Investment Trust Dividends
Thursday 25 July
Brunner Investment Trust PLC ex-dividend payment date
North American Income Trust PLC ex-dividend payment date
Sequoia Economic Infrastructure Income Fund Ltd ex-dividend payment date
Sirius Real Estate Ltd ex-dividend payment date
Tufton Oceanic Assets Ltd ex-dividend payment date
The UK is currently perceived as cheap, home to out-of-favour, downtrodden sectors that have struggled over the last decade. It is weighted towards the more value-oriented sectors, like banking and energy, which have failed to keep pace with the rapid growth of technology stocks over the years. Reviewing the data from the last three years to the end of June 2024, trusts with more balanced approaches and those leaning towards value have performed well. Temple Bar (TMPL), is one of the most value-tilted strategies across the sector, meaning it has benefitted from UK value outperforming UK growth this year. City of London (CTY) also leans a little towards value and has performed well over the period. That said, manager Job Curtis isn’t a pure value player. He emphasises companies with robust balance sheets capable of sustainable cash generation and good growth potential, alongside attractive valuations, as he thinks it supports both dividend and future capital growth, contributing to the trust’s resilience and impressive dividend track record over time.
| THREE-YEAR RETURN (CUM FAIR NAV) | EQUITY STYLE VALUE % | EQUITY STYLE GROWTH % | EQUITY STYLE CORE % | RANKING | |
| Edinburgh Investment Trust | 36.0 | 22.0 | 38.2 | 36.1 | 1 |
| Temple Bar | 33.9 | 72.3 | 7.5 | 16.2 | 2 |
| City of London | 29.9 | 55.5 | 16.4 | 31.7 | 3 |
| Merchants Trust | 29.4 | 64.6 | 3.8 | 40.8 | 4 |
| Law Debenture | 29.2 | 48.1 | 20.6 | 30.0 | 5 |
| BlackRock Income and Growth | 21.3 | 38.3 | 31.6 | 31.0 | 6 |
| Murray Income | 15.7 | 33.8 | 37.3 | 39.6 | 11 |
| Three-year total return | |||||
| FTSE All-Share | 23.9 |
Source: Morningstar
Edinburgh Investment Trust (EDIN) tops the table and has from its balanced style over this period. EDIN underwent a change in management in March 2020, where the portfolio was revamped to focus on a growth-at-a-reasonable-price (GARP) approach, which blends elements of growth and value. EDIN’s new manager, Imran Sattar, came on board this year, and much like his predecessors, echoes this focus, preferring to invest in both growth and value companies as well as those with latent recovery potential. This multi-style and flexible process is designed to reduce the volatility of returns through the economic and market cycle, and has resulted in sector-leading performance over the last three years.
We decided to merge both the UK All Companies sector and UK Equity Income sector together, which left us with a large list of UK trusts. For the sake of keeping the data readable, we selected the top five, to keep things consistent for readers, but also highlighted a few trusts of interest further down the list. As we can see from looking at the four trusts following EDIN in the table above, each strategy is titled to value, a pattern followed by most others in the UK peer group.
BlackRock Income and Growth (BRIG) and Murray Income (MUT), on the on the other hand, place an emphasis on balancing quality, income and valuation, adopting more of a blended strategy when investing in the UK, quite different from most peers.
Adam Avigdori of BRIG prefers to stay style-agnostic, meaning the portfolio is not strongly tilted to either growth or value, but a balance of the two. He argues that markets have shifted into ‘goldilocks’ territory, which, in this context of slowing and in cases falling inflation, has signalled the peak for interest rates and certain broad macroeconomic indicators are not expected to deteriorate further. He argues that within this environment, his focus on investing in quality companies that are cash generative, have good growth prospects and sit at reasonable valuations, which in our view demonstrates blending aspects of both styles, could be better placed to drive returns over the long term. Consequently, he argues that purely style-focused strategies might not continue to drive markets as they have in the past.
