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Brian Tora: You can’t argue with 29 yrs of dividend growth

Sometimes this weekly article on what the investment world might hold in store for investors and their advisers writes itself. At other times no discernible pattern emerges, which is not to say that there is not plenty to at least think about. This week feels very much as though markets are on hold, in the absence of earth shattering developments. But losing sight of the underlying themes would not be wise.

Amongst the news that came out last week was that the British Chambers of Commerce did not feel the government’s statistics painted a true picture of our economic condition. It was more – not less – positive on how UK plc is behaving. Not that its survey was pure unalloyed joy. Business confidence is on the decline. It is looking like a long slow haul up from this latest recession.

Interest rates stayed on hold, both here and in Europe, last week – no surprise there. And Spain drifted out of the headlines, despite civic unrest there. Markets, which have actually got off to a positive, if quiet, start in October, appear to be taking the view that further upsets in the Eurozone are possible rather than likely. The question for investors now is, are markets right to be more relaxed or are they becoming complacent?

Several research houses are becoming more cautious in their outlook, citing the strong performance for equities during the third quarter of the year. This is understandable on the basis that the higher prices rise, the more careful investors should be. Our own market, as an example, was 18 per cent up from its 2012 low by the end of last week. Moreover, third quarter corporate figures will start emerging anytime now, and they are unlikely to sparkle.

And looking at how individual asset classes have been performing recently can be very telling. Emerging markets rose 6 per cent in September, while REITs fell nearly 2 per cent, according to the Economonitor review of major asset classes. Mind you, they are still around 15 per cent up since the beginning of the year, so perhaps all we are seeing is a little profit taking. Still, it smacks of risk-on again, which more cautious investors might like to bear in mind.

These are just the sort of people who would have taken comfort from a presentation from the Murray Income Trust I attended last week. Chairman Patrick Gifford and investment manager Charles Luke were able to point to 29 years of unbroken dividend growth. Indeed, this year’s dividend payout amounted to more than 4.3 times the 1990 level. Let’s face it, for many this is what investment is all about.

Murray Income is part of the Aberdeen Asset Management stable of investment trusts and this trust, which yields more than 4 per cent and is benchmarked against the FTSE All Share index, can invest up to 20 per cent of its portfolio in overseas assets.

This is not the only investment trust with a long record of raising distributions to shareholders. It will be interesting to see if it features more regularly in portfolios after the RDR.

And on a lighter note, I hope all you advisers located in that bastion of wealth in South London, Tooting, are busily seeking out new clients. This is where the people with the highest incomes in the country can be found, wealthier even than Kensington & Chelsea, according to a recent survey. It is only this year that Tooting achieved top spot. It would seem the days of Citizen Smith are long gone.

Brian Tora is an associate with investment managers JM Finn & Co

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