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The role of dividends

In the case of the Bearbull fund, the amount distributed in the first half was £5,342. That was just 2 per cent more than for 2020’s first half when dividends were being savaged. Yet, last year’s mayhem chiefly started in the second quarter by which time the fund had quite a lot of income under its belt, especially the best part of £1,000 from bowling-alley operator Hollywood Bowl (BOWL), whose bosses would not have been so generous had they any inkling their business was about to be shut down by government diktat. So a 2 per cent rise is okay, especially as the fund now has more holdings in lower – and hopefully safer – yielding equities than a year ago. Besides, it still generated a 4.1 per cent annualised yield, the best part of 1.5 times that of the FTSE All-Share index; this despite the fact its value rose 15 per cent in the first half, compared with 9 per cent for the All-Share.

Bearbull Income Fund distributions
Year ended Pay out (£)ChangeFund yield (%)Cumulative payout (£)
20181st half6,396-9%4.1182,223
 2nd half9,18610%6.3191,409
 Total15,5811%5.2 
20191st half7,88223%5.5199,290
 2nd half8,719-5%5.9208,009
 Total16,6017%5.7 
20201st half5,223-34%4.5213,233
 2nd half5,290-39%4.7218,522
 Total10,513-37%4.6 
20211st half5,3422%4.1223,865
Source: Investors Chronicle
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