Investors hunting a Henderson Far East Income yield of 9.61% to build a second income from £9,999 will find the trust’s dividend record difficult to dismiss, but its NAV performance against peers raises questions worth weighing first.
The ISA wrapper comes first
Before stock selection, the structure of the investment matters. A Stocks and Shares ISA shelters every penny of dividend income from HMRC and removes exposure to capital gains tax on any growth.
The arithmetic is straightforward. Put £9,999 into shares yielding 7% and you receive just under £700 in dividends. For a higher-rate taxpayer outside an ISA, that falls to roughly £632 once the dividend tax charge applies. The gap compounds over time as the portfolio grows.
Tax treatment depends on individual circumstances and may change. This article is not tax advice; readers should take professional guidance before making investment decisions.
Why the FTSE tracker sets a low bar
A fund tracking the FTSE 100 is the obvious starting point for UK equity income. The London Stock Exchange lists the index’s current dividend yield at 3.06%, a figure that supersedes the 3.1% cited in some published estimates. On £9,999, that produces roughly £306 a year.
That is a significant gap against higher-yielding alternatives. Roughly 60% of London-listed shares pay dividends at all, and a large number yield well into the mid-to-high single digits.
Henderson Far East Income yield: the case for and against
Henderson Far East Income (LSE: HFEL) is one of the more prominent high-yield options on the London market. Its current dividend yield stands at 9.61%, according to Hargreaves Lansdown. The trust’s annual report for the year ended 31 August 2024 shows net assets of £366m, a NAV per share of 221.97p, and a total dividend of 24.60p per share, up from 24.20p the prior year. The yield on the year-end share price at that date was 10.8%.
There is also a conflict worth flagging: the snippet cited a 9.6% yield; Hargreaves Lansdown shows 9.61%; the annual report’s year-end figure was 10.8%. The Hargreaves Lansdown figure is the most current available from an accessible source and is used here.
HFEL pools capital across 68 positions, giving investors instant diversification across the Asia Pacific region. The half-year report to 28 February 2026 shows South Korea as the largest geographic exposure at 24.2%, ahead of China at 17.1% and Taiwan at 12.3%. South Korea’s weighting rose sharply from 12.6% at 31 August 2025; China’s fell from 29.9%. Financials made up 35.1% of the portfolio by sector, with Technology at 25.4%.
Investment income on the revenue return line reached £14,275k for the half-year ended 28 February 2026, nearly double the £7,481k recorded for the equivalent period a year earlier, the same half-year report discloses.
The trust’s 18-year consecutive dividend growth record is a genuine anchor for income investors. On £9,999 invested at 9.61%, annual dividends would be just over £961. Inside an ISA, that income is sheltered from tax entirely.
Where HFEL has lagged
The yield is high for a reason. The half-year report to 28 February 2025 shows HFEL’s NAV total return at 40.8% over ten years (dividends reinvested, excluding transaction costs). The AIC sector average over the same period was 100.7%. Over one year, HFEL returned 5.7% on NAV versus the sector average of 12.3%.
That underperformance against peers is the trade-off investors accept for the elevated income. A concentrated Asia Pacific mandate, with its exposure to geopolitical risk and currency movements, has weighed on capital returns even as dividends have continued to grow.
Ongoing charges stand at 0.97% per year, with net gearing of 6%, adding a modest layer of risk to the portfolio’s returns in falling markets.
Building a portfolio versus using a single trust
HFEL offers a ready-made diversified solution for investors who want high income without constructing a portfolio themselves. For those willing to do the work, assembling a spread of individual dividend shares across sectors and geographies can reduce reliance on any single trust’s mandate or management decisions.
Either route works inside an ISA. The next dividend catalyst for HFEL shareholders is the ex-dividend date of 30 July 2026 for the announced cash dividend.
