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BMO Capital and Income Investment Trust dividend up 1%

BMO Capital and Income Investment Trust dividend up 1%

Shareholders in the BMO Capital and Income Investment Trust have seen their dividend increase by 1 per cent in the half year to March compared with the previous year, paid through a mix of earnings and the revenue reserve.

The dividend for the half-year period amounted to 5.25p, an increase of 1 per cent on the same period last year, and amounting to an annual yield of 3.8 per cent.

The firm saw a share price total return of 26 per cent for the six months to March 31, with the share price ending the period at 307p. Net asset value total return was 25.4 per cent.

Jonathan Cartwright, chairman, said: “We have always put great emphasis on increasing our dividend to shareholders each year. Despite reductions in income in the wider market, we are pleased to report the company has continued to deliver unbroken growth in annual dividends, paid through a mix of earnings and the revenue reserve.

“Looking ahead, the path to a post-pandemic environment is becoming clearer and this is leading to many companies having sufficient confidence to restart or grow their dividends.

"Our portfolio is well positioned and diversified, and we believe the companies within it should be able to generate attractive returns for shareholders in the coming years.”

Investment trust dividends hit a record £1.88bn in 2020 despite a worldwide drought in payouts elsewhere,.

Data from Link Group published in March showed dividends from investment trusts jumped 4.2 per cent in 2020 with an extra £87m being paid out through the year.

This confirmed a long-running trend of consecutive year-on-year growth, with dividends from investment trusts growing by a cumulative 123 per cent in the past 10 years. 

Investors elsewhere were not as lucky with Covid-19 having a detrimental effect on dividends around the world. Over 2020, dividends in the UK plunged 38 per cent and worldwide they fell by 12.2 per cent.

Link Group’s dividend monitor published in January showed dividends stood at £61.9bn in 2020 — 44 per cent less than 2019 and the lowest annual total since 2011.

Susan Ring, chief executive of corporate markets at Link, said at the time the social and economic scars of Covid-19 would be “deep” and it was highly unlikely dividends would regain their previous highs until 2025 “at the earliest”.

Cartwright said BMO's portfolio was well diversified and he believed the companies within it should be able to generate attractive returns.

He added: "Although their success is largely expected to be driven by their own efforts, we are conscious the companies do not operate in a vacuum and benefit from a wider, healthy and liquid economy.

"Although government enforced restrictions on activity are still in place, the path to a post-pandemic environment is becoming
clearer and this is leading to many companies having sufficient confidence to restart or grow their dividends.

"We fully expect this to have a positive impact on our income and earnings in the second half of our financial year. We believe there are interesting opportunities to invest in a good number of companies at still attractive valuations."