Troy Income confirms dividend cut – Troy Income & Growth Trust says that for the year to 30 September 2020 its NAV return was -9.1% and its share price return -11.6%. At the start of the period the shares were standing at a premium to NAV of +1.1%. A year later the share price had moved to a -0.8% discount. The UK market returned -16.6%. This performance places the company fifth out of its 20-strong AIC UK equity income peer group when ranked by NAV performance and seventh by share price.
Total dividends for the year were 2.78p, 1.1% ahead of the previous year. However, this year the board plans to cut the quarterly dividend to 0.49p, an almost 30% drop. The decision reflects the dividend cuts across the UK as a result of COVID-19.
During the year, the company issued 53.6m shares and bought-in 0.9m shares, growing the number of shares in issue by 17.9%. About a quarter of that came from the merger of Cameron Investors in November 2019.
Extract from the managers’ report
“Performance in the first half of the year was dominated by the sharp equity market decline of February and March that followed the global spread of COVID-19 and the ensuing lockdown. During this period, the more defensive characteristics of the portfolio and the absence of gearing meant it fell less than the broad market. Investments in sectors such as utilities, infrastructure and the portfolio’s primary healthcare REITs held up well, as did companies that offered products or services that experienced elevated demand during the period. Included in this latter category were Reckitt Benckiser, the manufacturer of Dettol brand, IG Group, whose online spread betting platform saw customer numbers rise, AstraZeneca, which is developing one of the most promising looking COVID-19 vaccines and Domino’s, who were able to respond quickly to changing dining habits.
This latter group of stocks saw strong performance persist into the second half of the reporting period. As the markets rebounded from the late March lows, companies that were able to prove themselves more resilient than anticipated by the market saw their shares rise sharply. Some of the biggest contributions to returns came from stocks such as Experian, Next, Paychex and LondonMetric.
Conversely, the biggest detractors to the portfolio’s performance experienced persistent weakness both during the market fall and the subsequent recovery. Stocks whose business models were fundamentally challenged by the pandemic and its secondary impacts fell hard during the market weakness and then struggled to recover as uncertainty spilled into the second half of the reporting period. The portfolio’s holdings in oil majors and banks were amongst those hardest hit, as were consumer service stocks such as Compass Group and WH Smith. In addition, both Hiscox, the non-life insurer, and Equiniti, the share registration business, suffered material stock-specific weakness related to the virus.”
TIGT : Troy Income confirms dividend cut