The decline in NAV outperforms the company’s FTSE All-Share Index which fell by 7.5% also on a total return basis.

With NAV total return exceeding that of the benchmark by 7.2%, the company was ranked 4 from 23 in the AIC UK Equity Income Sector for the year.

Formal proposals are being put to shareholders at the forthcoming AGM to adopt a more formal and rigorous adoption of ESG considerations by changing the investment objective to achieve growth of income and capital from a portfolio invested mainly in companies listed or quoted in the United Kingdom that meet the Company’s Sustainable and Responsible investing criteria as set by the Board.

The company produced a much more resilient income delivery than the wider market and, with the fourth interim dividend, the dividend increase for the year will be ahead of the rate of inflation.

The Dunedin Income Growth Investment Trust now has a strong track record of outperformance over the medium term.

The NAV total return is 24.9% ahead of its benchmark over five years, a period during which the dividend per share has grown from 11.4p per share to 12.8p per share, an increase of 12.3%, compared with inflation of 9.2% as measured by the Consumer Price Index.

The company’s NAV performance ranks 2 from 23 in the AIC UK Equity Income sector over five years.

Within the portfolio, the Company benefitted from good stock selection with strong operational and share price performances from companies that the Investment Manager had been expanding Dunedin Income Growth Investment Trust’s exposure to. Namely, high quality businesses with cash flows and balance sheets capable of providing reasonable levels of dividend but, critically, combined with good long-term growth prospects.

The Dunedin Income Growth Investment Trust has also benefitted from the strong performance of a number of its overseas holdings, which once again have added value while further broadening the opportunity set for the Investment Manager to pick from, and diversifying the income stream. The Company also benefited from the contributions of a number of its mid-sized market cap investments. With the greater emphasis on growth, the Investment Manager now has more flexibility. The signs are encouraging that this will facilitate the delivery of consistent positive returns from stock selection over the medium term.

The board commented last year, that there has been a continued focus from investors on ESG issues. Since then, it has been in discussions with the Investment Manager how best to further integrate ESG factors into investment decisions.

David Barron, chairman, Dunedin Income Growth Investment Trust, said: “The pandemic has only served to sharpen investors interest on ESG issues. Many companies exposed to the positive aspects of this trend have outperformed, while companies whose activities are deemed to be harmful to both society and the environment have generally underperformed. We believe that this is the start of a much longer term development.

“The Dunedin Income Growth Investment Trust will target a carbon intensity significantly lower than the FTSE All-Share Index. Stewardship and engagement will be an important part of our ESG approach. The Manager will engage with company management to influence behaviour and benchmark progress, will use the Company’s voting power in support of our ESG objectives and ultimately divest from companies that fail to improve or reform.

“The Board expects that, over time, more broadly accepted standards and benchmarks against which to measure the outcomes from more rigorous consideration of ESG factors will develop across the asset management sector, therefore our reporting framework to shareholders is likely to evolve. Our benchmark of the FTSE All-Share Index will not change.”

Following the payment of three quarterly interim dividends of 3.0p, a fourth interim dividend of 3.8p per share was declared, payable on 28 May 2021 to shareholders on the register on 7 May 2021. This will make a total dividend of 12.8p per share for the year, an increase of 0.8% on last year and ahead of the rate of inflation for the year as measured by the Consumer Price Index.

This will be the 37th year out of the past 41 that Dunedin Income Growth Investment Trust has grown its dividend, with the distribution maintained in the other four years.

Ben Ritchie and Georgina Cooper, investment managers, commented on the outlook for the Trust and sector. They said: “The development of vaccines for COVID-19 with high levels of potential efficacy and the roll out of large scale inoculation programmes represent a significant change to the prospects for both economies and equity markets.

“They allow investors to look through the current highly negative near term economic impact and instead focus on the middle of 2021, where a significant and sustained rebound in global aggregate demand is now forecast alongside a substantial recovery in corporate earnings. To add to that, we now have a UK/EU trade deal and further significant fiscal expansion coming in the United States.

“However, the outlook for markets as we move into 2022 and beyond remains uncertain and we are somewhat cautious on what may lie ahead, especially given the very strong rebound we have seen so far, and how equity markets digest what may be a period of rising bond yields and higher near term inflation.

“As a result, we are happy to retain a balance to our overall positioning; committed to a long term perspective, where we focus on holding high quality businesses with robust market positions, competitive advantages, growth prospects and balance sheets, while also owning companies with attractive recovery opportunities. This creates the potential to perform in a range of market environments, looking to protect capital on the downside while participating in any upside that may develop.”