TwentyFour Income Fund Ltd on Monday boasted a ‘record’ dividend for its financial year, having benefited from consistent interest rate increases by the Bank of England.

The Guernsey-headquartered closed-ended investment company said that earlier this month it had announced a quarterly dividend of 4.46 pence, which brings the annual total dividend to 9.46p, up from the previous year’s total of 6.77p.

In the financial year to March 31, TwentyFour Income said that the average sterling overnight index average rate increased to 2.3%, from 0.1% during the prior year. It said that this formed the basis of the increased dividend because its portfolio currently consists of floating rate securities all hedged to sterling.

It said its net asset value has increased by 6.8% since the beginning of 2023.

TwentyFour Income said that the additional income was primarily due to its portfolio manager’s reinvestments of bond repayments and investment of share issuance proceeds at higher yields.

The portfolio manager, TwentyFour Income said, sees the best value in BBB, BB and B secured assets, in particular mortgages and senior secured corporate loans, from Western Europe. It has increased the asset portfolio’s flexibility and reduced gearing to 5.4% on March 31, from 10.6% at the end of 2022.

TwentyFour Income said that the last financial year had been ‘very eventful’, with the war in Ukraine causing double-digit inflation and the September mini-budget prompting ‘unprecendented selling of various asset classes by UK pension funds’.

‘January 2023 had a very strong start, following two months of relative stability, as investors looked for high quality floating rate assets,’ TwentyFour Income commented.

TwentyFour Income said that at 10.1%, the inflation print for the last 12 months to March was higher than expected, which may put pressure on the Bank of England to further increase interest rates from the current 4.3%.

‘Market expectations are for a further two or three more 0.25% hikes and no cuts in 2023 implying that interest rates will stay elevated for longer,’ it said.

Shares in TwentyFour Income were down 0.3% at 99.95p in London on Monday morning.

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