RM Infrastructure Income PLC (LSE:RMII) (RMII) has unveiled plans to generate attractive and regular dividends through its investments in secured debt instruments of UK Small and Medium-sized Enterprises (SMEs) and mid-market corporates.
Posting final results for the year ended 31 December 2022, the UK investment company said its diversified portfolio had gross assets worth £126.1mln as of that date invested across 37 loans and one wholly owned asset, spread across 12 sectors and 16 sub-sectors.
It noted that approximately 59.1% of the portfolio net asset value (NAV) is committed to social and environmental infrastructure sectors, reflecting an increase of 8.3% over 2022. As of 31 December 2022, RMII had a NAV of 93.49p per ordinary share (FY21: 94.41p).
Despite a challenging macro environment, the company said its short-dated, high-yielding portfolio has outperformed many other fixed-income comparables during 2022. RMII's portfolio average yield rose by 67 basis points (bps) over 2022, and the investment manager is making new loans at higher levels to increase the average portfolio yield further.
In the results statement, Norman Crighton, RMII chair, said: "We expect this to increase the level of dividend cover, allowing for higher distributions absent of an increase in credit losses."
RMII aims to target a distribution of at least 7p per ordinary share in 2023, representing a 7.7% increase in income for shareholders over the distributions received in 2022.
"This would equate to a dividend yield more than 8.33% and represents an increase of 68 bps over the dividend yield of 7.65% based on the closing share price as at 31 December 2022," said Crighton.
He added: "The focus of the strategy remains on relatively short-dated lending, seeking to improve the overall credit quality of the portfolio. The widening seen over the last 12 months in credit spreads combined with the increase in underlying UK Gilt yields means there are opportunities to increase the coupons charged."
Despite a challenging market environment, the company said it remains optimistic about the opportunities to increase the portfolio's yield and generate higher distributions for shareholders in 2023.