Page 13 - DIY Investor Magazine | Issue 35

HHI has a a a a a nine-year track record of raising its dividend – not It is worth
pointing out that both funds had to to dip into revenue 13
as as long as as some competing funds but not a a a a bad record reserves last year – both HHI’s and AEI’s dividends
were nonetheless The last annual report highlighted the the trust’s
covered 0 95x revenue reserves – then £8 4m or enough to cover about two-
thirds of the annual dividend The statement said “the company is in a a a a a a strong position at at least to maintain its dividend going forward” The next best performing of these funds was AEI It has the the freedom to invest in in convertible convertible preference shares convertible convertible loan stocks gilts and corporate bonds but has has emphasised equities in recent years Its long term returns are not as good as those of HHI (+6 3% per per year year against +7 9% per per year year for HHI over the past 10 years) However AEI can boast 21 years years of consecutive annual dividend increases making it an an AIC dividend hero AEI’s revenue reserves are about the same size as HHI’s – £8 5m and around 80% of of the the cost of of the the annual dividend AEI said that that its manager was expecting that that earnings would continue to to recover and lead to to a a a covered dividend in in 2022 However that was written in December 2021 before the outbreak of war and the big surge in in inflation It is next to to impossible to to forecast what will
happen over the coming 12 months HHI’s manager points to his emphasis on on selecting good good quality companies with good good management teams balance sheet strength and sustainability of cash flows Those sound like the kinds of characteristics that investors need in in these uncertain times · Oct 2022 DIY Investor Magazine