Allianz Global Investors trust increases dividend for 35th year

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The Merchants Trust, managed by Allianz Global Investors, has increased its dividend for its 35th consecutive year, despite lagging its FTSE 100 benchmark.

The board is recommending a final dividend of 6.1p, which will see the total dividend for the year rise 0.8 per cent to 24.2p.

The net asset value for the investment company, which is managed by Simon Gergel, rose 14.9 per cent last year compared to 21.4 per cent in the FTSE 100. The share price rose 9.3 per cent over the year.

Royal Dutch Shell, GlaxoKlineSmith and HSBC are the three largest holdings, accounting for 8.3 per cent, 7.5 per cent, and 6.2 per cent respectively at the end of January.

However, for the year ahead the investment trust will shift its benchmark to the FTSE All Share to reflect that 36 per cent of the portfolio now comes from outside the large-cap index, compared to 11 per cent a decade ago.

Gearing for the fund averaged 22.7 per cent throughout the year.

Chairman Simon Fraser says the investment trust has reaffirmed dividend growth as a key objective at its recent annual strategy session.

Fraser adds that the outlook looks positive for continuing dividend growth in the years ahead.

“In the next 12 months our earnings per share will continue to be supported by the translation of international dividend payments back into sterling and the maturity of our expensive loan in January 2018.”

“More broadly, we face many political and economic risks over the short to medium term, ranging from the impact of elections in Europe and the nature of Brexit, to the American domestic and foreign policy under President Trump.  

“However, The Merchants Trust has navigated its way through many uncertain periods in its 128 year existence.

“In these situations, it is best to focus on the competitive position and financial strength of individual companies, rather than the prospects for the stock market as a whole.”