VCT dividend payments reach 20-year high

The annual aggregate dividends paid out over the past year by Venture Capital Trusts reached its highest level in the 20 year history of the vehicles.

Dividends paid out by VCT’s, which were first introduced in 1995 by the Finance Act, totaled £240.3m in the 12 months to 31 March, the Association of Investment Companies has reported.

Aggregate VCT dividends rose 4 per cent year-on-year, having recorded a total figure of £231.1m in the year to March 2013.

The average VCT is currently paying an average yield of 8.2 per cent, with the average generalist VCT yielding 8.8 per cent and the average AIM VCT yielding 5.6 per cent.

This month marks the twentieth anniversary since VCTs were created.

AIC chief executive Ian Sayers said it has been a good year for the VCT sector with strong fundraising for the latest tax year and funds under management at a record high.

The VCT sector raised £429m in the 2014/2015 tax year, the fourth highest level ever recorded, AIC reported two weeks ago.

Mr Sayers said: “As the sector has matured, it is encouraging to see so many VCTs offering consistent and attractive yields. The companies VCTs invest in start small, and as such are high risk, but the tax advantages on offer can be appealing for investors willing to accept the risks.

“The increase in average dividends paid is one of many reasons why income hungry investors might want to consider VCTs as part of a balanced portfolio.”