F&C Investment Trust (FCIT) has maintained its successive string of dividend hikes after beating its benchmark in 2021, but manager Paul Niven (pictured) has sounded the alarm that markets this year will be even trickier to navigate.
FCIT’s share price ended last year at 926p, representing a total return of 19.4% which was in-line with its benchmark, the FTSE All-World Index (19.5%).
The world’s oldest investment trust’s NAV total return was 21.7%, which put it ahead of its benchmark.
It said the difference between the gains reflected in the NAV total and the share price total return “was the effect of the discount rate widening over the year, from 5.4% to 7.3%”.
Subject to shareholder approval, the final dividend will be 3.8p per share, bringing the total dividend for 2021 to 12.8p a piece.
The 5.8% increase is the investment trust’s 51st consecutive annual dividend rise.
Trusts that can maintain dividend hikes will be in hot demand
Interactive Investor’s head of research, Dzmitry Lipski, described FCIT as “one of the best one-stop investment shops in the UK, weathering every boom and bust, and every crisis, along the way”.
It has been in the Super 60 rated list since II launched it.
“Fund manager Niven, not surprisingly, sounds a cautious note today on the prospects for global growth, but investors are in the hands of a first-class navigator.
“The [previously] announced reduction in fees, with the ongoing charges figure falling from 0.59% to 0.54% and, subject to shareholder approval, an increase in dividends, should make it even more appealing to retail investors seeking both growth and income.”
The 5.8% dividend increase beats CPI, which is 5.4% for the 12 months to 31 December 2021.
Lipski added: “In these tough times, and with rampaging inflation, investment trusts who can maintain their proud records of consecutive dividend increase will be more relevant than ever.”
Exposure to Russia
The global trust has a very small weighting to two Russian securities, which comprised 0.3% of assets at the end of 2021, II noted, which have been written down following the invasion of Ukraine.
Once liquidity permits, it will seek to divest all direct exposure to Russian equities.
Niven said: “The Russian invasion of Ukraine is a historically significant event which is exerting a terrible toll on the Ukrainian people. Events are fast moving and causing significant volatility in markets and creating challenges to the fundamental outlook for the global economy.
“The immediate impact of Ukraine, beyond the unfolding humanitarian crisis, is to dent an economic recovery that was underway as the impact of the Omicron variant of Covid-19 receded. It will also raise inflation in the near-term via the direct impact on food and energy prices and by exacerbating supply shortages.
“Expectations for global growth have also been cut, with Europe particularly exposed and there is now some greater uncertainty with respect to the near-term outlook for central bank policy.”
