The Covid-19 pandemic has ravaged stock markets with waves of different variants over the last two years. The latest variant, Omicron, statistically is the most transmissible, making it potentially worse than the previous variants in terms of potential infections.
Therefore, the stock market could be staring at an extended period of high uncertainty amid the pandemic, with some governments already considering implementing new measures to mitigate the spread.
As a result, some investors could be contemplating putting some of their investments in income stocks while making their plans for 2022.
According to Janus Henderson Group PLC's (JHG, Financial) David Smith, portfolio manager of the Henderson High Income Trust PLC (LSE:HHI, Financial), U.K. dividends increased significantly amid the successful vaccination rollout, with analysts expecting 24.4% growth from 2020.
Speaking to Simon Elliot, head of investment trust research at Winterflood Securities, in a discussion about delivering income at a time of high uncertainty, Smith said the Henderson High Income Trust continued to increase dividend payments despite the challenges created by the pandemic using its revenue reserves.
According to Smith, the Brexit trade agreement announced on Dec. 20, 2020 has removed much of the uncertainty that imposed large discounts on U.K. stocks. “As a result, U.K. stock market valuations are cheaper when compared to international peers, despite the strong performance experienced recently,” he said.
The Henderson High Income Trust is one of the best dividend-paying trusts within Janus Henderson’s portfolio of funds. It has a dividend yield of 5.57% versus 3.54% for the group. It also trades at an attractive price-earnings ratio of 5.79 compared to 11.20 for the group.
In the last 12 months, shares of the Henderson High Income Trust gained about 20% compared to 36.81% for Janus Henderson. Therefore, the fund offers an exciting valuation multiple whilst leaving room for more upward movement.
Should you invest now?
From an investment perspective, investors seeking healthy continuous income payments could opt for the Henderson High Income Trust as compared to investing in Janus Henderson shares, which offer a lower dividend yield but pay significantly higher capital gains to investors.
Overall, both options look exciting to investors going into a potentially uncertain period in 2022 amid the coronavirus pandemic.
Janus Henderson's current price-earnings ratio is significantly below the Peter Lynch fair valuation of 15, which makes the stock a compelling option for value investors.
Conclusion
In summary, with both Janus Henderson and the Henderson High Income Trust trading significantly below their optimal valuation whilst offering solid dividend yields, now could be time to assess both stocks for potential income opportunities while preparing your strategy for 2022.
