In what has been a tough year for income investing, the trust was able to draw on its reserves to increase its dividend.
Murray Income Trust (LSE:MUT) was able to raise its dividend by 0.7% in the financial year ending June 2020, according to the trust’s latest annual results.
The increase has brought the trust’s total dividend per share to 34.25p and marked the 47th consecutive increase. Based on the year end share price of 768p per share, the trust had a yield of 4.5%.
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The trust notes in its annual report that by increasing its dividend payout for another year in a row, it can retain its place on the Association of Investment Company’s Dividend Heroes’ list. Dividend heroes are defined as investment trusts that have successfully increased their dividend each year for at least 20 years.
Due to Covid-19, 2020 has been a particularly tough year for dividends and the trust is currently forecasting a 14% reduction in portfolio income in 2020. This, they argue, underlines the importance of building income reserves in tougher years. In the report, the trust said: “The purpose of building our revenue reserves over the years is to give us the ability to smooth dividend payments to shareholders in times such as these. So we are able to increase our full-year dividend per share for the year ended 30 June 2020 to 34.25p by paying out 30.50p as this year’s revenue supplemented by 3.75p from revenue reserves.”
The report also said that net asset value per share had fallen by 5.3% over the year. However, the trust notes: “While it is always disappointing to record short-term losses, we are reassured by the fact that our relative performance was well ahead of the benchmark index (FTSE All-Share) return of -13.0%, on a total return basis.”
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The trust’s management has recently won the tender for a proposed merger with Perpetual Income & Growth Investment Trust (LSE:PLI). The report notes: “if approved by shareholders, the proposed combination with PLI will create a company with gross assets in excess of £1 billion”.
Murray Income Trust said that while they are not allowed to forecast dividends, they take their current dividend hero status seriously, suggesting that they hope to be able to continue their record of consistently raising dividends after any merger of the two trusts.
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