JPMorgan Global Growth & Income raises annual dividend by 24%
Payout goes up under 4% distribution policy after year of strong performance
JPMorgan Global Growth & Income (JPGI) has announced it intends to pay dividends totalling 12.16p per share for the financial year beginning 1 July 2017. This will be the first full year of operation for the trust’s new distribution policy, under which it aims to pay out a sum equal to at least 4.0% of the year-end NAV. The proposed dividend – 4.01% of the 30 June 2017 NAV – will be paid in four equal instalments, in October, January, April and July.
The trust’s investment strategy targets capital appreciation, but the new policy has been put in place in recognition of investor appetite not just for receiving some of their return as income, but also having some certainty over the level of payout. As such the dividend may not be fully covered by portfolio income, but may be partly funded out of capital returns or the trust’s substantial revenue reserve.
JPGI’s investment process focuses on finding stocks globally that are undervalued relative to their growth prospects. While the popularity of expensively valued defensive growth stocks had weighed on relative returns in recent years, the past 12 months have been a much better period for manager Jeroen Huysinga, with NAV and share price total returns of 32.2% and 51.1% respectively for the year ended 30 June 2017. The NAV capital return for the year was 25.6%, and the proposed dividend is 24.1% higher than the payout in FY17.
During FY17, JPGI paid out a total of 9.8p per share. This was equal to 4.0% of the 30 June 2016 NAV, although 3.2p of the total was effectively a final dividend in respect of FY16.
Distribution policies that target a set percentage of NAV have gained popularity in recent years, and are employed by investment companies including European Assets Trust, HBM Healthcare Investments, BB Biotech and recent launch BB Healthcare Trust, in addition to JPGI. Investors should be aware that under such a policy, dividends will fluctuate from one year to the next and are likely to fall in years when the NAV return is negative.
Read our latest research on JPGI here.
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