The investment house Seven Investment Management is a success story. Over the past 22 years he has built a business managing £20bn of assets on behalf of individuals, families and charities.
The company, which is called 7IM, knows a thing or two about investing. Each week, one of their experts opines succinctly on a particular aspect—from the merits of portfolio diversification to surviving bear markets. Like mini Easter eggs, I devour them.
Your recent letter on dividends caught my attention, reminding me of the attractive power that dividends have in persuading investors to invest money in certain companies.
It said: ‘Dividends are a strong impetus for shareholders to invest in a company. When a company offers a dividend, it is making a statement: “Business is booming, and while we have reinvested some of our profits into the business, we are also rewarding our shareholders by returning some of their investment.” ‘
These words came back to me a few days ago when investment trust Alliance announced its final quarterly dividend for 2023, a payout of 6.34 pence per share. This meant that last year the £3.4bn listed fund paid shareholders dividends totaling 25.2p, a five per cent increase on the previous year.
Looking up: The pulling power of dividends can persuade investors to put money into certain companies
Most impressively, it extended the trust’s track record of increasing its annual dividend to 57 years. Only the City of London and Bankers trusts, both managed by Janus Henderson, have consistently increased their dividends over such a long period of time.
Although “booming” is not a word I would necessarily use to describe Alliance, there is no doubt that this 135-year-old trust ticks a lot of boxes for investors.
Its assets are invested around the world, annual running costs are low (0.62 per cent) and, unusually for an investment trust, it uses a team of fund managers to generate returns for shareholders.
Pulling the strings is the investment house Willis Towers Watson (WTW), which distributes the trust assets among some of the world’s leading managers to manage. They are currently held by ten fund groups (such as Dalton, GQG, Jupiter and Vulcan), which bring something different in terms of investment expertise. Each manages a portfolio of no more than 20 stocks, apart from GQG, which also manages a portion of emerging market assets. WTW supervises managers and sometimes replaces some if they do not meet the requirements or if they are better.
The result is a 200-person portfolio with nearly 60 percent of the trust’s assets in the United States. More importantly, the process works. Over the past three and five years, it has delivered overall returns of 39 percent and 73 percent, respectively. Only one trust among its global peer group – Brunner – has a better track record.
Last year’s dividend of 25.2p compares to the current share price of £11.72. Although annual revenue is modest in percentage terms (a little more than 2 percent), it is in growth mode.
Seven Investment Management says investors should be aware that companies sometimes misapply their dividend policy and overpay shareholders when they should be investing more in their businesses.
However, this cautionary advice does not apply to Alliance. It is a prudently run business that has plenty of income (more than a year) stored in reserve if things turn sour.
It’s the type of investment that should be at the heart of a well-balanced Isa or DIY pension portfolio.
Devil. The only word for the demon that tried to attack my late mother.
Good memories: Jeff with his mom.
I’d love to find the demon who recently cloned my mother’s personal details to open a Santander checking account in her name and, presumably, then spend wildly in the short term.
I won’t tell you what I’d really like to do to them if I found out who they were. But perhaps a stretch at HMP Wakefield would allow them to see the error of their ways.
Although his request fortunately caught the attention of the bank’s anti-fraud operations team and was rejected (thanks, Santander), the actions of this financial criminal will stick in my mouth for a while. Not only did they despicably attack a vulnerable 88-year-old woman, but my mother (or Helen of Troy, as I call her) died late last month after a long battle with cancer. Her funeral will take place this week.
Mum had died when Santander wrote to her informing her of the attempted fraud, so the distress her letter would inevitably have caused was avoided. But it raised my blood pressure into dangerous territory.
Financial crimes may not be violent, but they are still evil and need to be crushed from the top.
My prosperous hometown… but still the banks close
My home town of Wokingham in Berkshire is still doing quite well despite the ongoing cost of living crisis. It’s in growth mode as new developments pop up everywhere.
Even care home specialist McCarthy Stone seems to like it, judging by the fact that he has just built his second complex in the city (Oakingham Place), a five-minute walk from its traditional Queen’s Gate (no, I don’t know). . I’ve already had my eye on one of them).
However, like many towns up and down the country, banks seem uninterested in supporting Wokingham with branches that residents and small businesses can use to do their banking.
Disinterest: Lloyds branch in Wokingham appears to be the last to close in the city
Since I arrived in the city at the beginning of 2020, Barclays, Santander and NatWest have closed their branches. This leaves building society Nationwide (of course), HSBC and Lloyds hanging on, while the Post Office provides banking services behind a rather tired-looking WH Smith. But now it looks like Lloyds will be next to go. The council has just approved a new development for the land on which Lloyds and its retail neighbor Robert Dyas sit. It will have 60 homes, three new businesses and a public plaza.
The proposals have already attracted criticism because social housing is not incorporated into the project. One councilor says Wokingham is becoming “a town only for the rich”, an understandable view given that prices for a two-bedroom apartment start from £300,000.
Perhaps Lloyds will occupy one of the three stores in the new development; If you do, I will eat the brown hat that I loved, but that my late mother despised.
The most likely outcome is that the bank leaves town. As Steve Ross, a 68-year-old retired electronics engineer, told me, if things continue as they are, it won’t be long before Wokingham will be eligible for a banking hub (a shared bank branch).
One last observation about bank branches. Seven days ago I was in Staines-upon-Thames, Surrey, after taking part in a fairly muddy race. Given that the city center has seen better days, I was quite surprised to see three banks on its main street, occupying consecutive buildings: Lloyds, Barclays and NatWest. Illogical in a world where banks are shelving branches? Yes, although I’m not criticizing it.
- Does your city have an equally impressive banking offering? Email jeff.prestridge@mailonsunday.co.uk.
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