A good share price performance from Law Debenture in 2020

Law Debenture (LWDB) has announced its annual results for the year ended 31 December 2020 and, in the words of its chairman, Robert Hingley, “Law Debenture has delivered a good performance in 2020, demonstrating the advantages of its unique structure, which allows increased flexibility in portfolio construction”. To summarise its performance, while LWDB provided an NAV total return of just 2.0%, it provided a share price total return of 12.9%, outperforming its benchmark by 22.7%. The announcement includes a number of key highlights, which are detailed below.

Group Highlights

  • Share price total return for 2020 of 12.9%, outperforming its benchmark by 22.7%
  • Continued strong performance from the Independent Professional Services business (IPS) supports dividend growth
  • £20m acquisition of UK company secretarial business from Eversheds Sutherland (International) LLP (“CSS”), which completed at the end of January 2021 and has not been factored into the  financial statements as at 31 December 2020
  • Continued low ongoing charges (0.55%), compared to the industry average of 1.02%
  • £10,000 invested in Law Debenture ten years ago would be worth £27,746 as at 31 December 2020

Dividend Highlights

  • 2020 FY dividends increased by 5.8% to 27.5 pence per ordinary share (2019: 26.0p)
  • Dividend yield of 3.8%[4], Q4 dividend of 8.00 pence per ordinary share
  • Transitioned to quarterly dividends, creating greater regularity and predictability around dividend payments

[QD comment: Law Debenture is unusual in that, within its investment trust structure, it owns and operates an independent professional services business that is largely uncorrelated (possibly even negatively correlated) with the performance of its investment portfolio. This means that the combined entity is resilient in times of trouble, but will fail to keep pace when markets are recovering strongly.]

Leave a Reply

Your email address will not be published. Required fields are marked *