International Public Partnerships manages 5pc dividend growth

The FTSE 250 firm said that with inflation moderating, it could announce a further increase to the annual dividend growth target of 3% for 2024, amounting to 8.37p per share, while reiterating a long-term projected annual dividend growth rate of 2.5%.

It had maintained its track record of growing dividends annually since its 2006 initial public offering, achieving a 2023 dividend cover of 1.1x.

Despite a 4.1% decrease in net asset value (NAV) to £2.9bn, the company said it remained optimistic, citing long-term real rates of shareholder returns.

The board replaced the static total return target with qualitative factors to inform investment assessments, reflecting changes in the macroeconomic environment.

To optimise portfolio performance, INPP undertook measures including raising £212m in cash from asset realisations, fully repaying the corporate debt facility, and launching a £30m share buyback programme.

The company's investment activity totaled £108.1m, with acquisitions in New Zealand and the UK.

Notably, INPP committed to its 11th offshore transmission (OFTO) investment, further contributing to the UK's transition to a net-zero carbon economy.

The portfolio's performance and asset stewardship remained robust, with investments in energy transmission, gas distribution, wastewater, and digital infrastructure.

Notable progress included advancements in Tideway, a top investment in the portfolio, and divestment from Airband.

Looking ahead, INPP said it was confident in proactive measures to optimise the portfolio and address share price discounts.

The board and the firm’s investment adviser said they were committed to sustaining shareholder returns through diligent asset management and prudent portfolio strategies, underpinned by the long-term nature and inflation-linkage of cash receipts.

With a focus on generating further returns for shareholders, INPP anticipated continued progress in meeting its investment objectives, supported by robust asset management practices and a commitment to shareholder value creation.

“The board continues to believe in the robustness and resilience of INPP's low-risk portfolio and the long-term investment case for generating predictable, inflation-linked returns from investing responsibly in social and public infrastructure,” said chair Mike Gerrard.

“Even if the company does not make any new investments, the projected cash flows are sufficient to fulfil INPP's progressive dividend policy for the next 20 years.”

Gerrard said the company had proactively sought to improve shareholder returns by optimising the portfolio through around £200m in asset realisations, repaying all cash drawings under the corporate debt facility and allocating up to £30m to a share buyback programme.

“We have also announced a further increase in INPP's full-year 2024 dividend target following another year of strong operational and financial portfolio performance.”

At 0852 GMT, shares in International Public Partnerships were down 1.48% at 123.74p.

Reporting by Josh White for Sharecast.com.