Schroder Income Growth posts 19% NAV return, lifts dividend for 31st straight year

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Schroder Income Growth NAV & dividend

Highlights

Schroder Income Growth posts a 19% NAV return, narrows discount to 5.3% from 8.2%, and repurchases 4.4% of shares for £10.7 million.
Ongoing charges fall to 0.57% from 0.78% due to a management fee cut and cost savings, with annualised NAV total return at 8.7% since July 2011.
The trust raises its dividend for the 31st consecutive year, now compounding at 4.1% annually, with a 4.2% yield and a 6.8% discount to NAV.

Annual performance and portfolio changes

As reported by London Stock Exchange, Schroder Income Growth says stronger share price performance is helped by the discount narrowing to 5.3% from 8.2%, with board buybacks contributing to that move. The board repurchases about 4.4% of issued share capital for £10.7 million during the year, adding roughly 0.3% to NAV, and a further 1.1% has been bought back since the year end as of 09/11/2026.

Among the strongest contributors over the year are Computacenter, which benefits from AI-related capital expenditure in its U.S. business, and Standard Chartered, supported by the interest rate environment and growth in Asian wealth management. Relative underperformance against the index comes largely from an overweight position in consumer discretionary, while Telecom Plus detracts after warning that renewed competition in the energy market would weigh on 2027 earnings.

The portfolio manager also adjusts holdings over the period, taking profits in higher-yielding names including Lloyds and TP ICAP and reallocating capital into RELX and LSEG. The analysis says these moves reflect a view that proprietary data owners can benefit from AI adoption rather than be displaced by it, with both companies integrating AI into products or supplying data used by third-party tools.

Income outlook and UK market backdrop

Ongoing charges fall to 0.57% from 0.78%, reflecting a cut in the management fee to 0.40% from 0.45%, now charged on the lower of market capitalisation or NAV, alongside the removal of a separate secretarial fee and lower service provider costs. Over the longer term, the trust has delivered an annualised NAV total return of 8.7%, ahead of 8.1% for the FTSE All-Share since Sue Noffke took over in July 2011.

The dividend increase keeps the trust ahead of inflation over the long run, with dividends compounding at an annualised 4.1% since 1996 against inflation of 2.5%. Even so, dividend cuts at holdings including Diageo and Taylor Wimpey, and revenue cover of 0.89 times, mean the revenue reserve has narrowed to 5.07 pence per share, although the board still has access to realised capital reserves.

The broader UK backdrop also appears supportive for the strategy, with 26 of the trust’s 46 holdings announcing buybacks during the year and M&A involving UK companies doubling to £65 billion in the first eight months of 2026. Risks remain from the consumer discretionary overweight, slower recoveries in some positions and the potential effect of higher bond yields or renewed geopolitical tension, but the trust still offers a 4.2% yield and trades at a 6.8% discount at the time of writing.

Previously, we outlined the main factors behind the UK deficit-cut course ahead of the October Budget, as ministers stuck to IMF-backed plans.

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