Shareholders cash in on Alliance’s biggest dividend hike in 20 years

The trust revealed the payout alongside 11-month results to change its year-end to 31 December, which showed the group delivering a top-quartile total shareholder return.

Alliance unveiled a fourth interim dividend of 2.577p, making a 7.2 per cent annual hike to 9p from 8.395p. Katherine Garrett‑Cox, chief executive, said: “The message we are sending to shareholders …is that the asset portfolio is in good shape.

“The other message is that it is being done with prudent management of the balance sheet; the dividend is covered by earnings and we have not had to dip into our reserves. We are saying ‘Trust us, we are good for our promises’.”

It is the 45th consecutive annual increase in dividends at Alliance. The company said that its total shareholder return was “well ahead” of the global growth sector index – ranking six out of 32 investment trusts in the period, compared with number 24 out of 33 the previous year.

Alliance’s key net asset value total return also outperformed most of its peers, ranking ten out of 32 compared with 22 out of 33 the year before.

The group bought back 10 per cent of its shares in 2011 at a cost of £246m to try and narrow the difference between the share price and the value of the assets that the trust holds. The discount narrowed from 17.1 to 15.5 per cent over the period.

Garrett‑Cox said she “rather hoped” the company would not have to do another share buy-back this year but that it depended on where “volatile” equity markets went.

Alliance faced down a major revolt led by activist investor Laxey Partners at its AGM last spring, when more than a third of shareholders voted for a formal mechanism to buy shares whenever the discount to net asset value was above 10 per cent.

Garrett-Cox said Alliance’s improved performance was noteworthy given “the jarring shocks that have become so much a feature of equity markets over the past four years”.