Merchants Trust

Earnings

We continued to see solid corporate earnings from the companies we invest in over the period. Whilst it was not a completely positive picture across all sectors, in aggregate the trusts’ earnings generated a total income of £28.1m. This was 1.1% above the £27.8m generated for the first half of the previous fiscal year. In terms of earnings per share (EPS), issuance of new shares over the equivalent period last year meant that the EPS reduced by 1.7% to 17.1p (2023: 17.4p).

Dividends

The positive earnings picture noted above has given the board confidence to announce an increased Merchants dividend whilst allowing us to continue rebuilding revenue reserves that were partially utilised during the pandemic. As a reminder, at the start of this financial year, revenue reserves per share stood at 18.1p. Not all trusts can or will provide such income support and smoothing, which is why Merchants is one of a handful of companies to be awarded the AIC’s coveted Dividend Hero status from a universe of well over 400 listed companies.

With the final dividend of the 2024 financial year approved by shareholders at the AGM, Merchants has raised its dividend for 42 consecutive years and, with the increased dividend noted in this report, we remain well positioned for the future.

The board has declared a second quarterly dividend for the current financial year of 7.3p per ordinary share, payable on 15 November 2024 to shareholders on the register at close of business on 11 October 2024. A Dividend Reinvestment Plan (‘DRIP’) is available for this dividend for which the relevant Election Date is 25 October 2024 and the ex-dividend date is 10 October 2024. This means that for the first half of the financial year ending January 2025, the aggregated dividend will be 14.5p compared with 14.2p for the same period last year, a 2.1% year-on-year rise.

MRCH

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Advantages of Investment Trusts in a dividend re-investment plan.

1. Revenue reserves, used to pay the dividend in time of stress e.g. The Covid Crash
2. May trade at a discount which means a bigger yield when u buy
3. Covid crash – knowing it was AIC dividend hero, u could have bought when the yield was 8% which u should receive for as long as u own the Trust.
4. Gently increasing dividends plus the chance of a capital gain.
5. If u bought around the covid crash and simply re-invested the dividends, u could take out your stake and re-invest in another high yielder, whilst earning dividends on a share that sits in your account at zero, zilch, nothing.