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HL select UK Income shares

Our Investment Strategy

AccumulationIncome ?

Sell: 98.62p|Buy: 98.62p|Change -0.37p (-0.37%)

Correct as at 21/02/2020

Sell: 111.65p|Buy: 111.65p|Change -0.42p (-0.38%)

Correct as at 21/02/2020

Important information - The value of this fund can fall as well as rise so you could get back less than you invested, especially over the short term. The information shown is not personal advice, if you are at all unsure of the suitability of an investment for your circumstances please contact us for personal advice. The HL Select UK Income Shares Fund is managed by our sister company HL Fund Managers Ltd.

Seeking long-term returns driven by sustainable dividend growth

We believe income investing isn’t just about the next dividend. It's about creating the combination of rising income, backed by capital gains that maximises wealth over the long term. A very high yield today can mean a lower total return in the long run, because the company isn't reinvesting enough in future growth.

We want to provide investors with an attractive level of income today, but more importantly we aim to provide as much potential for long-term dividend growth as possible. Companies that grow their dividends usually see their shares appreciate over time too – in this way a rising income can also translate into long-term capital growth, though this is not guaranteed and investors could get back less than they invest.

Find out what we hold and why

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We look for strong cash flow, backed by robust finances that can support a growing dividend, year after year.

How we choose shares

We seek businesses that we believe can reliably pay increasing dividends years out into the future. We focus on companies' financial strength, their ability to generate cash and their prospects for profit growth. Please note yields will vary and are not guaranteed. Not every holding will tick each box but most of the companies we invest in will share many of the following characteristics:

  1. A sustainable starting yield
    A company must have the free cash flow to support its current dividend, as well as investing back into the business for future growth.
  2. Debts firmly under control
    Debts, dividends and downturns do not mix well. We want stocks that can shrug off any economic storms and carry on rewarding shareholders, rather than have to kowtow to their bankers.
  3. Strong returns, backed by cash flow
    High margins and high returns on capital attract us and tend to be backed up by strong cash flows – the makings of a great dividend stock.
  4. Recurring revenues
    Customers that come back again and again make it easier to pay a consistent dividend, so we value businesses with recurring revenues highly.
  5. Strong track record
    A history of paying dividends, and especially rising ones, can be a good sign of a shareholder friendly attitude in the boardroom.

A balanced approach

We hold a mixture of higher yielding companies, whose dividends form the bedrock of the overall income, and some exciting, lower yielding stocks that we believe have outstanding earnings and dividend growth prospects. We believe this gives us the right balance, of income today and growth for the future, to achieve a compelling overall long-term return for our investors. We are free to invest in companies of all sizes, and our portfolio includes large, medium and some higher risk smaller companies. Please remember investments, and any income from them, will fall as well as rise in value so investors could get back less than they invest.

We hold around 30 stocks, spread across 15 different sectors. This means that every holding could make a real difference to performance, though it also increases risk compared with a more diverse portfolio. That's why we focus so much on financial strength, as well as dividend potential.

We believe this gives us the right balance, of income today and growth for the future.

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Meet the Fund Managers

Steve Clayton, Fund Manager

Steve started working in the City in 1987, after gaining an economics degree from the University of Cambridge, and has worked in the stock market ever since. Early experience at Royal Life, NPI and Halifax eventually led to a Partnership at Mirabaud Securities LLP. That move saw Steve switch from running institutional portfolios to providing leading fund managers in the UK, Switzerland and North America with advice on stock selection and strategy. Steve joined Hargreaves Lansdown in 2014 to provide equity research to our clients and create the HL Select Fund range.

Charlie Huggins, Fund Manager

After gaining a First in Biochemistry at the University of Oxford, Charlie joined Hargreaves Lansdown in 2011. Working within the Investment Research team, Charlie has focused on equity research and investment management, gaining his CFA® charter. Since Steve Clayton joined HL in 2014, Charlie has worked with Steve to develop HL’s equity fund management capabilities.

Follow Steve and Charlie's strategy

HL Select UK Income Shares - Quarterly Review

The last three months saw the stock market return to a gentler pace of change after the sharp falls and recoveries of the previous periods. Read more

Managers' thoughts

Why we sold Domino’s Pizza

We have decided to exit our position in Domino’s Pizza. The shares had been held in both the Select UK Growth and UK Income funds since launch. Read more

Fund changes

Raising the Dividend

We are delighted to announce that we have raised the regular monthly dividend payment by 5%. Read more

Fund changes

Read our blog

Ready to invest?

Invest now View the Key Investor Information

Invest with a lump sum from £100, or start a monthly direct debit from just £25 per month.