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(Alliance News) - Henderson International Income Trust PLC on Tuesday recorded a drop in net asset value per share over financial 2019 but was pleased with its portfolio's dividend performance despite the backdrop of political and economic uncertainty.
At August 31, the investment trust recorded a NAV per share of 164.8 pence, 1.4% lower than the 167.1p seen at the same point a year earlier.
Henderson International Income's net assets grew 4.2% over the twelve month period, however, rising to GBP309.2 million from GBP296.7 million. During the period, the company increased its share capital by 10.0 million shares, explaining the discrepancy.
The company upped its total annual dividend by 5.7% to 5.70p from 5.30p the year before.
The trust's NAV total return for the period was 2.2% with debt a par value and was 0% with debt at fair value. Henderson International Income's benchmark - the the MSCI World (ex UK) Index - gained 8.0% in the same period.
"The positive total returns achieved by the market this year suggest a relatively benign environment. The reality is that the economic and political backdrops have been rather chaotic, resulting in significant falls in markets from September to December, followed by an almost symmetrical rally for the rest of the company's financial year as most major areas of the world continue to deliver reasonable GDP growth, albeit at a lower level than anticipated," said Chair Simon Jeffreys.
He continued: "Against this backdrop aggregate company earnings are coming in below expectations, but dividend growth has continued to be positive, a fact echoed by the majority of the portfolio's holdings. As a result of the company's income objective, portfolio composition can differ significantly from the MSCI World index which can lead to significant variations in performance between the two."
The trust's fund manager, Ben Lofthouse, said, despite this political uncertainty, dividend growth from the portfolio has been "excellent".
Lofthouse said: "The company's investment process focuses on companies with attractive dividend yields, strong cash flow generation, and the potential to grow both earnings and distributions in the future. The dividend growth from the portfolio has been excellent over the period. The majority of companies in the portfolio have increased or maintained their dividends and the dividend growth has been widely spread across sectors and regions."
He noted the strong dividend growth from the trust's Technology and Financial Service holdings as a particular positive.
"All of the company's holdings contribute to income generation and the diversification across sectors and geographies is designed to enhance the portfolio's dividend stability. Based on the underlying trends within the portfolio the outlook for dividend growth remains good," Lofthouse added.
Looking ahead, Jeffreys commented: "It is notoriously difficult to predict market returns, particularly in the short-term. What we can say is that investors around the world are facing an unprecedented challenge to continue to achieve general positive real returns given the low bond yields available in many markets.
"Against this backdrop the company's objective of delivering an appealing income from a diversified portfolio of holdings remains highly relevant. The company will continue with its existing strategy of identifying companies that are attractively valued, pay a sustainable dividend and have the capacity to grow their dividends over the medium to long-term."
Shares in Henderson International Income were 0.3% higher in London on Tuesday at 162.01p each.
By Paul McGowan; paulmcgowan@alliancenews.com
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