Sunday, 11 September 2016

Murray Income - Final Results & Portfolio Sale

Murray Income Trust has been in my basket of income focussed investments trusts for several years. It has a record of increasing annual dividends in each of the past 41 years.

It has been managed by Charles Luke and his team at Aberdeen Asset Management since 2005. 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.

It has recently issued its results for the full year to 30th June 2016 (link via Investegate).

Net asset  total return is up 5.9% however share price return is just 0.1% compared to the FTSE All Share Index increase of 2.2%.

Income

The board are proposing a final dividend of 11.25p making a total of 32.25p for the full year - an increase of just 0.25p or 0.8% compared to the previous year's payout of 32.0p. At the current share price of around 730p, the yield is 4.4%.

Income generation has been below par for the year, partly due to a reduction in special dividends. The income generated over the past 12m reduced by 3.3% from 33.1p to 32p per share which therefore fails to cover the proposed dividend.

The management use options as part of the strategy to increase income. This year options income increased from 5.8% to 7.1%. I imagine many trusts will make limited use of such a strategy but it can be risky, especially when there is pressure to maintain an ever increasing annual dividend record.

3 yr chart  MUT v CTY v FGT
(click to enlarge)

Over the past couple of years I have been a little disappointed with performance compared to others in my portfolio. In June I compared the 5 yr performance of my basket of trusts against my Vanguard trackers and Murray Income was at the bottom of the table along side Dunedin Income.

Last year I took the opportunity to sell off part of my holding and I have now sold the remainder as MUT seems to add little to my basket of investment trusts.

I am hoping for better news from City of London trust which announces final results in the coming week.

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