Henderson High Income (HHI)

Henderson High Income (HHI) continues to differentiate itself within the UK equity income space through its blended approach, combining equities with a meaningful allocation to bonds. This structure supports a higher and more diversified income stream, whilst also introducing an element of defensiveness relative to more traditional equity-only strategies.

The Portfolio is focussed on financially robust companies capable of delivering sustainable and growing income, complemented by a bond allocation targeting higher-quality issuers. Recent activity reflects this approach, with additions to the bond portfolio including large, well-capitalised financial institutions such as AXA, ING Group and NatWest Group, alongside new equity positions in Bodycote and selected REITs such as Big Yellow Group.

This approach is also reflected in the trust’s Dividend profile. HHI currently offers a yield of 5.6%, a premium to both the broader UK market and peer group, alongside a 13-year track record of consecutive dividend growth, achieved at an annualised rate of 2.1%. Income is also well diversified, with less reliance on a small number of large-cap payers than the wider market. This is complemented by the use of cheap long-term Gearing, agreed in the past at very attractive rates, which supports income through positive carry and helps fund the bond allocation, whilst also contributing to a more stable overall return profile.

Performance has been resilient over the longer term. Over five years, HHI has outperformed its composite benchmark, reflecting the benefits of its dual equity and bond allocation. Over the past 12 months, returns have been solid in absolute terms, although relative performance has lagged the strong and concentrated rally in UK equities, alongside the moderating impact of the bond allocation. At the time of writing, the trust trades on a 4.2% Discount, in line with its five-year average.