The Bankers Investment Trust (BNKR) is celebrating its 130th anniversary with a 51st consecutive year of annual dividend growth, and a new FTSE World index benchmark that better reflects its investment approach. Recent performance has been strong, buoyed by good returns from the US portfolio and eye-catching outperformance in China, while dividends grew ahead of forecasts in FY17. Manager Alex Crooke cautions that recent sterling strength could be a headwind for overseas dividend income in the current period, although the trust’s large revenue reserve (1.8x the FY17 dividend) and focus on stocks with attractive dividend growth should help to ensure that BNKR’s long record of year-on-year growth is maintained. Crooke has recently been appointed co-head of equities at Janus Henderson Investors, but remains committed to overseeing BNKR.
BNKR aims to achieve its twin objectives of long-term capital growth and aboveinflation dividend increases by investing globally in well-run, cash-generative firms that are trading at attractive valuations. Lead manager Alex Crooke sets the overall geographical allocation, with stock selection in each region undertaken by specialists from across Janus Henderson Investors (JHI). David Smith has taken on BNKR’s UK equity portfolio following Crooke’s appointment as JHI’s co-head of equities.
Global indices have largely recovered from the stock market pullback in the early part of 2018, with the headline UK FTSE 100 index flirting with a new all-time high. While the sell-off has arguably blown some of the froth off historically high forward P/E multiples, average valuations in many markets remain above long-term norms. Against such a backdrop, an investment approach that focuses on cash-generative stocks trading at attractive valuations may find favour with investors.
At 24 May 2018, BNKR’s shares traded at a discount of 1.2% to cum-income NAV (with debt at fair or market value). This compares with average discounts of 2.1%, 3.5%, 2.9% and 6.5% respectively over one, three, five and 10 years. Following a period of discount volatility from early 2016, BNKR’s discount to NAV has narrowed steadily since mid-2017. The board has the authority to buy back or issue shares to manage a discount or a premium, but has not done so since October 2016. The 2.2% dividend yield is a little below the 2.4% yield on the FTSE World index.