Bonds Advice

Questor: some spectacular gains from stocks, stability from bonds – our Income Portfolio in 2019


Questor Income Portfolio: the election gave our income stocks a late fillip, while bonds made steady income and some worthwhile capital gains

It was a year of two – rather unequal – halves for the Income Portfolio in 2019. Until the election our holdings were becalmed but many came to life as soon as the result was known, as we reported here two weeks ago. Let’s look back at some of the highlights.

Winners of 2019

Next, the retail chain highly regarded, not least by this column, for the adroit way in which it has managed the rise of online shopping, produced the portfolio’s best total return, 77.6pc. The capital gain was 73.5pc while dividends provided 4.1pc.

Renew Holdings, the engineering contractor, made a total return of 68.6pc: 65.4pc from the rise in the share price and 3.2pc from the divi.

Dairy Crest, the maker of Cathedral City cheese, gave readers a total return of 48pc – 46.5pc capital and 1.5pc income – before it left the portfolio in April as the result of a takeover.

In fourth place came Crest Nicholson, the builder, whose 33.5pc capital gain combined with 10.2pc in income for a total return of 43.7pc over the course of last year.

Legal & General, the insurer, produced a capital gain of 30.3pc and income of 7.2pc, making a total of 37.5pc. The property investment trust Regional Reit enjoyed a share price rise of 22.4pc and produced income of 8.9pc for a total return of 31.1pc.

OneSavings Bank, the buy-to-let specialist, made 30.3pc in all: 25.9pc from share price appreciation and 4.4pc from dividends. National Grid gained 23.2pc in capital terms and 6.2pc in income for a total of 29.4pc.

Next were our two generalist investment trusts, Schroder Income Growth and Invesco Income Growth. The former produced capital gains, income and total returns of 23.7pc, 4.9pc and 28.6p respectively; the latter’s figures were 21pc, 4.8pc and 25.8pc.

Sirius Real Estate, the specialist in German property added to the portfolio in November, has already made a 19.6pc total return, all of it from capital gains. The stock it replaced, Lloyds Banking Group, gained 11.6pc in capital terms and paid income of 6.4pc for a total of 18pc before its sale.

Other holdings to gain were Standard Life Investments Property Income Trust (total return 15.5pc), Lowland investment trust (9.7pc since it joined the portfolio in April to replace Dairy Crest), Northern VCT (6.3pc) and BMO (formerly F&C) Commercial Property Trust (3.1pc before its sale in January).

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New York-listed New Residential Investment Corp enjoyed a 10.7pc rise in its share price and its income produced another 13.6pc, but a 4.3pc currency loss trimmed the total return to 20pc.

Losers of 2019

Just three of the portfolio’s holdings made a loss on a total return basis. The biggest was Royal Mail’s 15.7pc – a 21.8pc fall in capital value partly offset by income of 6.1pc. We sold the stock in November.

Share in ULS Technology fell by 7.6pc over the year but income of 3.3pc trimmed the total loss to 4.3pc. Baronsmead VCT virtually trod water: a 9.6pc fall in the shares was almost cancelled out by income of 9.3pc.


Our bond holdings

You would expect more stability from bonds than stocks and so it proved. Income returns varied from 4.9pc from our Ladbrokes bond to 6.9pc from Premier Oil and Bank of Ireland, although capital gains were more diverse: from 0.6pc from Lendinvest to 8.1pc from Tesco, which also made the highest total return of 13.3pc. The smallest was 5.5pc from Ladbrokes. 

 Read the latest Questor column on every Sunday, Tuesday, Wednesday, Thursday and Friday from 6am.


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