Charles Luke and Iain Pyle, managers of MUT, echo the belief on quality, arguing it allows them to blend the most appealing aspects of both growth and value strategies. This leads them to target companies with good quality characteristics, including strong business models, robust balance sheets, and compelling ESG characteristics, as well as seeking out businesses with attractive income profiles, given that dividend yield acts as a valuation backstop. They also believe that a focus on high-quality companies demonstrating these traits offers fewer tail risks and a greater margin of safety, which in turn can lead to less volatile and more resilient earnings streams over time.
By emphasizing quality, income, and valuation, both BRIG and MUT aim to navigate market uncertainties and provide stable, long-term returns to shareholders.
Kepler
I’ve bought 1573 shares in SDCL for 1k
I intend to buy a further 1k of AEI, if I can get a better entry point.
With the changes to the Snowball, I should be able to confirm next years fcast of 9k and a target of 10k, after the dividends for September are announced.
I’ve bought for the Snowball
2165 shares in JLEN for 2k
1309 shares in SUPR for 1k
by Charlie Keough
Having multiple streams of passive income is the dream for millions of investors. There are plenty of ways to achieve this. I could start a business or buy property. But I think the easiest way to start out is by buying dividend shares.
Famous investor Warren Buffett once said: “If you don’t find a way to make money while you sleep, you will work until you die.” That’s a mantra that’s driven most of my investment decisions.
During my time investing, I’ve slowly been building up my nest egg. In the years to come, I’m confident that it’ll provide me with a solid source of passive income.
If I were starting from scratch today, here’s what I’d do.
Consistency is key
There is one tip that I deem to be imperative. That’s to invest on a regular basis.
This can be difficult, and life can get in the way. Unexpected outgoings crop up all the time. And it’s smart to have an emergency fund for times like this. However, by choosing a select amount, say £200 a month, and ensuring that I invest that every month, I know I’ll be able to achieve my goals more quickly.
Investing regularly provides so many benefits. For example, by doing so, I’m pound-cost averaging. This means by drip-feeding my money into the stock market, I’m not trying to time the market. As they say, time in the market beats timing the market.
With that in mind, by investing regularly I can also benefit from compounding. This means I’ll be earning interest on my investments as well as the extra money I make.
If u want to do nothing and sit thru the thick and the thin, the thing to remember is that gains are unlimited and losses limited to 100% of your investment if u don’t CostPriceAverage.
U knew MRCH was a dividend hero and u were waiting for an entry position.
Mr. Market gave u an opportunity, even though at the time every bone in your body was telling u not to buy. U decide to buy as the yield as had risen to 8.5%.
U decide to KISS and re-invest the dividends.
U now decide to take out your profit and leave in your stake, as u would like to own the Trust, when u start your de-accumulation ‘pension’ yielding 4.8%. U have achieved the holy grail of investing, in having a Trust that pays u a dividend and sits in your account at zero, zilch, nothing.
The cash taken out re-invested, could yield 8%+ to grow your Snowball.
Gore Street Energy Storage announces a new dividend policy alongside its full-year results. Brunner mentions the Medicis in its Half-year Report after the share price tacks on 26%, while Polar Capital Technology reveals it is looking to lower its share price after a strong run.
ByFrank Buhagiar•19 Jul, 2024•
GSF’s NAV per share for the year came in at 107.0p compared to 115.6p 12months earlier. The lower outcome is largely down to external factors including the high interest/inflation rate environment. Chair, Pat Cox, doesn’t sound overly worried “We expect to see improving market conditions as inflation continues to subside and rates come down.” Dividends for the year totalled 7.5p per share, meaning the fund has generated a +48.4% NAV total return since the 2018 IPO. As Cox points out “Despite challenging market conditions, the Company has achieved significant growth by raising new funds and expanding our diversified energy storage portfolio to approximately 1.25 GW across five markets.” What’s more, with £60.7 million in cash plus a further £58.6 million in debt headroom, the company is in a strong financial position to drive further growth and “take another significant step forward in scale”.
