Wednesday, 10 September 2014

Murray Income Trust - Final Results

Murray Income Trust has been in my basket of income focused investments trusts for several years. Its probably not an investment that is going to shoot the lights out but I regard it as a fairly solid, middle-of-the-road steady performer. It has a record of increasing annual dividends in each of the past 40 years.

It is currently managed by Charles Luke and his team at Aberdeen Asset Management. It is essentially a UK income trust but like several others in this sector, the management have been gradually increasing their exposure to larger, high-quality overseas listed companies. These currently make up 18% of the portfolio and include Microsoft, Roche and Nestle.

It has this week issued its results for the full year to 30th June 2014 (link via Investegate).

Share price total return is up 9.4% compared to the FTSE All Share Index of 13.1%. The reason for the apparent under-performance is the share price having moved from premium to trading at a discount to NAV. The NAV total return for the year was marginally ahead of the benchmark at 14.0%.Over the past year they have increased the quarterly dividend and held the final dividend to provide investors with a smoother flow of income.

The board are proposing a final dividend of 10.25p making a total of 31.25p for the full year - an increase of just 1.6% compared to the previous year (30.75p). At the current share price of around 772p, the yield is 4.0%.

The managers policy is to buy and hold for the longer term - portfolio turnover was again very modest with just four additions - Inmarsat, Ultra Electronics, US-listed Microsoft and finally Verizon Communications as part of the spin-off from the holding in Vodafone. The only two sales were Morrison Supermarket (retained for far too long) and Amec.

Income generation has been weak, partly due to the rise in the value of sterling - 50% of the holdings derive their income from the US dollars or euros. The Board say they are hoping to make more progress on increasing the dividend over the coming year and the recent pull-back of sterling against the dollar will help.

"Our aspiration in terms of portfolio construction has not changed, our aim is to build a sensibly diversified portfolio that is not dependent on any one particular economic scenario but provides broad exposure to the market as a whole while generating an above average dividend yield. Equally, we are keen to ensure that each investment can make a difference, hence the relatively low number of 45 individual holdings". Charles Luke.

Overall, an average performance for the year with the promise of a little more to come in the way of income next year. I am happy to continue holding - both SIPP drawdown and ISA - but unlikely to be adding. It will be interesting to compare with City of London Trust which reports next week.

As ever, slow and steady steps….

2 comments:

  1. Dear DIY Investor,

    Murray Income Trust is a good solid holding, although I would like to see larger dividend increases.

I presume the company is re-building its dividend cover maintaining increasing them during the crash period.



    Regards

    Louis

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    Replies
    1. Hi Louis,

      Good to hear from you. Yes, the dividend reserves have been falling over recent year - in 2011 they represented 150% of the previous years dividend but this year it has fallen to 130%. Still, this is higher than City of London which was below 100% last time I looked.

      They are naturally proud of being able to increase the dividend over such a lengthy period and may be a little cautious/stingy at present not wishing to jeopardise that record but also I think the strength of the pound sterling has had a big impact as I have noticed with several of the dividends with my individual shares.

      Hoping for a little better over the coming 12 months!

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