Equity income trust DIVI expects NAV to rise as markets improve

Diverse Income Trust plc (LON:DIVI) has announced that its Factsheet for the month ended 31sty January 2023 is now available:

Manager Commentary

Over recent months, as energy prices peaked and shipping costs fell, there has been hope that inflationary pressures would decline rapidly. Economic data now reflects this improvement with the negative effect of traded goods prices, such as crude oil, automobiles, iron ore, pharmaceuticals, and smartphones, leading to inflationary pressures almost disappearing over the last six months. Investors have become progressively more upbeat that global interest rates may not rise as high as previously feared. 

It is usual for many AIM-listed (Alternative Investment Market) share prices to lag an improving wider stock market trend. To date there have been some examples of sharp share price recovery, amongst companies with medium sized market capitalisation (mid-caps), but fewer down the market capitalisation range. 

The share price of K3 Group is a notable exception as it has agreed a takeover at a premium share price, subject to shareholder approval. Meanwhile, there are other holdings that have experienced share price weakness for company specific reasons.  I3 Energy bought a number of onshore Canadian oil and gas fields when valuations were low in 2020. Over the last couple of years these have generated very substantial cash surpluses, and it is now paying generous dividends each month.  Even so, as the energy price has fallen back over the last six months its share price has fallen by 25%. We continue to hold I3 Energy as we believe the dividend prospects are still attractive. 

With the improving market trends, we look forward to investor interest across the full range of UK quoted companies improving, that in our view should be reflected in an improvement in the NAV of the Diverse Income Trust. Over a longer-term horizon, we believe the Diverse Income Trust’s strategy is well positioned should we see the wider UK stock market outperform. 

Gervais Williams & Martin Turner

31.01.2023 

Diverse Income Trust plc provides shareholders with an attractive and growing level of dividends coupled with capital growth over the long term.

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