Edison issues review on The Merchants Trust

RNS Number : 5948D

Merchants Trust PLC

07 July 2016

 

London, UK, 7 July 2016

Edison issues research review on The Merchants Trust

The Merchants Trust (MRCH) is a very well-established trust investing in UK equities, primarily in higher-yielding, large-cap companies, which aims to produce high income and long-term growth in capital and income. While recent months have been a difficult period for investing in this area, the manager sees good value in the portfolio across a range of themes. MRCH ranks highly in the AIC UK Equity Income sector in terms of dividend yield
(c 6.0% vs 4.5% sector average) and the annual dividend has increased in each of the last 34 years, providing investors with an important source of total return in an environment of low earnings growth. The latest annual dividend was more than covered by income.

MRCH's current 5.4% share price discount to cum income NAV with debt at market value is wider than the averages of the last three, five and 10 years (range of 1.1% to 1.7%). This is not unusual in the investment trust sector, where discounts have recently been in a widening trend as a result of heightened investor risk aversion. For FY16, MRCH announced a 0.8% increase in the annual dividend, bringing the number of consecutive annual dividend increases to 34; based on the current share price, the dividend yield is 5.9%.

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