Results analysis from Kepler Trust Intelligence

RNS Number : 8817T

Alliance Trust PLC

23 July 2020

 

Alliance Trust plc (ATST)

23/07/2020

Interims results analysis from Kepler Trust Intelligence

Alliance Trust (ATST) released its interim results for the six months to 30 June this morning, recording a 3% increase in its dividend compared to the same period in the previous financial year and keeping the trust on track for its 54th consecutive year of rising dividends, one of the longest track records of progressive dividend growth in the investment trusts universe.

The trust, which will pay two further dividends in its current financial year, paid out 3.595p per share, and barring even greater volatility than we saw in H1, is by our calculation on track for a total payout of 14.38p by the year end (compared to 13.96p per share in 2018-19) despite the significant headwinds faced by equity income investors during the COVID-19 crisis.

Kepler View

The first half of 2020 has been very difficult period for everyone. Putting the human tragedy to one side, conditions for equity investors have been extremely challenging, and the economic contraction we have witnessed, triggered by lockdowns around the world, is of a greater scale than anything we have seen since the Second World War.

Perhaps the most encouraging news for the ATST shareholders concerned the dividend. The trust's dividend is backed up by significant revenue reserves of £109.1m; equivalent to around 33p per share as at 1 January 2020 - around double this year's likely total dividend even after the subtraction of the trust's final dividend for the previous year (paid in March in 2020) is taken into account. These reserves could be bolstered further by the conversion of the trust's legacy merger reserve, which the board intends to put forward as a resolution at next year's AGM.

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