Law Debenture (LWDB) - 2nd Quarter Dividend

[Itsallaguess]

‎
The Law Debenture Corporation (Second Interim Dividend Announcement) -

• Declaring a second interim dividend of 7.625 pence per ordinary share payable in October 2023, representing an increase of 5.2% over the prior year's second interim dividend.

• It is the Board's intention for each of the first three interim dividends for 2023 to be equivalent to a quarter of Law Debenture's total 2022 dividend of 30.50 pence per ordinary share.

The combination of IPS' steady income and our strong reserves allows Law Debenture to continue executing its 45-year track record of maintaining or increasing its dividend payments.

This 7.625p Q2 dividend will be paid on 26 October 2023 to shareholders on the register at close of business on 6 October 2023. The Corporation's shares will go ex-dividend on 5 October 2023.

https://www.londonstockexchange.com/news-article/LWDB/dividend-declaration/16144874

Taking the above Q2 dividend announcement into account, when set against a current share price of 803p, gives Law Debenture (LWDB) currently sitting on a 12-month rolling yield of around 3.9%.

Cheers,

Itsallaguess

[BullDog]

LWDB makes a great core holding in a portfolio. I combine it with JGGI to diversify away from UK stocks. I think they fit well together.

[midgesgalore]

Over the piste I have done quite well with this IT, having first bought on the slippery slope of the market collapse at the onset of COVID with a 5.5% discount to NAV. Since then that purchase with various other top-ups I am 41% up including dividends.

One thing I have noticed since my first purchase is Law Debenture has generally been trading at a premium of a few percent except for a few brief excursions into discount, currently around 1% premium.
I keep wondering why that is?
For various reasons many other trusts have premium / discount running the opposite polarity due to sensitivities of lending costs and interest rates etc.

In my notes I see I received my first dividend of 19.4p on 16 April that year but ensuing dividends followed at 6.5p from then onwards (and always increasing). That could be they decided to make 4 x quarterly dividends instead of 2 x mismatched dividends in their financial year. I don't know for sure as I have no knowledge about that dividend schedule - prior to my interests in March 2020.

I know Law Debenture (LWDB) have an Independent Professional Services ("IPS") business attached to the trust but I don't know if that accounts for the difference - or does it?
In their annual report headed, 28 February 2023, they note their ("IPS") business "has funded approximately 34% of dividends paid by the Company in the last 10 years"
https://www.fundslibrary.co.uk/FundsLibrary.DataRetrieval/Documents.aspx/?type=sl.ra.full&id=f4019512-85de-421e-8037-70d51a63d5c5&user=W457BjhtaYM6DC%2bcZLrpEVy914O5THbkPiyFR7yPX1CeLOv%2frJR1VMpfsY9CkY4g&r=1

It could be the reason but I expect they owned their IPS business way before I made my first purchase.
Does anyone know why the jump from NAV average discount to average premium?

midgesgalore

[BullDog]

Over the piste I have done quite well with this IT, having first bought on the slippery slope of the market collapse at the onset of COVID with a 5.5% discount to NAV. Since then that purchase with various other top-ups I am 41% up including dividends.

One thing I have noticed since my first purchase is Law Debenture has generally been trading at a premium of a few percent except for a few brief excursions into discount, currently around 1% premium.
I keep wondering why that is?
For various reasons many other trusts have premium / discount running the opposite polarity due to sensitivities of lending costs and interest rates etc.

In my notes I see I received my first dividend of 19.4p on 16 April that year but ensuing dividends followed at 6.5p from then onwards (and always increasing). That could be they decided to make 4 x quarterly dividends instead of 2 x mismatched dividends in their financial year. I don't know for sure as I have no knowledge about that dividend schedule - prior to my interests in March 2020.

I know Law Debenture (LWDB) have an Independent Professional Services ("IPS") business attached to the trust but I don't know if that accounts for the difference - or does it?
In their annual report headed, 28 February 2023, they note their ("IPS") business "has funded approximately 34% of dividends paid by the Company in the last 10 years"
https://www.fundslibrary.co.uk/FundsLibrary.DataRetrieval/Documents.aspx/?type=sl.ra.full&id=f4019512-85de-421e-8037-70d51a63d5c5&user=W457BjhtaYM6DC%2bcZLrpEVy914O5THbkPiyFR7yPX1CeLOv%2frJR1VMpfsY9CkY4g&r=1

It could be the reason but I expect they owned their IPS business way before I made my first purchase.
Does anyone know why the jump from NAV average discount to average premium?

midgesgalore

One word - demand.

[SalvorHardin]

Many years ago the balance sheet didn't include anything for the IPS business. Consequently the market assigned a value to it which lead to Law Debenture's shares consistently trading at a premium to the quoted NAV (e.g. the 2010 annual report quotes an NAV of 342.9p and a share price of 356.6p as of 31st December 2010).

A few years ago Law Debenture started to include an estimate for the NAV of the IPS business and added it to the portfolio NAV (I first heard about this at the 2017 or 2018 AGM (can't remember which one)). When this happened the shares moved from a premium to a discount (ISTR around 10% initially). The discount has narrowed since then.

As to recent changes in the discount, IMHO it's nothing more than the usual noise that we see in the stockmarket. The fluctuations from small discount to small premium are nothing to be concerned about. The IPS NAV is a bit more reliable than the NAV for typical private equity investments in investment trusts (because we have more published information), but is less reliable than if the IPS was quoted separately on the stockmarket (because it's an estimated value rather than market value assigned by the stockmarket). As we know, the market's valuation of investment trusts' private equity investments can fluctuate quite considerably.