Alliance Trust has upped its dividend by 7% and posted a turnaround in performance in its annual results, with the trust leaping to top quartile in its sector.
The trust declared a fourth interim dividend of 2.577p, taking the total dividend for the year to 9p, an increase of 7.2%.
The dividend increase is the largest annual rise in 20 years and the 45th consecutive year the group has hiked its income payout.
The trust reported a decline in its share price for the year of 5.8% to 343p, while the NAV per share also fell 7.6% to 406p, to 31 December 2011.
However, the relative performance of Alliance Trust will give shareholders comfort, after it outperformed its global growth benchmark by 5.1% in share price terms, and by 2.3% in NAV.
This has propelled the trust from third quartile to top quartile in the AIC Global Growth sector, and may silence shareholder critics who have previously labelled the investment performance as ‘pedestrian'.
Katherine Garrett-Cox, the group's chief executive, said over the financial period total shareholder return and NAV total return ranked 6/32 and 10/32 respectively against the peer group compared to 24/33 and 22/33 in the previous year.
The dividend has been fully covered by current year earnings, meaning the board did not have to call on its dividend reserves.
"I am very pleased with the way in which each of the businesses of Alliance Trust has contributed to the results," said Garrett-Cox.
"We have generated returns well ahead of the sector as a whole and, crucially for our long-term investors, we have been able to grow the dividend by over 7%, the largest annual increase in twenty years, and we have done so out of current year earnings."
In the results Garrett-Cox admitted the company needs to drive up demand for its shares in order to reduce its discount, as revealed by Investment Week on Monday.
Over the past 12 months, the £2.5bn trust has bought back over 70m shares, worth around £250m and equivalent to over 10% of its share capital, according to broker Winterflood.
"The biggest challenge for the trust is to drive increasing demand for our shares - we need to be a lot more confident about what sets us apart in the business we are in and get more shareholders on board," said Garrett-Cox.
"We are hoping to get new shareholders from the asset management side of our business - as inevitably the more people buying our open-ended products will also increase the possibility of the umbrella and corporate heart of the business gaining more traction."
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