Friday, 19 July 2013

Aberforth Half Year Results

Aberforth Smaller Companies Trust has been a stalwart of my SIPP for several years. They have today issued results for the half year to 30th June (link via Investegate). Here’s my full year post from earlier this year.

Net Asset total return advanced by 16.8% over the 6 months compared to 8.5% for the FTSE All Share index. The board are proposing a 5% increase in the interim dividend to 7.35p.

Over the past 5 years the share price has increased by 12.7% p.a. compared to the FTSE AS annual increase of 6.7%.

Aberforth operates a progressive dividend policy. Here’s a brief quote from the manager’s report on the importance of dividends :

“Given the traditional prejudice that small companies are all about capital growth, their income credentials are frequently overlooked. However, the long term data argue that the heavy lifting behind small companies' superior total returns is done by yield and dividend growth. The traditional prejudice is reinforced by headline income data for the NSCI (XIC), which shows a historic yield of 2.5%, which is 28% lower than the FTSE All-Share's 3.5%. But comparison is not straightforward. Of the 383 companies in the NSCI (XIC), 106 are zero yielders. Adjusting for these, the yield of the yielders rises to 3.1%. The dividend cover of these yielders is 2.2x, somewhat higher than the FTSE All-Share's 2.0x. Moreover, small companies continue to offer a better spread of income than the heavily concentrated large cap universe. ASCoT's portfolio, whose yield and cover were 2.9% and 3.0x at the end of June, demonstrates that through active management the small company universe is fertile territory for income.”
At the half year portfolio review, Aberforth was the best performing investment trust with a return of 19%.
Although it is the lowest holding for yield in my SIPP - around 2.6%, it more than compensates in capital appreciation and also offers diversity. Happy to continue holding long term.

As ever, please DYOR - and stay cool in the heatwave!

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