High-yielding trust Henderson High Income (LON:HHI) modestly beat its composite benchmark in H1 as takeovers lent a helping hand. Chairman Jeremy Rigg said high energy prices, supply chain issues and higher price inflation had provided ‘a challenging mix’ for the trust.
And he cautioned that the on-off nature of the Middle East ceasefire provides an ‘unstable environment’ for the rest of the year.
The good news for investors in the trust is dividend payouts from UK companies have ‘continued to be positive’, despite pockets of weakness such as UK housebuilders. And Rigg remains ‘confident’ in manager David Smith’s ability to provide shareholders with a high income return.
A touch ahead in H1
Henderson High Income Trust invests in companies offering higher levels of income generation and scope for capital growth over the medium term.
Smith focuses on financially-robust companies capable of delivering sustainable and growing income. These holdings are complemented by a bond allocation targeting higher-quality issuers.
| 3 years | 5 years | 10 years | |
| NAV total return (%) | 49.2 | 60.9 | 115 |
| Benchmark (%) | 46.3 | 51.7 | 104 |
Source: Henderson High Income Trust, H1 results
For the six months to June 2026, Henderson High Income delivered a net asset value (NAV) total return of 6.3%.
That was slightly better than the 6% return generated by the benchmark. This is a composite of 80% of the FTSE All-Share Index and 20% of the ICE BofA Sterling Non-Gilts Index. However, the trust’s share price total return was better at 8.7% as the NAV discount narrowed from 5.7% to 3.7%.
Performance drivers
Performance benefited from holdings in Schroders (LON:SDR) and DCC Energy (LON:DCC), which received bids from Nuveen and a private equity consortium respectively.
Overseas winners included Texas Instruments (NASDAQ:TXN) and Engie (EPA:ENGI).
Semiconductor manufacturer Texas Instruments benefited from robust demand from the build-out of data centres in the US. And Engie’s acquisition of UK Power Networks went down well with investors.
Unfortunately, homewares leader Dunelm (LON:DNLM), recruiter Michael Page (LON:PAGE) and tobacco company Imperial Brands (LON:IMB) detracted from returns.
Dunelm reported softer trading due to subdued underlying market conditions. Michael Page suffered from a lacklustre recruitment market and fears over the impact of AI on employment. And market share losses soured investor sentiment towards Imperial Brands.
Buys and sells
During H1, Smith initiated a new position in engineering firm Bodycote (LON:BOY), which recently agreed to a cash acquisition by US private equity firm Veritas.
He also bought global beer and soft drink maker Carlsberg (B:CPH:CARL), seeing potential for ‘organic volume recovery across its beer portfolio, as well as margin expansion following the acquisition of Britvic’.
Smith sold containerboard-to-paper bag maker Mondi (LON:MNDI) and money-saving platforms operator Mony Group (LON:MONY). ‘We sold Mondi given our concerns on oversupply in the European paper and packaging industry which is putting pressure on pricing in an environment of subdued demand,’ he explained.
While Mony’s short-term cash flows are ‘unlikely to be impacted from agentic AI’, Smith feels they could be over the medium term, which is likely to depress the valuation.
With an attractive yield of 5.4% and a 13-year track record of consecutive dividend growth, Henderson High Income Trust should appeal to the more cautious dividend investor.
The £348 million cap trust’s blended approach, combining equities with a meaningful allocation to bonds, supports a higher and more diversified income stream. This approach also means the fund is more defensive than a traditional equity-only strategy.
Performance has been resilient over time, with the trust outperforming its composite benchmark over the past three, five and 10 years. This reflects the benefits of its dual equity and bond allocation. However, this bond allocation means the trust may struggle to keep pace with a strongly rising market.
