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(Alliance News) - Temple Bar Investment Trust PLC on Friday raised its dividend after reporting an improved net asset value, as NatWest Group PLC, Barclays PLC and Standard Chartered PLC contributed strongly to the portfolio in 2024.
The London-based company, which primarily invests in UK equities, said net asset value per share at fair value increased 13% to 291.1 pence as at December 31, from 252.2p a year prior.
NAV total return was 19.9%, outperforming the FTSE All-Share Index benchmark of 9.5%.
Temple Bar said it benefited from the rise in share price at banks NatWest Group, Barclays, and Standard Chartered and Currys PLC, with each adding at least 2% to the investment return. Marks & Spencer Group PLC and ITV PLC also provided a boost.
"The one significant detractor in the year was Stellantis [NV], whose share price fell by around 40% in 2024," Temple Bar noted.
Further, Temple Bar announced it has amended the dividend policy to reflect the proliferation of buybacks, which co-managers Ian Lance and Nick Purves said "have undoubtedly been a key driver of portfolio returns".
"In recent years, companies have been altering the nature of their distributions to shareholders. Increasingly, they have been looking to provide investors with a return via share buybacks either alongside or instead of dividends.
"Unlike dividends, which are recognised as revenue in your company's accounts, and which underpin the dividends we pay, buybacks by portfolio companies have not contributed to the distributions paid to our shareholders. In order to address this distributional shift in the behaviour of portfolio companies, Temple Bar is proposing to amend its dividend policy to enhance the dividend it pays."
Temple Bar has proposed a 25% increase in the quarterly dividend to 3.75 pence from 3.00 pence. This brings the total 2024 dividend to 11.25 pence from 9.60 pence, up 17%.
Looking ahead, Temple Bar maintains its optimism, despite uncertainties in the UK market.
"The portfolio manager's report highlights the fact that the UK stock market continues to be out of favour with investors. While the resulting poor valuations provide our portfolio manager with attractive entry points when building an investment position, the continued poor perception of the UK market will, ultimately, lead to a reduction in the breadth of investment opportunities. Whilst for now, we believe that leaves our Portfolio Manager with an opportunity set large enough to meet our current restrictions, this will have to be monitored closely if the trend of delisting from London continues.
"Against a backdrop of continued, albeit slower than anticipated, growth from the UK economy in 2025, the valuation of UK equities continues to look compelling compared to their equivalents overseas."
On the US, co-managers Ian Lance and Nick Purves said: "The consensus view today is that American 'exceptionalism' will continue, suggesting to us that expectations are already high and that the potential for disappointment is great. The UK stock market in contrast contains a good number of neglected companies, where the bar of expectation is much lower, and where the likelihood of positive surprise is much greater. Accordingly, we believe that the long-term outlook for investment returns in the UK stock market is better."
"The ability to be truly long term is the biggest advantage that one can have in the stock market today, and we are optimistic that we can continue to use this advantage to generate excess investment returns for the Trust."
Temple Bar shares traded down 1.0% at 298.00 pence on Friday morning in London.
By Aidan Lane, Alliance News reporter
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