Shares didn’t react too well to the results though – closing down 6.6% on the day while the discount widened to -39.73% from -35.45%. At first glance, the reaction is somewhat puzzling for, as JPMorgan points out “The revenue and NAV had been well flagged”. There was news on the dividend front, however, including a target for the current financial year of 7p per share. That’s lower than the 7.5p for the year just gone. The company highlights “This is consistent with investors’ expectations based on the current NAV.” That’s not all “from the 2024/25 financial year, the profile and quantum of dividend distributions will be more closely aligned with operational and other cashflows rather than NAV.” The prospect of lower and more variable dividends, a possible cause for the underwhelming share price reaction then.
JPMorgan: “(The change in dividend policy) looks a sensible move given that NAV is not directly related to current cash flows, and when dividend cover is <1.00, the payments have to be part funded by expensive debt.”
Jefferies: “The decision to align dividends with operational cash flows instead of NAV makes sense. Furthermore, increased operational capacity in FY25, in turn strengthening dividend cover, will enhance the fund’s capital allocation flexibility.”
Liberum: “The weakness of the GB market has been well documented in 2024. As a result, the diversification of geographic markets remains a positive for the GSF portfolio, allowing poor revenue performance in GB markets to be partially offset by a strong performance in the Irish and Texan markets in FY 24. We view the current discount to NAV as providing an attractive opportunity.”
Numis: “Given the significant increase in capacity expected in the portfolio, GSF has scope to meaningfully grow its revenues and ebitda in the coming months and makes it our preferred play amongst the pure play battery peers.”
BUT’s +12.8% NAV total return for the half year, not far off the +13.9% posted by the composite benchmark (70% FTSE World Index Ex UK and 30% FTSE All-Share Index). BUT theglobal investor’s share price outshone them all, rising +26% as the discount narrowed to -5.5% from -15.4%. A vote of confidence in the trust’s bottom-up approach which, as Chair, Carolan Dobson, explains, is favoured because “in short it is much easier to predict the future behaviour and potential performance of an individual company than it is an entire economy or geographic region.” Can’t argue with that. “For this reason, our managers concentrate staunchly on building the company’s portfolio from the ground up, finding companies that meet Brunner’s strict investment policy”.
The investment managers see reasons to be positive. That’s because “After the mono-dimensional markets of the past few years it is interesting to see such different types of equity investments leading this year.” These include “companies which are creating scarcely believable technologies” on the one hand. While on the other, “traditional banks – a business model which dates to the Medicis – are having a field day. This wider market breadth is reassuring and suits Brunner’s balanced approach.” The market liked what it heard – share price added 10p on the day to finish at 1385p.
Winterflood: “BUT benefited from overweight positions in Industrials and Financials, as well as underweight in Consumer Staples. Key detractors included not owning Nvidia”.
PCT saw its NAV per share rise by an eye-catching +40.8% over the full year, outperforming the already impressive +38.9% posted by the benchmark (sterling terms). The NAV growth, a vindication of a pivot towards AI, particularly the semiconductor and component subsectors. That strong performance has meant the share price regularly trades above the £30 level now. Turns out having such a high share price can be problematic for some investors. As Chair, Catherine Cripps, explains “a higher share price might be a barrier to investment for certain investors including regular savers who may wish to invest smaller amounts per transaction on a regular basis.” So, the Board is proposing to subdivide each existing share into 10 new shares to lower the share price. Subject to approval at the upcoming AGM, shareholders can therefore expect a sharp drop in the share price, albeit for a good reason.
Looking ahead, sounds like the Investment Managers are not losing any sleep over the global economy “whether there is a recession or not and what equity markets do over the next six to 12 months perhaps misses the point. Astounding new innovations such as AI augur well for a longer-term innovation-led growth and prosperity cycle.” Shares closed down on the day by almost 5% at 3235p, a case of shareholders taking profits after such a strong run perhaps.
