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Another good year for City of London

City of London Investment Trust’s results for the year ended 30 June 2022 were announced yesterday. Over the period the trust beat the All-Share index, returning 7.5% to the index’s 1.6%. The return to shareholders was 7.7%. The dividend was increased from 19.1p to 19.6p and this was covered by earnings of 20.7p. Ongoing charges fell to 0.37% from 0.38%.

The dividend was raised for the 56th consecutive year. Although the increase was lower than inflation over the 12 months, City of London has increased its dividend by 41.2% over the last 10 years compared with a cumulative increase in UK CPI inflation of 26.5%.

Gearing contributed 1.5 percentage points to the outperformance due to the decline in fair value of the trust’s long-term debt – the £30m 2.67% maturing 2046 and the £50m 2.94% maturing 2049 secured notes.

Stock selection contributed 4.7 percentage points, helped by the portfolio’s tilt towards large companies and dividend yield and away from highly valued, growth stocks and medium-sized and small companies. The biggest stock contributor was BAE Systems, the defence equipment manufacturer, followed by Imperial Brands, the tobacco company. Brewin Dolphin, the private client wealth management group, which received a takeover bid from Royal Bank of Canada, was the sixth biggest stock contributor. The underweight position in Shell was the biggest stock detractor, somewhat offset by the holding in TotalEnergies, the French international oil company, which was the eighth biggest stock contributor. The second biggest stock detractor was being underweight in AstraZeneca, although partly balanced by the holding in US pharmaceutical company, Merck, which was the ninth biggest contributor.

CTY : Another good year for City of London

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