Profile: City of London’s Job Curtis on reaching 50 years of dividend raises

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The aim of the City of London Investment trust is to provide long-term growth in income and capital, with an emphasis on providing a dividend income to shareholders. In this respect it has done particularly well as last month the trust announced its 50th consecutive year of dividend increases; an unparalleled achievement.

The £1.2bn trust, which is managed by Henderson Global Investors’ Job Curtis, currently has a dividend yield of 4.4 per cent.

Of the 50-year record, Curtis says: “I am very pleased to have played a part. The portfolio invests in good companies. Over the long term, big value has been added from consumer staples such as British American Tobacco – which has pumped out dividend growth consistently – Unilever and Diageo.”

Curtis runs a portfolio of 118 holdings, as he favours diversity, with 70 per cent invested in the FTSE 100, 20 per cent in mid caps and the remainder invested overseas. He uses a value approach and works closely with a 12-strong global equity income team.

With companies such as Barclays, Rolls-Royce and Rio Tinto announcing dividend cuts recently, has Curtis struggled in the search for yield?

“I find that the bad news is emphasised and the good news is lost,” he says. “The mining dividend cuts were expected. We are underweight with 1.25 per cent in the sector. There must be the potential for a long-term recovery so we are happy to have some exposure.”

Curtis adds that the special dividends announced by several companies were “a pleasant surprise” and that he sees a trend developing in companies switching to special dividends from structured payments.

He says: “ITV, Croda, Prudential, Direct Line and Hiscox all announced a special dividend and there was a jump in Lloyds’ final dividend as well as a special dividend.


“Special dividends are becoming more of a trend. Companies don’t want to be tied to a dividend burden, but with special dividends they can return cash to shareholders without committing to the future.”

Property is a significant theme. Curtis says homebuilders such as Berkeley, Persimmon and Taylor Wimpey are committed to returning dividends to shareholders. The portfolio has a 4.4 per cent weighting in housebuilders and a 6 per cent allocation to real estate investment trusts (Reits).

“Reits are an attractive structure; they have come through the financial crisis and there is less gearing in the sector,” Curtis says. “The property sector is healthy – particularly City and West End offices. When there is talk of dividend cuts in the market it is a sector that is dependable.”

The most notable change to the trust in the past year has been the introduction of car-related companies, which Curtis has become more positive on. He cites robust demand, solid consumer confidence, the low oil price and low interest rates as reasons.

He has bought auto components firm GKN, car retailer Pendragon and car maker Daimler with a combined weighting of 1.5 per cent. “GKN is good value long term, Pendragon is the leading car retailer in the UK and Daimler is attractive on yield,” Curtis says.

This move has been funded by cutting exposure to engineering firms and manufacturers that supply oil companies – such as Weir Group and Rotork – on the grounds oil companies are facing headwinds.

Over one year to 29 February the trust has delivered a share price loss of 6.7 per cent and a net asset value return of -3.6 per cent against the -3.2 per cent of the UK Equity Income sector.

“The trust’s performance is well above the FTSE All Share but is at around halfway in the UK Equity Income sector. We are relatively heavy in the FTSE 100, which gives us a better yield, but the others that focus on the FTSE Small Cap have inevitably done better.”