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BMO UK High Income revamp yet to pay dividends

BMO UK High Income revamp yet to pay dividends – BMO UK High Income has released results covering the year to the end of March 2019. The NAV total return for the ordinary shares and the B shares was 3.5% compared to the total return of the  benchmark of 6.0%. The share price total return for the ordinary shares and B shares was 3.7% and 4.5% respectively. Revenue earnings per share decreased over the year to 3.77p .The total dividend/capital repayment in respect of the year ended 31 March 2019 amounted to 5.04p. [here’s where it gets confusing] The dividend was covered by earnings because the earnings per share figure is based on both the 86.9m ordinary shares in issue and the 31.0m B shares, while the dividend of 5.04p is just paid to the ordinary shareholders [the B shares get a capital repayment instead, which was not covered by capital profits – capital earnings per share were a 0.19p loss. So, on balance not a great year for the trust.]

The manager has been reshaping the portfolio away from the big, high yielding traditional constituents of UK equity income portfolios and into a high conviction (35 holding) more small and mid cap biased portfolio. However, the shift in emphasis on market caps did not play out well in an environment where large cap stocks outperformed.

Outgoing chairman, Iain McLaren, said “Whilst the performance is behind the benchmark during this period of transition, we are confident that the changes being made will deliver over the longer term. The Manager has been clear that he wants to move away from the traditional mega-cap income model of owning the top 10 index constituents,… This is a challenging transition to make, especially given the uncertainty in markets and the fact that these larger businesses are often deemed safe-haven assets in periods of heightened volatility. In tandem with these sales, he has rotated into areas that are under-owned or under-researched, but where he sees significant value on offer over the longer term.”

BHI / BHIB / BHIU : BMO UK High Income revamp yet to pay dividends

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