(Alliance News) - Henderson High Income Trust PLC on Thursday said it outperformed it benchmark, as it declared an increased annual dividend.
For 2019, the trust said its portfolio delivered a total return on net assets of 26% compared to its benchmark - a composite of 80% of the FTSE All-Share Index and 20% of the ICE BofAML Sterling Non-Gilts Index - which returned 17%.
Henderson High said it net asset value per share at the end of December was 189.76 pence, up from 159.46p the same date in 2018.
The company declared a total annual dividend of 9.80p, up 2.1% from 2018.
The good performance was attributed to good stock selection within the equity and bond portfolios, while gearing further enhanced returns against a strong market backdrop. Holdings in housebuilders Galliford Try PLC and Bellway PLC, brick manufacturer Ibstock PLC as well as water company Severn Trent PLC and utility company National Grid PLC were beneficial to its performance.
Detractors from performance included luxury clothing retailer Ted Baker PLC and tobacco Imperial Brands PLC, with Ted Baker's performance hurt by a tough retail environment and unprecedented levels of discounting which severely hurt profitability.
During the period, Henderson High secured holdings in 3i Group PLC, Reckitt Benckiser Group PLC, Bodycote PLC and French pharmaceutical company Sanofi SA, and added to its holdings in Virgin Media Ltd.
The company sold out of its holdings in ITV PLC, BAE Systems PLC and Barclays PLC. It exited its holdings in Greene King, KCOM and Manx Telecom.
Looking ahead, Henderson High said that the Covid-19 outbreak, Brexit trading negotiations, the US presidential elections and any sustained oil price war implemented by Saudi Arabia could result in high volatility and presents uncertainty.
"Although there will be a significant short-term impact on both global economic growth and company profitability from the disruption caused, governments and central banks are beginning to initiate a coordinated response, both in terms of further monetary and fiscal stimulus, to provide support. We are confident that the well-diversified portfolio is in a good position to continue to generate a relatively high income stream over the long run," said Chair Margaret Littlejohns.
Henderson High said it has reduced borrowings and lowered the its exposure to cyclical companies in favour of businesses that have more dependable cash flows. It said it believes its well-diversified portfolio should help reduce the impact of dividend cuts by companies in its portfolio, adding that the level of its revenue reserves "provides reassurance".
The stock closed 1.5% lower at 134.50p each on Thursday in London.
By Ife Taiwo; ifetaiwo@alliancenews.com
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