Trust dividends on the rise

A number of investment trusts have sought to increase their dividends this year, in some cases to address the discounts at which their shares trade to their investment portfolios, and one has already taken advantage of new tax rules to do so.

Some £1,609m has been raised so far this year, according to analysts at Winterfloods, of which £415.9m was through new issues. Of the existing companies issuing new shares, a large proportion of these were income-orientated companies, with £490.4m coming from the high yielding infrastructure sector. And again highlighting the popularity of income mandates, one of last year’s new issues, Diverse Income trust, has announced plans for a C-share issue.

There have been two new issues so far this year: Alcentra European Floating Rate Income, which launched in March raising £81m, and BlueCrest BlueTrend, which also launched in March and raised £165m.

In fact, due to demand for the trust’s shares, BlueCrest BlueTrend has published a prospectus which will permit the issue of ordinary shares and C-shares over the next 12 months. In a US election year, May saw Edinburgh US Tracker adopt an income approach, changing its name to North American Income to reflect this policy change.

Also in May F&C Private Equity investment trust was the first investment trust to announce it would take advantage of the new tax rules, planning a dividend equivalent to 4 per cent of its net asset value (Nav) from capital.

Since then a number of trusts have amended their articles to take account of the new rules. So in spite of the volatile market conditions we have seen so far in 2012, there appears to be plenty of activity in the sector.

Annabel Brodie-Smith is communications director at the AIC