- Continued outperformance in 1H
- Interim dividend up 35%
- Shares trading at premium
Valued-focused investment trust Temple Bar (TMPL) delivered another period of outperformance for the six months to 30 June,with the total return in net asset value increasing 14.2% against 9.1% for the benchmark.
The trust continued its strong absolute and relative performance with three-year share price total return growth of 66.1%, almost doubling the index total return of 35.5%.
A narrowing in the trust’s discount to NAV to 2% from 6.6% in December 2024 meant the share price total return was just shy of 20% for the period. The trust purchased 2.2 million shares in the early part of the half to reduce the discount and enhance NAV.
Since the period end, the shares have moved to a premium to NAV and the board said it will consider issuing new shares at a premium if there is sufficient client demand.
PROGRESSIVE DIVIDEND
Strong dividend income from investee companies saw a circa 12.3% increase in revenue earnings per share, allowing the board to declare a second interim payout of 3.75 pence per share, compared with 2.75 pence in the same period in 2024.
The prospective dividend yield on the shares is around 4.4%, higher than the average dividend yield of the FTSE All-Share, which sits at 3.4%.
Managers Ian Lance and Nick Purves at Redwheel commented: ‘In an uncertain world, our approach is and has always been to think long term and invest in what we believe to be fundamentally sound businesses which for one reason or another are valued at a significant discount to their true economic worth.
‘This is on the basis that eventually that true economic worth will be reflected in a higher share price.’
PORTFOLIO CHANGES
The trust established new positions in medical devices firm Smith & Nephew (SN.), French food retailer Carrefour (CA:EPA), and Korean bank Woori Financial (316140:KRX), and added to miner Valterra Platinum (VALT), formerly known as Anglo American Platinum.
These were funded by sales of Barrick Gold (ABX:TSE), Newmont Corp (NGT:TSE), Forterra (FORT) and the proceeds from Direct Line’s (DLG) takeover by Aviva (AV.).
Looking ahead, Lance and Purves said: ‘One must never forget of course there is no investment approach that will outperform the stock market in each and every year, and there will inevitably be bumps in the road.
‘However, with this at the forefront of our minds, we feel confident that through the disciplined application of a proven value investing strategy, the Trust can continue to create long-term value for its shareholders.’
