REG - Dunedin Inc.Growth - New Dividend Policy & Second Interim Dividend

Dunedin Income Growth Investment TrustAnnouncement

09/09/2025 07:00

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RNS Number : 4925Y  Dunedin Income Growth Inv Tst PLC  09 September 2025

Dunedin Income Growth Investment Trust PLC

Legal Entity Identifier (LEI):  549300PPXLZPR5JTL763

 

 

New Dividend Policy and Declaration of Second Interim Dividend

 

9 September 2025

 

The Board of Dunedin Income Growth Investment Trust PLC (the "Board") is
pleased to announce:

 

That it will utilise capital and income reserves to significantly increase
dividend distributions to shareholders and enhance investment flexibility.

 

This will result in:

·    An increased total dividend of at least 19.1p per share for the year
ending 31 January 2026, representing an increase of 34.5% compared to the
previous year.

·    A notional dividend yield of 6.0% on NAV and a share price dividend
yield of 6.5%.

·    A second interim dividend for the year ending 31 January 2026 of
4.25p per share payable, as usual, in November 2025.

 

It is the Board's intention to continue with a progressive dividend policy
with growth in absolute terms in future years from the increased level, and
building on the successful long-term track record of dividend increases.

 

The Association of Investment Companies classifies the Company as one of the
'Next Generation of Dividend Heroes' being one of the 30 investment trusts
that have raised their dividend for between 10 and 19 consecutive years.

 

Rationale for the Change

 

Over the long-term, income return through dividends has been a significant
proportion of the total return generated by the Company, and the Board is very
aware of the importance of regular and reliable dividends to shareholders.

 

The Board also notes the significant change that has taken place in the
distribution policy of the businesses in which the Company invests. This has
seen companies increasingly favour share buy backs over dividend
distributions. The net buy back yield alone on the FTSE All Share Index at the
end of 2024 was almost 2%, having been close to zero in 2014. At the same
time, the total Sterling amount of dividend payments expected to be made by UK
companies in 2025 is only marginally higher than it was in 2014.

 

Alongside this, the Board notes the substantial increase in interest rates
since late 2021 which has made holding cash a more attractive proposition than
was the case for the period following the global financial crisis. Today, cash
rates offer a premium yield comparable with the dividend yield available on
the FTSE All Share Index (3.4%).

 

Recognising investors' continued appetite for yield, the Board has reviewed
the Company's dividend policy with the aim of making the Company's shares more
attractive to a wider range of investors whilst making use of the inherent
advantages of the investment trust structure.

 

Accordingly, for the year ending 31 January 2026, it is the Board's intention
that the Company's dividend will be increased to a minimum of 6.0% of the NAV
as at 31 July 2025 (being the most recent financial quarter end), offering a
highly attractive yield compared to cash, the FTSE All Share Index and peers
in the UK Equity Income sector. This amounts to a total dividend for the year
of at least 19.1p per share, an increase of 34.5% compared to the total
dividend of 14.2p for the year ended 31 January 2025. Based on the share price
of 293p as at 8 September 2025, this represents a notional dividend yield of
6.5%.

 

The year ending 31 January 2025 was the 41(st) year out of the past 45 years
that the Company has grown its dividend (+3.3% on the previous year and ahead
of the rate of inflation(1)), with the distribution maintained in the other
four years.

 

It is the Board's intention that, following this step up in distribution, the
Company will continue to have a progressive dividend policy, delivering
absolute increases in dividends per share to build on its successful long-term
record of dividend increases.

 

The Company will fund the dividend cost from a combination of revenue and
capital generation thus utilising one of the key benefits of the investment
company structure. In addition, the Company has substantial revenue and
capital reserves totalling £298 million as at July 2025, equivalent to
approximately 12 years of the new dividend distribution, underpinning the
policy for the future.

 

The Board does not expect changes to the investment process as a result of the
new dividend policy, with the Company continuing to focus on high-quality
companies and long-term capital and income growth, supported by a disciplined
investment approach and integration of sustainability. It will, however, give
the Company's managers additional flexibility to focus on delivering total
returns.

 

Second Interim and Proposed Dividends

 

The second interim dividend in respect of the year ending 31 January 2026, of
4.25p per share, will be payable on 28 November 2025 to shareholders on the
register on 7 November 2025, with an ex-dividend date of 6 November 2025.

 

A first interim dividend of 3.2p was paid on 29 August 2025. The remaining
dividends for the year will comprise a further interim dividend of 4.25p
payable in February 2026, and a final dividend of at least 7.4p per share
payable in May 2026. Formal dividend announcements will be made in advance of
each of these payments.

 

For future financial years, the Board anticipates three equal interim dividend
payments followed by a balancing final dividend.

 

 

For further information, please contact:

Ben Heatley

Head of Closed End Fund Sales

Aberdeen Group plc

07796 564562

 

 

 

(1) As measured by CPI

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