Henderson International Income Trust (HINT) was launched in 2011 with the aim of enabling UK-based investors to diversify their sources of income by investing overseas. As shown in the chart below, the UK market suffers a high degree of dividend concentration, with the top 10 dividend payers accounting for 55% of total UK dividends in 2018 compared with 9% for the top 10 payers globally. Since launch, HINT’s investors have enjoyed total returns of c 10% a year, supported by well-covered dividends that have grown at a compound annual rate of 5.2%. While manager Ben Lofthouse’s value-oriented investment approach has been somewhat at odds with growth- and momentum-driven markets recently, he is finding plenty of attractive investment opportunities.
The global equity market shrugged off geopolitical worries to post a 20%+ total return in 2019 and 2020 has begun positively. However, with aggregate valuations looking extended (the Datastream World index forward P/E is only 0.1 point off its 10-year high), investors with a focus on value and income may be better rewarded over the longer term than those who simply ‘buy the market’.
HINT is the only global equity income investment trust that specifically excludes the domestic market, to which investors may already be sufficiently exposed.
Manager Ben Lofthouse has built a successful track record since HINT’s launch in 2011, with c 10% annual total returns and year-on-year dividend growth.
The manager seeks cash-generative companies with secure and growing dividends and HINT’s own dividends are fully covered by income.
At 17 January 2020, HINT’s shares traded at a 2.0% premium to cum-income NAV. Reflecting its unique investment mandate and the appetite for income, the trust has traded at an average premium of 0.8% since launch and the board regularly issues shares to meet demand. HINT currently offers a dividend yield of 3.3%, broadly in line with the peer group average despite excluding the higher-yielding UK market.