Christopher Johnson: At Finsbury Growth & Income Trust’s FGT AGM this week, star manager Nick Train came under further pressure to explain the trust’s underperformance.
Over the last five years, the trust’s total return was less than 4%, below its benchmark, the FTSE AllShare. That covers the growth side of the trust’s name, but what about the income?
The current yield is 2%, which is nothing too exciting. But the trust has a record of modestly increasing its dividends over the years. Last year it paid 19.8p, a slight increase on 2023.
But what of the stocks Train invests in? He argued that the UK is en route to having an equivalent to the US’ Magnificent 7 as stocks from RELX REL to The London Stock Exchange LSEG ride the AI, cloud, and software wave.
While RELX and LSE offer relatively low dividend yields, below 2%, the share prices have performed well: RELX is up more than 20% and LSE more than 30% since this time last year.
We’ll find out more on upcoming dividends at the company earnings announcements in February.
Another UK conviction stock for Train is Diageo DGE. There is talk that the Guinness brand will be spun off from the drinks company.
Diageo has a 3.22% dividend yield and paid a total dividend in 2024 of 62.98p, an increase on last year’s total dividend of 49.17p. Nick Train also backs Diageo despite the news that Terry Smith, CEO of Fundsmith, has decided to dump the stock.
Train feels that Diageo will continue to thrive as consumer demand for buying premium alcoholic beverage products grows.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
