Polar Capital Global Financials (PCFT) has announced that it expects to declare dividends for the current year, at levels equivalent to last year, in due course. The news will be well received by shareholders, who last month voted to indefinitely extend PCFT’s life.
Distributable reserve facet of investment trusts to allow PCFT to support dividend at equivalent level
In a statement this morning, PCFT said the following:
“In light of the exceptional market conditions arising from the covid-19 pandemic, the board has been discussing the current financial year’s dividends, due to be paid in August 2020 and February 2021. The company has an income and growth mandate and the board is aware of the importance of income to shareholders, especially at a time when many listed companies, including some in the financials sector, are cutting or suspending their dividends.
The company has built up distributable reserves over past years which may be utilised to support dividend payments to shareholders at times when the underlying portfolio delivers lower than expected income returns. This is a unique feature of the Investment Trust structure which the board expects will enable it to maintain the dividend for the current financial year at an equivalent level to last year. This approach will give the fund manager time to assess the structure and longer-term income capability of the portfolio in a post covid environment and to determine the appropriate longer-term distribution level.
The board will declare dividends in due course, with the first such declaration expected to be in July for the August payment.”
[PCFT’s announcement comes at a time when many banks have been forced by regulators to suspend dividends. Crucially though, balance sheets across the global banking sector are much better capitalised than they were in the lead-up up to the 2008 global financial crisis. Many of these companies are in fundamentally sound shape, so while the real economy repercussions will inevitably restrict lending, the fact that much of the loan provision baton, in the post-2008 world, has been taken-up by the leveraged loan market means that banks are less exposed to potentially bad loans than many might think.]
PCFT: Polar Capital Global Financials to maintain equivalent level dividend this year