Montanaro European Smaller Cos Trust PLC on Friday said it will raise its dividend after returning to growth.

The London-based trust which invests in small European companies is managed by Montanaro Asset Management Ltd.

In the year that ended March 31, net asset value increased 4.2% to 165.1 pence per share from 158.4p the previous year.

NAV total return was 4.9% over the year, improving from a 7.1% decline last year.

Montanaro ESCT underperformed its benchmark, the MSCI Europe ex-UK SmallCap Index, the which returned 5.9%.

The final dividend has increased 17% to 0.9p from 0.77p, therefore bringing the total dividend for the year to around 1.13p, up 16% from 0.97p.

During the first half of the period, Montanaro ESCT said ‘growth’ companies underperformed ‘value’ companies, meanwhile ‘high-quality’ companies underperformed ‘low quality’.

Chair Richard Curling commented: ‘Over the long term, we believe that earnings are the most important driver of share prices. In 2023, the average company in your portfolio grew its earnings by double digits and delivered high returns on capital. This, combined with attractive absolute and relative valuations for the asset class, means that we look forward to the future with confidence.’

Montanaro ESCT shares were flat at 140.50 pence each in London on Friday morning.

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