, I’ve come to agree with the statement made by legendary Fidelity fund manager, Peter Lynch, on the topic of portfolio performance …

At any one time, a third of a portfolio’s holdings will be leading the charge, a third will be bringing up the rear, and what remains will be contently plodding along.

At the root of such a statement is the statistical phenomenon sometimes known as reversion to mediocrity, which is another way of saying every dog will have its day. On that basis, just because a laggard can’t match the performance of a leader doesn’t mean it should be disposed of if still able to contribute to the overall aims of the pack. Over what is now decades, I’ve lost count of the number of times my portfolio’s IT leaders have fallen back to become laggards, as laggards have advanced to become leaders.

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Re: 3 Dividend Hero Investment Trusts

#405622

Postby Arborbridge » April 20th, 2021, 3:47 pm

forrado wrote:I ceased being concerned about such matters years ago. Since then, all I’ve collectively asked of my ISA portfolio of usual suspect income paying ITs is the maintenance over time of real spending power in terms of both capital and income. Also, over time, I’ve come to agree with the statement made by legendary Fidelity fund manager, Peter Lynch, on the topic of portfolio performance …

At any one time, a third of a portfolio’s holdings will be leading the charge, a third will be bringing up the rear, and what remains will be contently plodding along.

At the root of such a statement is the statistical phenomenon sometimes known as reversion to mediocrity, which is another way of saying every dog will have its day. On that basis, just because a laggard can’t match the performance of a leader doesn’t mean it should be disposed of if still able to contribute to the overall aims of the pack. Over what is now decades, I’ve lost count of the number of times my portfolio’s IT leaders have fallen back to become laggards, as laggards have advanced to become leaders.


I happen to lean towards this POV. Over my investing career I have poured over invesment charts and performances decade in and out, devising methods for prune the worst and buying the best. I'm not sure that it ever makes much long term sense to worry too much because a) whatever you choose someone will find something that grows better - and run your nose in it, b) whatever you buy or sell will probably start doing the opposite of what you thought it would.

In the end, I've ceased to worry too much and have been fairly sanguine about my investments in the sound knowledge that you "pays yer money and takers per pick". That's not to say that I do not evolve the "basket" from time to time - I do - but I do not do it frequently or willingly.

CTY is a laggard at present, but wasn't always. Murray Income and DIG the Dog were my backmarkers for years but MUT got lucky with Brexit came good shortly after I sold it. Monks was a laggard, but then became notably good. Temple Bar could always be relied upon to be a contrarian safe place - until the market changed with Covid and it was trashed.
And Fundsmith and Nick Train's ITs? Brilliant, but who knows how long for. In the words of the one time manager of TR Eurpoean Trust (forget his name) "All one can do is hold on and enjoy the ride".


Pity me, folks for tomorrow I am supposed to be recommending an investment for my daughter's brand new ISA. An unhappy task: it's bad enough choosing one's own, without risking approbrium or guilty feelings. Well, it'll be something in the "fit and forget" range, and that's probably VWRL.


Arb.

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Re: 3 Dividend Hero Investment Trusts

#405629

Postby Dod101 » April 20th, 2021, 4:26 pm

I understand only too well the comments by forrado and Arb but I try not to follow them too closely. Professional managers like Peter Lynch (and they are still the same today) need to buy 'safety' shares to ensure that they do not stray too far from their benchmark. It was possible to spot the turning point with the likes of Monks simply by noting the change of manager some years back (I did not but sadly I was not looking) and as for City of London, well many of us got the clear signal for where it was going by our experiences with a HYP because it is like a HYP incorporated. That is not to say that it will not have its day in the sun again, but I think if I had held it I would have sold by now. Any share which gets undue attention needs to be treated with great circumspection.

All shares pause now and again in their progress and that is to be expected, but my aspiration is to try to identify when a share is pausing its progress for longer than I would find comfortable. In any case, I am always optimistic that there is another share which will perform better than the one I decide to ditch and as sure as 'ell I am not going to find it if I do nothing.

