CT UK Capital and Income (CTUK) has published its annual results for the year ended 30 September 2024, during which it provided an NAV total return of 18.4% and a share price total return of 16.6%, both outperforming its All-Share benchmark, which it says provided a total return of 13.4%. Unfortunately, the announcement does not include the fund manager’s review so we cannot comment any further on the performance drivers at this stage.
Dividend
CTUK has declared a fourth quarterly dividend of 3.95p per share which, when taken together with the three dividends already paid for this financial year, brings the total dividend for the year to 12.50p per share. This is an increase of 2.9% over the previous year and is a dividend yield of 3.7%. it is also the 31st consecutive year of increased annual dividend payments, maintaining CTUK’s status as an AIC Dividend Hero.
However, CTUK’s revenue earnings fell last year as the dividends paid to it by its portfolio companies declined. CTUK says that this decline should not be taken as a negative indicator for performance either historically or prospectively, but partly as a change in the balance between capital and income returns that it happened to receive last year (these are explained in detail in the fund manager’s review, which was not available at the time of writing). CTUK’s chair, Jane Lewis, does say that there were three major factors at play. First, CTUK’s previous year’s figures had been boosted by special dividends in the prior year which were not repeated. Second, one of CTUK’s major investments has decided to redirect its cash return to shareholders into a share buyback programme and this is arguably leading to greater capital growth in that investment, albeit at the expense of dividend income. Third, corporate activity has led to the take-overs of a number of CTUK’s higher yielding investments, again boosting CTUK’s capital returns, but reducing its dividend income in the process.