Don’t forget the divi
Popularity has been driven in part by low interest rates, which have driven investors to seek out attractive, stable and sometimes subsidised income streams from sources such as solar, wind and even anaerobic digestion. But has investor appetite and investment in the sector been rewarded? The short answer is yes. When dividends were decimated last year as companies struggled with coronavirus, the Renewable Energy Infrastructure sector’s constituents more than held their own. Remarkably, every investment company in the sector maintained or increased its dividend.
The closed-ended investment company advantage
Elsewhere in the industry, investment companies paid and protected dividends throughout the pandemic, facilitated by their structural income advantages.
Unlike their open-ended counterparts, investment companies don’t have to distribute all of the income they receive every year. In fact they can save up to 15% in a revenue reserve to use when times are tough.
A recent estimate from Link Group reported that investment companies had £1.6bn in reserves heading into the pandemic, of which £700m had been used to support dividends by the end of March this year.
Investment companies in the Renewable Energy Infrastructure sector have proved that they can offer attractive, protected and sustainable income, whilst supporting renewable, carbon neutral energy production.
They will play their part in achieving net zero and we can expect more fundraising and launches in future.
About Annabel Brodie-Smith
Annabel Brodie-Smith is Communications Director at the Association of Investment Companies (AIC). Her role is varied but chiefly focuses on explaining the uses and features of investment companies to the media, opinion formers, advisers and private investors. She also communicates the AIC’s work and current initiatives to key audiences and oversees the AIC’s training and information programme for advisers and wealth managers. This aims to increase awareness and understanding of investment companies through seminars, conferences and online training.
After obtaining a B.A in Geography from LSE/King’s College, and an M.A from Syracuse University in New York, Annabel went on to obtain a postgraduate diploma in public and media relations from the University of Wales. Prior to joining the AIC Annabel worked at Hill & Knowlton, the PR Agency, where her work included working on the winning Athens 2004 Olympic bid, before joining the AIC in November 1997.
Annabel is passionate about financial education and diversity in financial services. She is an ambassador for Women on Boards and The Diversity Project. Previously, Annabel was a board member of pfeg (the Personal Finance Education Group) which has now been renamed Young Money.
