Accelerating Dividend Growth
Edison | Jul 11, 2018 08:29AM ET
Standard Life Equity Income Trust (SLET) aims to generate a generous level of dividend as well as long-term growth in capital and income. The board has announced that the FY18 dividend will be at least 18.7p, which is +9.4% year-on-year, considerably higher growth than the rate of UK inflation. This increase will mean that SLET’s dividend has grown for 18 consecutive years. Manager Thomas Moore is continuing to find attractively valued companies with positive fundamentals. He is confident that investment performance will improve with a change in investor focus away from high-growth, highly valued stocks, and he will be able to build on the trust’s positive longer-term record. He says the current growth style bias in the UK stock market means that reasonably priced companies delivering strong results are not being rewarded with higher valuations.
Investment strategy: Focus on Change
Moore and his team follow the investment manager’s Focus on Change philosophy, which aims to identify undervalued companies that are not reflecting attractive fundamentals or the potential for improvement. The belief is that over the long term a company’s share price will be driven by its fundamentals, but that share prices moves can be less rational over the shorter term. Moore is index agnostic, meaning that stock and sector weightings are meaningfully different to those in the benchmark FTSE All-Share index. He invests across the capitalization spectrum; currently c 70% of the portfolio is invested outside of the top 100 UK companies. Net gearing of up to 25% is permitted; at end-May 2018 it was 11.8%.
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