Dunedin Inc. Regulatory News (DIG)

Dunedin Income Growth Investment Trust: New research

08/10/2018

Highlights:

· Dividends have grown consistently year-on-year

· A turnaround story, with the managers aiming to shift the portfolio into faster growing stocks while maintaining the dividend

· A wide discount offers the potential for narrowing if the strategy shift proves successful

· A 20% allocation to ex-UK stock offers attractive diversification from most UK equity income holdings

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Dunedin Income Growth invests in mainly UK equities with around 20% in European stocks, and aims to generate a growing income plus capital growth in excess of the FTSE All Share.

The yield of 5% is partly a result of the discount, but mainly due to the historic holdings in high yielding stocks with lower growth.

After a poor 2015, the managers have been implementing a turnaround strategy which aims to slowly transition the portfolio to stocks with faster growing earnings and dividends while at least maintaining the distributions.

Returns have improved over the past year, but the trust has slipped onto a wider discount than the sector average thanks to the historic poor performance, and the board has been active with buybacks around the current level of 10%.

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