Stock market

10%+ Yield! I am eyeing this share for my SIPP in May.

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I am thinking of buying my SIPP shares in May.

As the old saying goes, “Sell ​​in May and move away.“But as an investor with a long-term view, I’d be happy to buy shares at the right price in any given month and then hold them for years to come.

12% decline in one year

The share I have my eye on. Henderson for East Income (LSE: HFEL).

Over the past year, the share price has fallen 12 percent. Meanwhile, the five-year decline is a painful 38 percent.

So, what is it about this share that caught my attention?

The long-term trend has been downward, but the share value is up 12% from the October lows. The investment trust focuses on East Asia, as its name suggests.

In recent months, there have been several signs that key economies in the region are in better shape than some investors had feared.

This year, the Nicky Index (roughly, equal to Japan’s FTSE 100) hit a new all-time high, finally surpassing the point it last reached in the 1980s, when Japan was the big economic story on the global stage.

High yield investment trust

While Henderson Far East Income hasn’t rewarded shareholders with price growth in recent years, it has certainly delivered on the earnings front. Trust does what it says on the tin.

At the current share price, the dividend yield is 10.6%. It pays quarterly and has a track record of increasing annual dividends in recent years. In fact, its stated purpose is, “Providing shareholders with increasing total annual dividend per share as well as capital appreciation

That’s all well and good – but no part is guaranteed to make a profit. Whether or not Henderson For East Income continues to pay them, let alone increase them annually, depends on its financial performance.

Exposure to key Asian markets

Japan is currently not among the top 10 markets for the trust. China holds only 14 percent of its portfolio.

Its top three markets are South Korea, Australia and Taiwan. Together, they hold about half of the trust’s portfolio.

The biggest holding is. Taiwan Semiconductor Manufacturing, a chipmaker whose shares have more than tripled in the past five years. The second is the largest. Samsung Electronicsup 69 percent over the past five years.

I like the fact that if I buy some shares in Henderson For East Income, my SIPP will be exposed to such large, proven businesses that I think look well-positioned for long-term trading success.

Should I buy?

There are risks, though.

Even with their global exposure, such firms could see their profits decline if Asian economies slow, on top of broader global risk.

About a third of the portfolio is in financial services shares, which could mean that a recession in key Asian economies could hurt performance.

Still, I find Asian exposure and double-digit yields attractive for my SIPP. I plan to buy if I have spare cash to invest in May.


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