City Natural Resources tops up dividend from capital – City Natural Resources High Yield Trust has published results for the year ended 30 June 2018. Its NAV return over the year was 12% – 5.4% behind the return on its benchmark. A widening of the discount left shareholders with a return of 9.9%. The dividend was maintained at 5.6p despite a dramatic fall in earnings to 3.28p from 5.08p. the balance of the dividend will be paid from revenue reserves. The board is still targeting a 5.6p dividend for next year.
The chairman had this to say about revenue: “The Investment Manager has increased the portfolio’s allocation to equities as foreseen by this year’s strategic review, and has selected equities with an eye to total return and without regard to their yield. As anticipated, the dividend is uncovered for the current year and the Board has used distributable reserves to fund the shortfall. Notwithstanding this use of reserves, the Board believes that an increased allocation to equities as the sector recovers will deliver the best net asset value total return to shareholders at the same time as maintaining the level of dividends they receive.”
A new £20m unsecured revolving credit facility, with Scotia Bank (two year term and interest at base rate plus 1.05% per annum), was used to repay the company’s convertible unsecured loan stock.
The manager’s report does not really detail why the fund lagged its benchmark during the year.
CYN : City Natural Resources tops up dividend from capital