Fund Profile


Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by HICL Infrastructure. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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Since 2006, HICL Infrastructure (LON:HICL) has aimed to deliver enduring, sustainable dividend and capital growth by investing in the highest-quality core infrastructure assets. The team have increasingly been diversifying away from UK PPP investments in a bid to extend the average life of the portfolio, improve the inflation linkage and broaden the exposure of the portfolio to minimise investment risk.

This process continues, with the manager of HICL having made several new significant investments during the last financial year in the electricity transmission, communications and transport sectors. As we show in the Portfolio section, the portfolio continues to evolve and, in a number of ways, the portfolio metrics have improved considerably through the manager’s activity.

As we discuss in the Gearing section, another development came in May 2023, which saw the board and manager of HICL arranging long-term, fixed-rate debt. This is the first time HICL has borrowed long term, and in doing so has reduced the cost of borrowings, as well as reduced the risk to the portfolio of further rises in interest rates. The board sees it as crucial that HICL retains a strong balance sheet.

With a dividend target of 8.25p, despite not seeing an increase since 2020, this still represents the highest cash dividend in absolute terms compared to the immediate core infrastructure peer group, and was fully covered last year. At the current price of 134p, HICL offers a prospective yield on the current share price of 6.2%. We continue to expect that dividend cover should gently rise. The board’s dividend policy has been to pay out at least as much as the prior year’s dividend, but has balanced a desire to see increases in the dividend with the “need to protect the longer-term interests of shareholders and future-proof HICL’s investment proposition”.

Analyst's View

With inflation rearing its head in a significant way for the first time since the trust’s launch, it is perhaps understandable that there may have been expectations of a more direct impact from inflation on higher-dividend guidance. However, as we discuss in the Portfolio section, HICL’s manager has been rebalancing away from PPP assets to capture longer-term cash flows with greater growth and/or inflation linkage, which tend to initially provide lower yields. We understand that these investments have been made with a view towards building out HICL’s earnings base for the future.

The annual results released recently illustrated the portfolio’s ability to capture inflation, principally in the NAV, which has helped act as a counterbalance to the negative of rising interest rates. As the managers highlight, the benefit of inflation compounds over time and, alongside the investment activity, has significantly enhanced the portfolio’s cash flow and earnings profile over the long term.

The discount to NAV now stands at 18.6%. In our view, the derating reflects short-term sentiment and rising short-term government bond yields, rather than reflecting the long-term attractions of the trust. As we discuss in the Dividend section, there is a case to be made that HICL shareholders are forgoing jam today in order to build the foundations of future dividend growth, long into the future. With dividend cover improving over time, HICL will be a direct beneficiary, in total-return terms, of any increase in long-term expectations for inflation. Long-term investors may see the current discount as being a potentially interesting entry point.


  • Lower-risk, institutional-quality infrastructure assets within a liquid vehicle that has scale
  • Steady and resilient yield, with a dividend that is cash-covered
  • Returns are positively correlated to inflation


  • Evolution of the portfolio is exposing shareholders to new risks and/or correlation to economic activity
  • Capital is at risk if the manager is unable to continue to extend the weighted average asset life
  • Dividend cover is relatively low, at 1.03x on a cash basis
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2024 Kepler Alternative Income Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for alternative income... Find out more

Fund History

10 Jul 2024 Things can only get better
Discounts are yawning but markets are thawing and boards are on the offensive; Labour might not be the only thing making a comeback this year...
03 Jul 2024 Fund Analysis
HICL’s increased dividend target comes amidst other positive signs…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
20 Dec 2023 Fund Analysis
Green shoots are appearing for HICL’s dividend cover…
09 Aug 2023 Should I stay, or should I go?
Re-appraising the invitation to the bond party…
07 Jul 2023 Fund Analysis
HICL’s portfolio continues to evolve, building foundations for dividend growth…
03 May 2023 Alt-right or alt-wrong?
Infrastructure and renewables have moved from alternative to mainstream assets - what could be next..?
22 Mar 2023 Good vibrations
We identify some sectors with structural discounts we think could close over time…
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
16 Dec 2022 Fund Analysis
HICL’s portfolio continues to broaden but the shares have been de-rated...
16 Jun 2022 Fund Analysis
HICL is in a prime position to benefit from higher inflation…
11 May 2022 Catch a tiger by the tail
As inflation bites harder than it has for decades, we consider the best ways for investors to hang on to their capital...
04 May 2022 Time to change the record
We ask whether equities can still offer meaningful diversification or whether investors need to turn to alternatives…
09 Mar 2022 Private markets: A closer look at infrastructure and renewables
We examine the £27bn listed Infrastructure and Renewable Energy Infrastructure sectors…
21 Dec 2021 Fund Analysis
Cash covered dividend and link to inflation underlines HICL’s appeal…
01 Dec 2021 How to protect your portfolio from inflation
We highlight trusts which could appeal in an environment where 'transient' inflation is here to stay...
16 Jun 2021 Fund Analysis
Covered dividend target this year means HICL looks less expensive than peers…
12 May 2021 Riders on the storm
We look at the yields in the alternatives space and how they have been affected by the pandemic…
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
09 Sep 2020 Time to switch horses?
We look at what returns are likely from equity markets in the coming decade and identify which alternatives could offer similar or greater returns for lower levels of risk…
13 Aug 2020 Fund Analysis
HICL offer institutional quality infrastructure assets, delivering an attractive income...
23 Apr 2020 Sucker punch
Two of our analysts debate the merits of equity income and alternative income trusts at this point in time...
29 Oct 2019 Fund Analysis
Institutional quality infrastructure assets, delivering an attractive income...
09 Oct 2019 Bond proxy?
As a replacement or complement for longer duration bonds, listed alternative income funds look an interesting, well… alternative..
06 Mar 2019 Stairway to heaven
Our research shows that reinvesting the income generated by alternative assets could add a significant boost to long-term portfolio performance…
14 Feb 2019 Fund Analysis
Predictable cashflows, uncorrelated to the economic cycle
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