UK Edition
Questor: yes, divis were decimated by coronavirus but there are signs of a recovery
Questor Income Portfolio: shareholders are ‘extremely likely’ to receive £21bn in dividends by June while another £12bn should also be paid
Dividends were devastated in the first lockdown and its aftermath. What are the prospects now?
One stockbroker has combed through every company of any size on the stock market to assess its chances of paying a divi.
Peel Hunt categorised listed firms into those extremely likely, before June next year, to make payments, those likely to make payments, and those unlikely and extremely unlikely.
It said the extremely likely category contained 158 stocks, whose expected dividends totalled £20.7bn, while the likely category contained 124 companies and accounted for a total of £12bn in divis. It also put the value of cancelled and cut dividends at about £36bn.
Of particular interest to our Income Portfolio is that both National Grid and Legal & General were in the “extremely likely” category. These are the portfolio’s only remaining London-listed individual stocks.
It was notable that L&G offered, assuming that it did indeed pay the divi that Peel Hunt expected, the highest yield of all the “extremely likely” payers in the FTSE 100.
Update: Regional Reit
Regional also featured in the “extremely likely” category, although this will hardly come as a surprise to regular readers of the column.
To add further reassurance over the trust’s ability to pay dividends, it announced on Tuesday a further improvement in its rent collection numbers: 99.2pc of rents due for the first quarter of the year have now been paid, 97pc of those for the second quarter and 93.5pc for the third. The overall figure for the year so far is 96.6pc.
This compares with 98.1pc for the equivalent period last year. Hold.
Questor says: hold
Ticker: RGL
Share price at close: 64.2p
Update: property funds
Our Income Portfolio’s exposure to property comes via investment trusts rather than ordinary, “open-ended” funds for various compelling reasons detailed here in the past. However, yet another benefit of trusts over funds has now emerged.
Property funds may shortly be banned from being held in Isas. This is because the City regulator wants to make investors in such funds give between 90 and 180 days’ notice if they want to make a withdrawal, so that the managers have time to sell properties should many savers want their money back at the same time.
But HMRC rules stipulate that all Isas need to offer quick access to money – within 30 days. The taxman has started a consultation exercise, ending Dec 13.
Naturally, property investment trusts will not be affected as shares in trusts can always be sold and such sales do not cause the fund managers to sell holdings because there is always a new owner of the shares.
Update: Triple Point Social Housing
This property trust said this week it had bought 11 properties that between them added 133 units of special needs accommodation to its portfolio.
One aspect of the transaction caught Questor’s eye: five of the newly acquired properties are leased to their housing association tenants on the basis of “upward-only” rent reviews tied to the retail prices index.
The RPI measure of inflation tends to be higher than the more common consumer prices index so these leases can be expected to boost the trust’s income slightly more from year to year than its CPI-linked leases, which include those on the other properties just acquired.
Triple Point said the properties generated net initial yields “in line with the company’s existing portfolio”.
Questor says: hold
Ticker: SOHO
Share price at close: 111.5p
Wasps retail bonds
These bonds are not part of our portfolio but we suspect some readers may hold them so offer this brief update.
The issuer, Wasps rugby club, has been hit by the pandemic and wants to vary the bonds’ terms in order to give itself more flexibility. Crucially though, it intends to maintain interest payments and pay back the amount borrowed on or before the maturity date of May 2022.
Bondholders are being asked to approve the changes at a meeting to be held via video conference next Thursday. More details are available via your broker.
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