By Kristy Dorsey

The £534 million Murray Income Trust has raised its total annual dividend payment for the 47th year in a row despite a double-digit decline in income from the UK companies in which it invests.

Managed by Charles Luke of Aberdeen Standard Investments, Murray Income will pay a fourth interim dividend of 9.5p, making a total of 34.25p for the year to June 30. That will be a 0.7 per cent increase on the previous year’s payment of 34p per share.

Murray Income chairman Neil Rogan said 30.5p of the dividend payment will be met by this year’s revenue, supplemented by 3.75p from revenue reserves. This will reduce revenue reserves from 27.8p to 24.1p per share.

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“Covid-19 has led to a sudden, large and unexpected cut in dividend payments from many UK companies,” Mr Rogan said. “Hit hard by declining revenues, companies have chosen to conserve cash or followed guidance to suspend dividends whilst in receipt of Government furlough funding or other assistance.

“Calendar year 2020 dividends, for the market, are currently expected to be 40% below 2019 levels. Charles is currently forecasting a 14% reduction in our portfolio income in 2020.”

Though negative, the share price total return of -5.8% was well ahead of the trust’s benchmark, the FTSE All-Share Index, which registered a total return of -13% for the same period. Shareholder funds eased by 9% during the year, while the trust’s market capitalisation fell to £507.7m against £561.9m previously.

Murray Income said it will “shortly” be announcing details of its merger with Perpetual Income & Growth Investment Trust, which was agreed in July after Perpetual Income pulled the mandate from Mark Barnett and Invesco. The combination will create a company with gross assets in excess of £1 billion.

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Turning to what lies ahead, Mr Rogan said it was a “tough time” to be writing an outlook.

“There are too many variables that are difficult to predict, so any residual forecast would necessarily have a very low level of confidence,” he said. “It is simply not a time for big predictions, nor for taking risks.”

Mr Luke added: “Uncertainties abound. Although the trajectory of an economic recovery will be dependent on a range of factors including government support, the magnitude of any second wave of the virus, the timing and availability of a vaccine, and behavioural changes, it seems likely the post-coronavirus environment will be characterised by a long period of sub-par growth, limited inflation, low interest rates and high corporate debt.

“In addition, the end of the transition period for Brexit adds a further layer of ambiguity regarding our future relationship with the EU and as a consequence of those negotiations, the rest of the world. Furthermore, the outcome of the upcoming US election is too close to call.

“In these difficult circumstances, we believe that companies with attractive dividend yields, sound growth prospects and strong balance sheets are likely to be prized more highly than ever.”