Avantegarde wrote:
You might be interested in the example of (what was) the Standard Life UK smaller companies trust.
Having drained its reserves in the past couple of years to maintain dividends, it now says it will be replenishing its reserves, implying that dividends will not grow much, if at all, in the next few years.
Its rate of dividend growth has slowed down dramatically too.
Yes, such outcomes wouldn't be a huge surprise to be honest, but it would be the price to pay for missing out on a huge jolt downwards in delivered income from single-share holdings, as shown in the ArbHYP income chart posted earlier.
Like most things in life, there's no 'free lunch' in all of this, and one income-investment strategy compared to another is likely to have some weighting that's dependant on just how 'manually involved' an income-investor wants to be with their long-term investments, and as someone who largely moved away from single-share income-investments some years ago, with a view to looking for an approach that needs much less manual involvement in my direct investments, I am happy to see that the primary aims of that move have been delivered for me, in that both my direct 'hands-on' involvement with my income-investments has been drastically minimised since doing so, and the broad portfolio-level income delivered from my largely income-IT holdings has been much, much smoother and more predictable in the years since.
Both of those aspects carry a significant weighting in my personal income-investment requirements, but I do think it's important to acknowledge that other approaches might be preferable where investors might consider
other aspects to hold more important weightings in their own considerations...
I should also note that it's important to realise that not all geographical markets will recover from the recent market turbulence at the same pace, and one of the other aspects of my move to a much more income-IT based portfolio has been to be able to look at more diverse 'growthy' markets for significant portions of my income-IT holdings, where there might be a level of de-coupling in terms of the pace of recovery, when compared to low-growth markets like the UK, which I note is an area related to the Standard Life UK smaller companies trust that you mention...
In terms of this ongoing thread though, I certainly don't think we're in a position yet where we can start to claim any hard conclusions, and I'm just happy to have started this discussion two years ago, where we can now clearly note the robustness of the IT-based income delivery up to this point, and hopefully monitor things going forward now that we can see Arb's HYP income recovering somewhat, to see how both of those portfolio-level components do from here in the years to come...
Cheers,
Itsallaguess