Numis: “We continue to rate Ben Rogoff highly and think that Polar Capital Technology is an attractive way to gain diversified exposure to global technology stocks.”.
Looking for dividend stocks ? These 3 investment trusts might be great buys
Story by Royston Wild
The Motley Fool
An investment strategy focused on dividend stocks can be a great way to build long-term wealth
By reinvesting dividends I receive, I can substantially boost my returns by earning money on my initial capital investment as well as those income payments.
With my total dividends rising over time as the number of shares I hold increases, the power of compounding significantly enhances my overall returns, leading to exponential growth in my investment portfolio.
Investment trusts can be excellent shares to buy to help me make this a reality. Many are focused specifically on generating income for their shareholders. And with a diversified range of assets and professional management teams, they offer the potential for steady and reliable income streams.
There are many such trusts for UK investors to choose from today. Here are three of my favourites that I think are worth serious consideration.
City of London Investment Trust
City of London Investment Trust (LSE:CTY) is one of the London stock market’s greatest dividend aristocrats. It’s raised the annual dividend for a staggering 57 years on the spin.
At 432p, the trust carries a trailing dividend yield of 4.7%. That’s more than a percentage higher than that of the broader FTSE 100 index.
City of London’s highly geared towards British blue-chip stocks like BAE Systems, RELX, HSBC and Unilever. These businesses tend to be sound investments over time, thanks to their market-leading positions and solid balance sheets.
More than 88% of City of London’s capital is allocated in UK shares. Investors should be mindful that this could lead to disappointing results if economic conditions in Britain worsen.
Alliance Trust
Alliance Trust (LSE:ATST) may be a better buy for investors seeking greater geographical diversification. Right now, 57% of its money is tied up in US equities. The remainder is spread broadly across other global regions.
As with City of London, the trust is also focused on stable, market-leading multinational businesses. Key holdings here include Microsoft, Amazon, Visa and Nvidia.
Alliance has a larger weighting towards tech stocks than many other trusts. This gives investors a chance to exploit hot growth themes like artificial intelligence (AI), though on the downside it also means returns may be more vulnerable during economic downturns.
At £12.20 per share, the trust’s trailing dividend yield is 2.1%. It has also raised annual dividends for 57 straight years.
The Merchants Trust
The Merchants Trust (LSE:MRCH) has fewer years of steady dividend growth than those other two. But at 42 years, it can clearly still be considered a top dividend aristocrat.
Some of the largest holdings here include GSK, Shell, British American Tobacco and Barclays. Almost 45% of its capital is tied up in just 10 companies though, which makes it less diversified in this respect than certain other trusts.
At 576p per share, Merchants boasts a trailing dividend yield of 4.9%. Its exposure to cyclical, sensitive, and defensive sectors suggests it could continue to deliver a healthy passive income to investors.
The Snowball is currently on track to earn 9k of dividends this year, for the accumulation stage for your pension, using a dividend re-investment plan.
The Snowball has 100k invested in dividend paying Trusts and it’s likely that u do not have 100k to invest or if u do u would still like to see how the Snowball performs before committing. I have intentionally not included any new funds but that might be one way of growing your retirement ‘pension’.
The Snowball’s target yield is 7% compounded as this doubles your income in ten years, if held thru thick and thin and there will be plenty of thin.
9k compounded at 7%
over ten years would grow to an income yield of 18%
over twenty years would grow to an income yield of 35%
Using the 4% rule, if u want to gamble with your retirement, your 100k would need to grow to around 800k, GL with that.
Mr. Market has been very accommodating to dividend hunters in Investment Trusts and the Snowball currently yield in excess of 7% but compound growth of 7% remains the plan.
Current dividends to date £6,268.14
Do not scale to arrive at a total for the year.
If u don’t plan, u fail to plan.
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