Bad luck versus imprudence: Take a leaf out of a Lincolnshire farmer's book

Much needed shift in corporate culture needed

The impact of the current unprecedented environment on UK income investors has been well publicised. But as we reflect, it is important to make a distinction between bad luck and imprudence.

My father is a farmer and I admire, in an admittedly biased manner, how he runs his business. Farming is a commodity sector with a cyclical and unpredictable earnings stream attached. Farming is also capital intensive - it costs a lot to invest in more land and machinery. Growth is not easy, nor cheap, therefore compounding growth really is tough and ensuring his business carries negligible debt is paramount. This affords flexibility and allows him to invest when opportunities arise. This flexibility is enhanced by taking only a variable amount of capital in the form of a dividend ...