Montanaro UK Smaller Companies plans 4% dividend – Montanaro UK Smaller Companies has announced a significant increase in its future dividend distributions. The company intends to pay a regular quarterly dividend equivalent to 1% of the Company’s NAV on the last business day of the preceding financial quarter, being the end of March, June, September and December. The dividends will be paid in May, August, November and February each year.
The plan is that the revised dividend policy will be effective from the financial quarter ending 30 September 2018, in other words, the first enhanced dividend is expected to be declared in October and paid in November.
There will be no change to the existing investment policy or to the strategy.
The board said that it “is aware of the current low interest rate environment and that a growing number of investment trust investors are seeking investment opportunities with a regular and attractive level of income alongside capital growth. The board believes that the revised dividend policy should therefore broaden the appeal of the company’s shares particularly to retail investors, which would be in the best interests of the company and existing shareholders as a whole.”
[QD comment: Montanaro UK Smaller Companies is by no means the first investment trust to go down this route. Ahead of the announcement it was trading at the widest discount of any UK smaller companies trust – close to 20% which compares to 8.5% for the median trust in this sector. The shares are little changed on the news.]
MTU : Montanaro UK Smaller Companies plans 4% dividend