Henderson International Income Trust (HINT)

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Henderson International Income is value-orientated portfolio of global dividend-paying equities that aims to deliver a growing income stream combined with attractive capital appreciation over the medium to long-term.

The portfolio is managed by Ben Lofthouse, who is a valuation driven investor who focuses on undervalued companies that can generate strong free cash flow and, therefore, potentially produce a sustainable and growing dividend. Typically, he looks for companies run by strong management teams, with healthy balance sheets, have high barriers to entry and business models that aren’t too capital intensive.

Henderson International Income is highly differentiated from its peers in the AIC Global Equity Income sector and the open-ended IA Global Equity Income peer group due to the fact Ben deliberately avoids the UK, arguing that most investors turn to global income portfolios in order to diversify their portfolio away from popularly-held FTSE stocks such as HSBC, Royal Dutch Shell, GlaxoSmithKline and British American Tobacco. As we note in our latest research, dependency on UK stocks for dividends is surprisingly high in the two global income sectors – meaning Henderson International Income is the only trust in the AIC Global Equity Income sector to have a 0% weighting to the UK.

This positioning hasn’t negatively affected performance either, as since launch in April 2011 to the end of December, the trust has delivered an NAV total return of 112% compared to an average return of 90% across the peer group.

The trust has also paid a growing and covered dividend each year since inception, though its yield has come down to less than 3% following decent share price apperception, it has produced more in total income over five years than its average peer and generated stronger annualised dividend growth than its two main rivals in the sector, Murray International and Scottish American.

As a result of this performance profile and its positioning (which has made it attractive for income investors searching for greater diversification), demand for shares in Henderson International Income have been strong since its launch, with the trust (on average) having traded on a narrow 0.2% discount over the past five years. The board has used this as an opportunity to grow the trust significantly, though the merger with the now defunct Henderson Global Trust has also helped in that regard.

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Updated: 12 January 2018

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