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Volta Finance Limited dividend is a signal of underlying health

Volta Finance Limited (LON:VTA) announced earlier this week that it has declared a quarterly interim dividend of €0.11 per share which is payable on 29th October 2020 and amounts to approximately €4.24 million, equating approximately to an annualised 8% of net asset value. The ex-dividend date is 1st October 2020 with a record date of 2nd October 2020.

Paul Meader, Non-Executive chairman of Volta Finance limited was pleased to note “this weeks’ dividend announcement as an signal of the underlying health of the company’s cash flows. Additionally the company has arranged, for shareholder convenience, the ability to elect to receive their dividends in either Euros or Pounds Sterling.”

Hardman and Co Analyst Mark Thomas when talking about the company as an investment “…is an investment for sophisticated investors, as there could be sentiment-driven, share price volatility. Long-term returns have been good: ca.10% p.a. returns (dividend-reinvested basis) over five years pre- crisis. The portfolio’s cashflow yield is currently ca.17%, more than 2x the cost of the dividend (8% of NAV, giving an 12% yield on the current share price).

Mark also points out that potential upside could come from

i) improving trends in CLO markets, with rising asset prices, greater volumes and widening spreads,
ii) normalisation of sentiment discounts on both assets and shares,
iii) shares aligning with other corporate debt vehicles, and
iv) a rising dividend.

Volta Finance Limited is a closed-ended limited liability company. Its investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.

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