we must sell these incomeless shares and buy more reliable assets

Linda J. Dodson

Drastic action is needed to maintain this portfolio’s income in these new, difficult circumstances, Questor has decided. Today we make the most far-reaching changes to our Income Portfolio since we established it in October 2016.

So far, as we wrote last week, four of our stocks, of a total of nine if we disregard investment trusts, have announced dividend suspensions. One more, Ten Entertainment, has said nothing but, as a bowling alley company, is unable to operate; accordingly this column expects it too to cancel its divi.

Stocks that pay no dividend have no place in our Income Portfolio, even in such extraordinary times, so we will sell all five of them.

Where, you will ask, can we find investments to replace them that will pay the kind of income we need?

In fact, sources of generous, sustainable and even rising income can be found. We have decided to use investment trusts exclusively as our replacement assets thanks to their built-in diversification and ability to invest in illiquid income-producing assets without limiting savers’ ability to get hold of their money if they need to.

We are not relying on trusts’ reserves, useful as those are, because we want sources of income that are inherently stable. We have chosen trusts that can expect the income that they themselves receive from their holdings to be maintained even during this crisis, no matter how long it lasts.

All but one of the trusts we have chosen invest in either property or infrastructure assets of various types. We have scrutinised their portfolios for evidence of the sustainability of their income and have read what they have told the market about how they are placed in relation to the coronavirus crisis. In all cases we have come away reassured.

Here then are the investment trusts that we advise readers to buy to replace the five stocks we are selling.

Triple Point Social Housing has in our view one of the securest income streams around: its tenants are housing associations that cater to vulnerable people and the rents are ultimately backed by the Government. It yields 5.5pc.

Source Article

Next Post

Subaru and Kawasaki to halt production for Boeing

TOKYO — Japanese aircraft parts makers are suspending production now that they are losing orders from Boeing amid the coronavirus pandemic. Subaru will suspend aircraft component manufacturing at a plant in Aichi Prefecture on Monday; production is scheduled to resume on May 11. The plant mainly produces central wings for […]