Be upfront and get the bad news out of the way – advice that no PR person or politician has ever felt confident enough to follow. So the dividend distribution from the Bearbull Income Portfolio for the first half of 2022 was 10 per cent lower than 2021’s first half (see table). It was also the lowest level for the first half since 2012, which means it was below 2020’s Covid-affected payout.
| Bearbull Income Portfolio distributions | |||||
| Year ended | Payout (£) | Change | Fund yield (%) | Cumulative payout (£) | |
| 2018 | 1st half | 6,396 | -9% | 4.1 | 182,223 |
| 2nd half | 9,186 | 10% | 6.3 | 191,409 | |
| Total | 15,581 | 1% | 5.2 | ||
| 2019 | 1st half | 7,882 | 23% | 5.5 | 199,290 |
| 2nd half | 8,719 | -5% | 5.9 | 208,009 | |
| Total | 16,601 | 7% | 5.7 | ||
| 2020 | 1st half | 5,223 | -34% | 4.5 | 213,233 |
| 2nd half | 5,290 | -39% | 4.7 | 218,522 | |
| Total | 10,513 | -37% | 4.6 | ||
| 2021 | 1st half | 5,342 | 2% | 4.1 | 223,865 |
| 2nd half | 7,639 | 44% | 5.5 | 231,504 | |
| Total | 12,982 | 23% | 4.8 | ||
| 2022 | 1st half | 4,821 | -10% | 3.4 | 236,325 |
| Source: Investors' Chronicle | |||||
To sugar the pill a bit – the timing of payments meant there was just one first-half distribution from Real Estate Credit Investments (RECI), so there should be three in the second half. The snafu at insurance specialist R&Q Insurance (RQIH) – formerly Randall & Quilter – which cost 2021’s final dividend, was an event way out on the fuzzy end of the distribution curve so could it have been anticipated? Reverse engineer these two and the payout would have been 5 per cent higher than 2021.
Interestingly, the annualised yield on the fund’s average first-half value was, at 3.4 per cent, its lowest since 2002’s first half. Even with that bit of reverse engineering, the yield would have been just 4.0 per cent (the lowest since 2007). Partly that was a function of success. The fund’s average value for the first half was 8 per cent higher than 2021’s.
That will probably unravel if UK equities follow their American superiors into a bear market. Yet they still look cheap as chips to dollar-denominated investors, which may explain why the FTSE All-Share index, the Bearbull fund’s benchmark, is still only 7 per cent off February’s all-time high. Not that I am banking on the resilience continuing, which is why the income fund is sitting on over £34,000 in cash (13 per cent of its value). More will be coming in, assuming the holding in R&Q is ditched, as it must be now the dividend has been axed.
So between now and September a high priority must be attached to finding holdings in two companies whose activities are plausible and understandable, revenues and profits are dependable and growing, and share rating and dividend yield are acceptable. Easier said than done.
