J#39: Double Digit Dividends Fund is receiving its first dividends already. We also made 2 more investments for future harvest
30th of June marks an important milestone for the Double Digit Dividends Fund. It’s the end of the Fund’s first quarter in existence and the Fund will also receive its first dividend payment on 30th June from one of our investments that pays a quarterly dividend.
Consistent with the Fund’s Private Placement Memorandum terms — 100% of all dividends and fixed income coupon payments, net of withholding taxes and the fund’s running costs, that the Fund receives shall be distributed every quarter to the Fund’s investors.
The bulk of dividend returns from our existing investments are scheduled to be paid in the upcoming quarters – see graph below.
To reiterate, we are expecting a blended dividend yield (net of withholding taxes) of 11.9%. This return excludes any potential capital gains (and losses) and foreign exchange gains and losses.
The graph above provides you with a month-by-month percentage of the blended 11.9% yield you will receive for each month. For example, in June 2021 we are expecting 9% of the 11.9% in annual dividend yield to be paid. This profile is based on the historical timing of the dividend payments made by the companies we have invested in. Companies can, and sometimes do, change their payment dates and hence the profile is only our best forecast.
An updated graph will be provided after the close of the first quarter. The graph will change as we are busy investing and placing orders now. Specifically, we have:
- Invested in a Middle Eastern company producing carpets that are sold to a worldwide customer base – its main export markets include North and South America, Europe, the Middle East, Asia and Australia. Business is booming.
- It currently yields more than 12.5% (net of withholding taxes), has a 3-year dividend history, and no long-term debt. With over US$600 million in sales in the last financial year, it’s a key player in this industry. Liquidity for us to buy and sell our investment is also not an issue, it has a 65-day daily average turnover of more than US$500,000.
- Invested in an African financial services company that yields 13% (net of withholding taxes) and has a 2-year dividend track record. Its tier-1 capital ratio and total capital ratio relative to other banks is reproduced below.
Comparing these ratios is a sound way to analyse the risk profile of banks. These ratios measure a bank’s cushion to absorb losses before it becomes insolvent.
The ratios are standardised by the Basel Committee on Banking Supervision and therefore comparisons between banks are possible. The higher the ratio number, the safer the bank. Our investment stacks up well against most well-known global banks.
- Increased our position in Eastern Company (Egypt). The reasons for our first purchase can be read here.
- Placed an order for an African microfinance company that yields more than 13% net of withholding taxes. This is no small company. It has over USD 1 billion in assets and a strong customer foot-print in 11 sub-Saharan countries.
As per my email exchange with our broker, EFG Hermes’s head of trading (reproduced below), what we are finding with this company is that there are strong bids but no sellers. Poor liquidity does not mean it is a poor investment. Poor liquidity when there are buyers about but no sellers is a tell-tale sign that it is a good investment! We have just got to be patient with this name and work the order book.
- Invested in a Russian company that has high-capacity infrastructure to produce and transport its energy related product. We envisage this company will double its earnings in 2021 and have a yield of 10.2% by June next year. Further details can be read here.
A dividend profile graph to reflect the above investments shall be provided in my quarterly report to investors and by way of a Journal to all readers thereafter. The quarterly report shall include the portfolio’s progress and the composition of the portfolio being constructed.
Also on my radar are two Chinese stocks. One sells industrial machinery, and the other is an energy producer. Both have a yield greater than 10% and with high daily turnover. Subject to their stock prices not materially increasing, we shall invest in these names with the fresh investments in the Fund in the upcoming quarter (01 July to 30 September 2021).
Should you wish to participate in the above investments or add to your existing investment in the Double Digit Dividends Fund, please do complete a SUBSCRIPTION form that is available for download at The Fund page on our website.
Alternatively, should you wish to reach me directly,
my email address is petertan@double-digit-dividends.com
Subscriptions to the Fund are on a quarterly basis. 30th of June reflects the close of the 1st quarter of the Fund’s existence and hence subscription forms (to be emailed to our administrator, Circle Partners) are required within a week from today. Should you wish to invest, completing the subscription forms are therefore a priority.
A Message for My Children
It was a delight that we had lunch together this week.
It has been about 21 months since I had a meal with the both of you together in a home setting. Since December, it has been fortnightly zoom calls and dinners in a restaurant with the professional help of various parties. I hope that you like my new home and the neighbours (and now friends) that I introduced to you. I am looking forward to your next visit at my home and perhaps, in addition to dinner, we can do some other social activities together.
I am doing everything in my power so that you do not grow up estranged from your father. The reason for parent to child estrangements varies from case to case. Take for example a friend of mine, Simon (not his real name). Despite having a warm and meaningful relationship with his young adolescent daughter, his relationship suddenly, like a light switch turning from on to off, turned for the worse. He has now not seen his daughter for 4+ years.
In Simon’s case, he shared with me that it is likely that the harmful and repugnant practice of Parental Alienation (‘PA’) has occurred during his divorce. To give you a background of what PA is and the complexity Simon has had to navigate, this 7-minute long video provides a good overview.
What strikes me in my journey with you is that many things in life we simply take for granted. Things can, and as have in our case, turned like a light switch from ‘on’ to ‘off’ and now back to ‘on’ in an instant. In most families, having a meal all together is a common occurrence. Trust me, even a common meal should not be taken for granted as things can change in an instant. The secret of happiness is to continually appreciate your many blessings no matter how common or ordinary they may seem.
At some point in the future, we should discuss what has happened and why we were estranged. It may be years from now that we ‘unpack’ the reasons and evaluate how we got to this point, but it is important to do.
Understanding your childhood and learning from the many experiences is important to understanding your own self, to strengthen relationships and to build knowledge. We’ll leave this important (and painful) discussion until the time is right and, for now, let’s just enjoy each other’s good company.