Troy Income & Growth delivered a total return on net assets of 14.7% and a share price total return of 14.8% for the year ended 30 September 2016. By contrast, the return on the UK market was 16.8%. The fourth interim dividend of 0.625p represented a 4.2% increase on the dividend of 0.6p paid each of the first three quarters of the financial year. The full year dividend totalled 2.425p and represented a 4.3% increase over the previous year. The Board intends, barring unforeseen circumstances, to pay a dividend of at least 0.625p per quarter in the current financial year (2.5p for the full year) and remains committed to a progressive dividend policy.
23.145m shares were issued to meet natural demand, increasing the issued share capital by just under 9%.
Exposure to consumer staples averaged around 21% during the year and again made the largest contribution to the positive absolute return generated over the period. With the exception of a modest holding in Dairy Crest which returned +10.6%, all their investments in this sector delivered returns in excess of +20% with Unilever and British American Tobacco returning +40.4% and +40.3% respectively. As the oil price rallied so did the companies relatively modest oil and gas investments. Royal Dutch Shell and BP both rose in excess of +35% making a strong absolute contribution. However, when compared to the performance of the FTSE All-Share the portfolio suffered on a relative basis from having a lower exposure to oil and gas and no investments in the mining sector.
The only sector to detract on an absolute basis from performance was the financials sector. Here investments in property and banks bore the brunt of the market’s post Brexit concerns. Despite this, they remain confident in the long term value represented by these businesses.
One of the most significant drivers of performance within the Company was currency. The sterling value of their US and Swiss listed stocks rose and made a strong contribution to returns despite the US dollar exposure being partially hedged. The impact of the devaluation of sterling also had an impact on the performance of those stocks that have global revenue bases and report in sterling; 36% of the dividend income is determined in a foreign currency and here the sterling weakness was also a significant positive.
TIGT : Troy Income & Growth benefits from consumer staples exposure