LONDON: JPMorgan Claverhouse raises dividend for 40th consecutive year - New research shows importance of dividend reinvestment
Jan 30, 2013
The JPMorgan Claverhouse Investment Trust has joined a select group of investment trusts that have increased dividends to shareholders for 40 years or more, following the announcement yesterday of its fourth quarterly dividend for the year ended 31 December 2012.
The Trust’s fourth quarterly dividend of 8.35p per share brings the total dividend for the year to 18.85p per share, an above-inflation increase of 3.3% on the previous year. The UK growth and income specialist, which was launched in January 1963 and has just passed its 50th anniversary, has now increased its dividend every year since 1972.
While dividends can act as an important source of income for investors, research prepared for J.P. Morgan Asset Management by Winterflood Securities illustrates just how beneficial long-term dividend reinvestment can be for investors without an immediate income requirement. Looking back to 1972, on a share price basis, a £100 investment in JPMorgan Claverhouse (ignoring dividends) has increased in value to £2,299.90. The total return, including dividends paid (assuming they were spent at the time of payment), on a £100 investment is £3,727.70 – meaning the actual value of dividends paid over the 40 years is £1,427.80 on an initial £100 investment. But simply reinvesting the dividends paid over the 40-year period would boost the total return on a £100 investment to an impressive £14,021.
The last 20 years in particular have been bumpy ones for UK equity investors, and dividends have been an important component of total returns. Reinvesting dividends over the long-term can allow investors to benefit from ‘pound-cost averaging,’ a phenomenon whereby regular investors can buy more shares when prices are low (and fewer when they are high), thus building a bigger stake to benefit from future growth.
Benchmarked against the FTSE All-Share Index, JPMorgan Claverhouse Investment Trust aims for capital and income growth from a portfolio mainly made up of leading UK companies. It is managed by William Meadon and Sarah Emly.
James Saunders Watson, Head of Marketing, Investment Trusts at J.P. Morgan Asset Management, said: “With its 40th consecutive year of dividend increases, JPMorgan Claverhouse has joined a very select band of trusts with such a record. The ability to reserve income means investment trusts have the flexibility to safeguard investors’ dividend streams, keeping some money back in the good years to pay out in the bad. But what this research really underlines is that dividends are not just good for ‘income’ investors. To have turned an investment of £100 into more than £14,000 over a 40-year period that has contained at least two so-called ‘lost decades’ for equities is a truly impressive achievement, and underscores the importance of regular dividends for long-term investors.”
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Notes to Editors
About J.P. Morgan Asset Management
J.P. Morgan Asset Management is part of JPMorgan Chase & Co. and is a global asset management leader providing world-class investment solutions to clients. With US$1.4 trillion in assets under management (the Asset Management client funds of JPMorgan Chase & Co. as at 31 December 2012) and offices in 41 locations around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.
J.P. Morgan Asset Management is a trading name of J.P. Morgan Asset Management Marketing Limited, which has issued this material in the United Kingdom and which is authorised and regulated by the Financial Services Authority. Registered in England No. 288553. Registered office: 25 Bank Street, Canary Wharf, London E14 5JP.
Any past performance referred to in this material is not a guide to future performance and the value of investments, and any income from them, can fall as well as rise. Any tax concessions referred to are not guaranteed and their value will depend on the individual circumstances of investors. Stock market linked investments carry a number of inherent risks. These risks will increase where fluctuations in exchange rates impact on the value of any underlying investments or where the investment is exposed to smaller companies or emerging markets. Investments in fixed income securities that are not rated as investment grade represent a greater risk to an investor’s capital.