BMO Capital and Income posts strong results and maintains AIC Dividend Hero status – BMO Capital and Income (BCI) has published its full-year results for the 12 months to 30 September 2021. During the period, its NAV rose by 37.8%, outperforming its benchmark, which returned 27.9%.
BCI will pay a fourth interim dividend of 3.75 pence per share to bring the total for the year to 11.60 pence per share, an increase of 0.9%, and achieving a 28th consecutive year of increased payments maintaining the company’s status as an AIC Dividend Hero.
Over the last year, the share price has on average traded at a discount to the underlying NAV per share. The chair said it is impossible to ascribe this precisely to any particular reason, but the rating on the shares remains consistently better than that of the majority of its peers in the UK Equity Income sector.
Statement from the chair:
Whilst the future is always uncertain, it certainly feels at present as though there are more issues of potential concern than usual notwithstanding the initial success of the UK Government’s COVID-19 vaccine rollout. At the time of writing, the rate of new COVID-19 infections appears to have abated somewhat in the UK. However, as we are seeing in Europe, the possibility of restrictions being reimposed cannot be ruled out. After the success of the vaccination programmes to date, this would clearly be a retrograde step for social and economic reasons and would not appear to be built into market forecasts.
Globally, supply chains are under enormous pressure, energy prices are soaring and more general inflationary pressure is building. Central Banks are talking about reducing Quantitative Easing and increasing interest rates, while at the same time government debt has risen substantially. None of these points would normally be expected to improve investors’ confidence and they certainly give grounds for some caution.
On the other hand, there are clearly opportunities to grasp. It seems likely that supply chain issues will abate, albeit in an uncertain timeframe, thus reducing some inflationary pressure. It also seems unlikely that interest rates will be increased significantly over the short term as there is little logic in trying to stem ‘cost-push’ inflation by raising interest rates. Having anticipated that conditions would have returned closer to previous normality by now, it is disappointing that has not fully happened, but it surely leaves some recovery potential to come. Your investment Manager sees opportunities to invest in companies generating good returns despite the circumstances and this combined with UK stock market valuations that do not appear too demanding give confidence that we should again be able to secure our objective of long-term capital and income growth for Shareholders.
BCI : BMO Capital and Income posts strong results and maintains AIC Dividend Hero status