Merchants Trust Regulatory News (MRCH)

London, UK, 9 May 2019

Edison issues review on The Merchants Trust (MRCH)

The Merchants Trust (MRCH) is managed by Simon Gergel at Allianz Global Investors (AllianzGI). He highlights the trust's growing income stream, long-term capital growth and above-average dividend yield. The manager notes that in FY19, MRCH's dividend growth of 4.8% was meaningfully higher than the rate of UK inflation, and a step up in dividend growth following the debt refinancing in January 2018. He explains that revenue growth in FY19 was even stronger, allowing an addition to reserves, which can be used to smooth dividend payments in years when revenue growth is lower. Gergel says that MRCH's portfolio continues to generate a healthy level of income, with most investee companies increasing their dividends, including Legal & General, St James's Place and the tobacco companies.

MRCH's discount has narrowed in recent months, meaning its shares are now trading close to NAV. The current 0.2% discount to cum-income NAV (with debt at market value) compares to the range of a 3.9% premium to a 6.8% discount over the last 12 months. Over the last one, three, five and 10 years, the trust has traded at average discounts in a range of 2.2% to 4.6%.

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