International Public Partnerships (INPP) has declared its 10th year of successive dividend increases, the longest record of rising pay-outs in the listed infrastructure fund sector which it said underlined the strength of its portfolio despite the pressure on its share price from higher bond yields.
A 2.15p final interim dividend brings the total for 2025 to its target of 8.58p, an increase of 2.5% in line with a policy to lift the annual distribution by at least that amount.
“INPP is pleased to be recognised as a ‘Next Generation Dividend Hero’ by the Association of Investment Companies (AIC),” the alternative income fund said in response to its achievement of consistently growing dividends since launch in 2016.
The 7%-yielder, which switched to quarterly from semi-annual dividends last year, confirmed that its target for this year and next would be 8.79p and 9.01p per share.
Cash flow cover for dividends was stable at 1.1 times with the company reiterating its confidence that without any further investments the existing portfolio could maintain its progressive dividend policy for the next 25 years.
Net asset value of INPP’s investments rose just 1.1% to £2.7bn but a reduction in the number of shares due to £135m of buybacks to counter their 15% discount saw net asset value per share increase by 6.8p or 4.7% to 151.5p. With the dividends included, that gave an underlying total return of 10.6%.
Given the pressure to return capital to shareholders on account of the wide discount, INPP was selective in new investments, providing £47.3m to the first tranche of its Sizewell C investment and meeting long-standing commitments to Flinders University, Gold Coast Light Rail Stage 3 in Australia, and toob, a UK full-fibre broadband provider.
By contrast, INPP sold £130m of investments, including the most recent £49m disposal of 49% of the Moray East OFTO offshore transmission link, either at a premium to, or in line with their valuations. This takes total realisations since the company adopted a new capital allocation strategy in June 2023 to £385m, around 14% of the portfolio at 31 December,
The sale prices achieved last year underscored the company’s belief that its current share price “materially undervalues” the portfolio given the level of capital being returned or reinvested.
Our view
James Carthew, head of investment company research at QuotedData, said: “Congratulations to INPP on becoming a ‘next generation dividend hero’, having raised its dividend each year for the last 10 years. The really remarkable thing, though, is today’s statement that the current portfolio should support it being able to raise the dividend every year for the next 25 years. Boards do not make these claims lightly.”
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