Murray Income delivers 47th consecutive year of dividend increase

Over Murray Income’s (MUT) financial year-ending 30 June 2020, it delivered total NAV and share returns of (5.3%) and (5.8%). Both were ahead of the FTSE all-share index total return of (13%). We have included a section on performance attribution below, which details where value was added and lost, over the year. MUT’s total dividends per share increased by 0.7% to 34.25p, the 47th year of consecutive increase.

MUT’s chairman, Neil Rogan, says that aggregate UK company dividends are currently forecast to be down 40% in 2020 versus 2019. He notes that “holders of unit trusts or OEICs will experience sharp falls in their income payments in many cases. Investment trusts have the structure and ability to smooth income payments by using their accumulated reserves, thus most investment trusts will be able to at least maintain dividends. Quality companies with attractive dividend yields, sound growth prospects and strong balance sheets are likely to be prized more than ever. The Company’s focus on quality should mean that it is particularly well placed to serve shareholders who are searching for a reliable, diversified and growing income stream.”

Performance attribution

The following commentary comes from managers, Charles Luke and Iain Pyle. 

“Two large sectors that were particularly weak over the period were the oil and gas producers and the banks sectors. For the former, weaker oil prices, concerns around the energy transition and a greater focus on ESG proved to be a challenging series of headwinds. For the banks sector, low-interest rates, impairment concerns and the deferral of dividends were barriers to performance. Conversely, the pharmaceutical and utilities sectors performed relatively strongly as investors sought to invest capital in cash-generative defensive areas of the market able to maintain their dividend payments.

From a size perspective, the FTSE 100 index underperformed both the Mid 250 and Small Cap Index. The FTSE 350 high yield index significantly underperformed the FTSE 350 low yield index during the period.

Looking specifically at the Company’s portfolio, stock selection and asset allocation were both positive, the former in particular. Stock selection was positive in all sectors apart from Consumer Goods and Consumer Services. Asset Allocation was significantly beneficial in Oil & Gas. 

Turning to the individual holdings, there were a number of companies that demonstrated strong share price increases. Roche performed well given its defensive growth status aided by a series of new products and a diminished threat from generic competition that led to earnings upgrades over the year. Strong demand for its cloud products helped Microsoft to perform very robustly. Assura benefited from the quasi-government rental income for its GP surgeries helping it to perform strongly.

On the other hand, there were a series of disappointments mostly related to the impact of COVID-19: the lack of travel affected National Express and WH Smith, and the shutdown severely limited Euromoney’s exhibition division’s revenues (albeit a relatively modest part of the company’s operations).”

We have also included the performance attribution table released by MUT.

MUT: Murray Income delivers 47th consecutive year of dividend increase