Diversified global fund F&C Investment Trust (FCIT) has raised its dividend for the 50th successive year and committed to transition its portfolio to net zero carbon emissions by 2050 at the latest.
However, in today’s annual results statement, the world’s oldest investment trust also cautioned that risks to the outlook are ‘numerous’, with equity markets having ‘already discounted much of the good news’.
Unveiling results for the 2020 calendar year, F&C Investment Trust announced a final dividend of 3.4p which will bring the total dividend for 2020 to 12.1p, a 4.3% year-on-year increase and comfortably ahead of the 0.6% rise in CPI inflation.
This is the 50th consecutive increased annual dividend and the 153rd annual dividend payment from the storied trust.
Analysts at Stifel pointed out that the dividend was ‘only 0.8 times covered by revenue earnings, with revenue reserves used to make up the shortfall and thereafter reserves will still exceed the cost of one year’s annual dividend’.
With a market cap of £4.15 billion, F&C Investment Trust is amongst the largest closed-end investment companies and was the first investment trust to launch, back in 1868.
Popular among retail investors, its reassuringly diversified portfolio provides access to most of the world’s stock markets and exposure to over 400 individual companies across the globe, including the likes of Amazon, Apple, Alibaba, Microsoft and Paypal.
According to Stifel, tumultuous 2020 proved a ‘reasonable year’ for the trust, which delivered a 12.3% net asset value total return, in line with the benchmark. The private equity portfolio performed strongly, as did the US, the trust’s largest geographic exposure, thanks to high-flying growth stocks, though the two disappointing areas were global strategies and emerging markets.
Whilst the trust has been ‘resilient, responsible and prosperous for over 150 years’, chairman Beatrice Hollond warned risks to the outlook are ‘numerous’.
Though Hollond expects better growth as this year progresses, and a consequent improvement in corporate earnings, she warned equity markets ‘have already discounted much of the good news. Valuations are being buoyed by unprecedented monetary and fiscal stimulus and, while we should expect support for some time to come, disappointment on earnings delivery or, critically, on inflation, could give rise to volatility and even a sharp setback in equity markets.’
NET ZERO BY 2050
In the belief climate change is ‘the defining challenge of modern times’, BMO-managed F&C Investment Trust also announced a commitment to transition its portfolio to ‘net zero carbon emissions by 2050 at the latest’.
Fund manager Paul Niven commented: ‘2020 may come to be regarded as the year in which sustainable investing came of age. We see great opportunity for shareholder returns to be enhanced through a focus on companies engaging in sustainable business practices.’