To come back on track, I have held Alliance since I returned to the UK in 1991. It had a torrid time in the first decade of this century with the unfortunate combination of a head strong CEO (before Katherine the not so Great) and a weak chairman in Lesley Knox (who incidentally has turned up as a Director of Legal & General. Fortunately L & G has I think a good number of competent directors). After the intervention of Elliott and the new investment management arrangements, Alliance has done very well. The dividend is modest but keeps growing and has done for 54 years apparently.

Dod

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Re: 3 Dividend Hero Investment Trusts

#405634

Postby Arborbridge » April 20th, 2021, 4:44 pm

Dod101 wrote:I understand only too well the comments by forrado and Arb but I try not to follow them too closely. Professional managers like Peter Lynch (and they are still the same today) need to buy 'safety' shares to ensure that they do not stray too far from their benchmark. It was possible to spot the turning point with the likes of Monks simply by noting the change of manager some years back (I did not but sadly I was not looking) and as for City of London, well many of us got the clear signal for where it was going by our experiences with a HYP because it is like a HYP incorporated. That is not to say that it will not have its day in the sun again, but I think if I had held it I would have sold by now. Any share which gets undue attention needs to be treated with great circumspection.

All shares pause now and again in their progress and that is to be expected, but my aspiration is to try to identify when a share is pausing its progress for longer than I would find comfortable. In any case, I am always optimistic that there is another share which will perform better than the one I decide to ditch and as sure as 'ell I am not going to find it if I do nothing.

To come back on track, I have held Alliance since I returned to the UK in 1991. It had a torrid time in the first decade of this century with the unfortunate combination of a head strong CEO (before Katherine the not so Great) and a weak chairman in Lesley Knox (who incidentally has turned up as a Director of Legal & General. Fortunately L & G has I think a good number of competent directors). After the intervention of Elliott and the new investment management arrangements, Alliance has done very well. The dividend is modest but keeps growing and has done for 54 years apparently.

Dod


Some of these remarks make you sound like a secret chart watcher ;) Most of the effects you've mentioned would have been flagged that way. And your comments about CTY quite condemn HYP too, which is an interesting observation for one who write on the HYP board. Yes, the thruth was that CTY got caught by Brexit as did my own HYP - quite how anyone could have guessed that the equally HYP-filled MUT would have scored in that period, I do not know. Frankly, I am of the opinion that luck has a lot to do with it. For years MUT was utterly lacklustre - indeed full of the type of safety shares you mention in your second sentence. Look at the composition of MUT and CTY and they weren't much different at that time - but maybe MUT was more awake and fleet of foot when it counted. One could not have been sure that would be the case with a previously stodgy lacklustre IT.

Arb..

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Re: 3 Dividend Hero Investment Trusts

#405647

Postby kempiejon » April 20th, 2021, 5:34 pm

Arborbridge wrote:Pity me, folks for tomorrow I am supposed to be recommending an investment for my daughter's brand new ISA. An unhappy task: it's bad enough choosing one's own, without risking approbrium or guilty feelings. Well, it'll be something in the "fit and forget" range, and that's probably VWRL.


Arb.


Very quick note on VWRL there is VWRP - the accumulating version - within an ISA, where rolled up income isn't an issue, it'll save a smidgen on re-investing dividends. My new iweb ISA this year is 100% VWRP.

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Re: 3 Dividend Hero Investment Trusts

#405653

Postby Arborbridge » April 20th, 2021, 6:17 pm

kempiejon wrote:
Arborbridge wrote:Pity me, folks for tomorrow I am supposed to be recommending an investment for my daughter's brand new ISA. An unhappy task: it's bad enough choosing one's own, without risking approbrium or guilty feelings. Well, it'll be something in the "fit and forget" range, and that's probably VWRL.


Arb.


Very quick note on VWRL there is VWRP - the accumulating version - within an ISA, where rolled up income isn't an issue, it'll save a smidgen on re-investing dividends. My new iweb ISA this year is 100% VWRP.


Thanks for that info - I'm glad you mentioned it.

Arb.


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