"Its current discount of 5.5 per cent is below its three and five year averages of 5.9 per cent and 6.3 per cent respectively. Despite this, the yield is compelling and, as such, STS may be attractive to investors looking for regular income at an attractive yield, or those looking for a moderately geared exposure to the FTSE All-Share," analyst Matthew Read said.
Performance of Securities Trust of Scotland vs index and sector
Source: Financial Express Analytics
Financial Express data shows the trust outperforming its FTSE All-Share Index by around 7 per cent in the year to 19 November, and its IT UK Growth and Income sector by around 4 per cent. The same data suggests it is one of the better performing funds in its sector, but has taken on more volatility than the average trust to provide those returns.
The trust is a conventional investment trust, has one class of share in issue, and can gear up to 15 per cent. Reflecting this it has an £18m loan facility with Lloyds Bank, Read says. The total expense ratio (TER) was 0.80 per cent for the year ended 31 March.
Dividends are paid quarterly; the first interim dividend is paid in September, and this year hit 1.15p. That level has historically established the level for the second and third interims in December and March respectively. The June dividend, its final dividend, is typically larger, and this year reached 1.20p.
For the year ending 31 March 2010 the Securities Trust of Scotland paid a total dividend of 4.65p, less than last year’s 5.45p.
"With the announcement of its recent interim results we believe STS is in line to maintain its dividend for the year ending 31 March 2011," Read added.