Foreign and Colonial makes good on divi pledge

Investment trust titan Foreign and Colonial has increased its dividend by a third as it makes good on its promise to be more generous with dividend payments.

The announcement came after the trust announced an increase in the net asset value per share to 342.6p at the end of June from 326.57p at the end of 2011, though the end-June figure was down from 362.6p a year earlier.

Net asset value (NAV) per share (with debenture stocks at market value) at 30th June 2012 was 339.37p, up 5.1% from 322.86p at the end of 2011, but down 5.27% from 358.25p at the end of June 2011. NAV growth outperformed the trust's benchmark by 1.8%.

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Foreign & Colonial (F&C) said its private equity portfolio continued to produce a positive cash flow and an increase in value, churning out net cash of £9m over the half-year. F&C's partial disposal of its holding in social networking site Facebook is looking like a good call if you are a glass half-full person, or an opportunity missed if you prefer to take the view that the trust should have dumped the whole lot.

The companies in F&C's listed portfolio continue to increase their dividends. Revenue return per share rose by 8% in the first half of the year after a 20% increase in 2011. The trust expects further dividend growth from the portfolio in the second half and into next year.

The trust's own dividend has been hiked by a third to 4p from 3p at the interim stage last year.

From February 2013 F&C will pay dividends quarterly, starting with a 2p payment in respect of the current financial year, to be followed by a final dividend of 2.50 pence in May 2013. The total dividend for 2012 will therefore be 8.50 pence, an increase of 20% on last year and the 42nd consecutive annual increase in the trust's dividend.

"None of the macro economic problems of the last five years have been resolved. The recovery from the financial crisis is going to be pedestrian and prolonged, but change and innovation continue to create opportunities, the global economy is still growing and companies are generally in robust financial health," noted the trust's chairman, Simon Fraser.

"Our job is to make the best of the market conditions to make you money. Positive cash flow from private equity and the repayment of our debenture in 2014 will help us make the most of the opportunities to continue to increase your dividend," Fraser added.

JH