Foreign & Colonial flags ‘dividend pressures’ as trust delivers 45th increase


The Foreign & Colonial investment trust has announced it is increasing its dividend for the 45th consecutive year, despite pressure on “dividend payers within the portfolio”.

In annual results released this morning, the board said the final dividend for the year will be 9.6p per share, a rise of of 3.2% on last year, subject to shareholder approval, and will be paid on 3 May.

This is the 45th consecutive annual rise in dividend payments in the trust’s 148-year history.

However, the board noted the rising trend for dividend cuts within markets and said the portfolio is not immune to these pressures.l

Chairman of the company, Simon Fraser, said: “We recognise the importance of a rising income stream in real terms for our shareholders and it is a clear focus of the board that we maintain our long-term dividend growth ahead of the rate of inflation.

“While the economic outlook remains uncertain, and we may well see some pressure on certain dividend payers within the portfolio, the board is planning another dividend increase ahead of inflation for 2016.”

The company, which is run by Paul Niven (pictured) who took over from long-standing manager Jeremy Tigue in 2014, also announced strong performance for the year, which saw a NAV total return of 7.5%.

Giving his outlook, Niven said: “Looking forward, the palliative effects of monetary policy are diminishing and, with the US, and eventually the UK, likely to raise rates further, global stresses are likely to increase.

“China remains the current epicentre of structural and cyclical concerns for investors and, given the nature of their domestic policy, it is likely that markets will grapple with policy makers’ intentions and broader implications for some time yet.

“We remain mindful of the scope for opportunities amongst the stress that is evident within financial markets at present.”

Since Niven took over the trust on 1 July 2014, it has returned 17.4% to 7 March, outperforming both its FTSE All World benchmark and the AIC Global sector which returned 13% and 7.2%, respectively, during the same period, according to FE Trustnet.

[Source:- Investmentweek]