We turned our Income Portfolio on a sixpence in the spring when the pandemic led to a series of dividend cancellations and threatened further damage to the income generated by our holdings.
Now that several months have passed, let’s look at whether the changes we made then have benefited our portfolio.
What we sold, what we bought
To recap, on April 17 we sold ULS Technology, Renew Holdings, OneSavings Bank and Crest Nicholson, all of which had scrapped their dividends, as well as Ten Entertainment, which seemed likely to (and later did). We replaced these stocks with five investment trusts: Triple Point Social Housing, Urban Logistics Reit, Residential Secure Income, Sequoia Economic Infrastructure Income and Biopharma Credit.
A week later we sold Invesco Income Growth and Standard Life Investments Property Income investment trusts and replaced them with two other trusts, JP Morgan Claverhouse and Murray International.
That was not because the former had scrapped their dividends but because we feared future cuts and expected more sustainable divis from the new holdings.
On May 22 we sold Next, reluctantly, because it too had scrapped its dividend the previous month. We replaced it with Real Estate Credit Investments, a high-yielding investment trust, the following week.
We also made one change to our bond holdings: on May 15 we bought some Halifax perpetual bonds to replace the Premier Oil ones we had sold in March as the economic chaos brought about by the pandemic precipitated a crash in the price of crude oil.
This made us fear not only for continued interest payments from the Premier Oil bonds but for the very survival of the company and the return of our capital at maturity.
Have the changes helped?
We’ll look at the effect of these changes on our income first. We chose our new holdings for the sustainability of their dividends so it’s not surprising that they have performed as expected in this respect. All have paid exactly what we anticipated at the time.
Among the six individual shares we sold, none has so far reinstated its divi. Of the two investment trusts that we discarded, Invesco Income Growth has so far maintained its dividend but Standard Life Investments Property Income cut its latest quarterly payment by 40pc. The Premier Oil bonds have continued to produce their regular interest.