On 23 May 2016, the VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF (TDIV) listed for the first time. Ten years later, it has done what every dividend strategy aspires to do – and what only a few actually deliver: distribute income every single year, grow that income over time, and compound capital through a full market cycle.
To mark the anniversary, we’ve put together ten figures that tell the story: sequenced as performance, income, stability, and portfolio characteristics. A few highlights below.
Ten years, ten figures – a preview
A portfolio built around developed-markets dividend leaders, with a structurally lower US weighting than most global equity ETFs. A positioning that has, on more than one occasion, proved its worth.
performance is not a reliable indicator of future results. **As of 22 May 2026.
Main Risk Factors: Equity market risk, foreign currency risk. Investors must consider all the fund’s characteristics or objectives as detailed in the prospectus or related documents before making an investment decision. Please refer to the sustainability-related disclosures in the document section to the KID and the Prospectus for other information and applicable risks before investing.
A good number of small-cap funds come with an edge on the income front.
30th June 2026
by Dave Baxter from interactive investor
Investing comes with its fair share of cliches, and enough of those apply to the world of smaller company investing.
Those who like to back small caps will most likely know that it can be pretty risky, can require more thorough research than simply buying blue chips, and that it should (in theory) deliver better returns over a long period.
That’s all well-rehearsed material but small-cap investing can offer some surprises, too.
Right now this is most notable on the income front: a decent number of UK small-cap funds are throwing off eye-catching yields.
That makes sense in some respects: companies with high growth rates can end up generating lots of spare cash and some of this might be funnelled into dividends.
But it’s worth being aware of this trait, for growth and income investors alike.
Those in the first camp might be keen to plough any payouts back into investments that can compound over time rather than sitting on any income they receive, while dividend hunters might be interested in what small caps can do for them.
The second point is especially pertinent given that the yields on large-cap focused UK income funds have fallen back in the wake of strong total returns.
Here, we showcase the UK small-cap funds with the chunkiest yields, the story behind those metrics, and what kind of portfolios have made it into the list.
Some familiar faces
Our table lists those dedicated small-cap funds with a yield of at least 4.5% – well in excess of the roughly 3% on offer from the FTSE 100, and comfortably ahead of the average of 3.9% from the Association of Investment Companies’ (AIC) UK Equity Income sector.
Many of the names in said sector will have a decent slug of exposure to blue-chip shares although it’s worth noting the highest-yielding name, Chelverton UK Dividend Trust Ord SDV
currently yielding 7.2%, does look further down the market cap spectrum.
The names in the table, by contrast, do not have a stated commitment to income above all else. But they are churning out some big dividends for now, which might turn heads. .
However, it is worth noting that a much talked about potential catalyst for a pick-up in performance – lower interest rates – appears off the table. Instead, the base rate is expected to remain at 3.75% for the foreseeable future.
has set itself apart from the crowd in multiple ways, if not all of those are definitely appealing.
In its own words, the team looks “to work in partnership with exceptional industry executives who bring long-standing industry experience and operational expertise”.
They often use the “buy and build” approach of investing in a business and then acquiring and merging it with smaller, complementary companies.
Marwyn favours companies with little debt and a focus on reinvesting capital into the business.
In practice, as we have discussed before, this is a fund that has performed very strongly but takes some big bets.
As the table shows, the fund has done extremely well over a 12-month period, in no small part thanks to the enormous returns made by European telecoms company Zegona Communications ZEG
The shares have returned around 140% over 12 months, and as Marwyn notes the company has enjoyed various wins, from a special dividend to a share buyback programme.
which yields just more than 6%, takes a very different tack.
It has a well-diversified portfolio, has had a much more mixed track performance record as of late in part due to its quality growth investment style, and follows an enhanced dividend policy where it pays a quarterly dividend equivalent to 1.5% of net asset value (NAV).
An enhanced approach
Enhanced dividend policies, where trusts can use reserves or capital to partly fund their payouts and where many also look to pay out a set proportion of net asset value (NAV) each year, have become much more widespread in recent years. That’s one way trusts are trying to appeal to a wider base of investors and fight discounts.
Montanaro UK Smaller Companies is in that list as mentioned, and it’s notable that it boosted its dividend when activist investor Saba Capital was lurking on its shareholder register.
But a good number of other names in the table also use an enhanced dividend policy of some form, something that makes sense if smaller companies aren’t always the most consistent with such payouts
which came under the management of Artemis last year, has its own 4% target that can be bolstered using capital.
Enhanced dividend policies can be useful in that they allow funds to provide dividends without limiting their investments to companies with high yields – although there are risks that the payouts will falter if the NAV drops.
UK small and mid-cap shares have had a rocky few years and that’s reflected in the performance of some of these funds. Many are down, or sitting on lacklustre returns, over one and five-year periods.
Marwyn Value Investors has bucked this trend, while the Montanaro team has seen a decent pick-up in performance over one year. Another strong performer over one year, meanwhile, is Aberforth Geared Value & Income
As the name suggests the fund’s managers follow a value investment style, and like many a small-cap fund they actually have a big allocation to mid-cap shares, with 60% of the fund in the FTSE 250. By sector it’s industrials, financials and consumer discretionary shares that are best represented in the fund.
The fund’s position sizes are pretty limited, with metal flow engineering specialist and top holding Vesuvius VSVS
accounting for just 4.7% of the portfolio.
But some well-known financials are in the list too, from the now controversy-mired Rathbones Group RAT
The RGL of the hero from Sherwood Forest Considering the rent update from Regional REIT – RGL The Oak Bloke Jun 30
It was the 18th June when OB pick for 26 RGL announced £1.1m of new rent. This enigmatic news in a riddle wrapped up in an enigma was so well hidden from the market that RGL went up by zero.
Why do I believe this is a Quadruple-Win? This single deal improves Regional REIT’s bottom line in three distinct ways:
New Revenue Stream: They have secured £1,075,000 per year in new rent.
Cost Eradication: Because these buildings were 100% vacant, Regional REIT was paying £700,000 per year just in “void costs” (business rates, security, basic maintenance, insurance). This cost now drops to zero as the tenant takes on those costs as a charge through.
Capital appreciation: £5m upgrade of facilities.
The fourth win is not RGL’s… because the Client wins too. Paying just £7.35 per square foot is a super cheap price. No wonder they were prepared to invest £5m to upgrade the space. Going rate for Nottingham on Rightmove is about double that price. £13m/sq.ft is the cheapest I can see. Or can you find plenty of office space for £1 a square foot? In Poundland maybe? Or on the Hindenburg? More on that later.
In 2026 based on the YTD £15m of disposals at an average 90% vacant and this Newstead Unit 1 and 2 deal (~£10m of property) which were 100% vacant (and presumably part of the Capex to Core?) that equates to approximately one sixth of RGL’s irrecoverable costs (in 2025).
The Net Swing: By passing on a £700k cost and gaining a £1.075m income, this single deal represents a massive ~£1.78 million per annum positive annual swing for the company’s cash flow. Overall an estimated movement of around £3m at the half year.
Compared with £22.2m cash from ops in FY25 that’s a potential 8%-13% improvement to cash gen.
A Free £5 Million Property Upgrade The announcement notes that the offices were rented in an “unrefurbished condition” and the tenant is spending £5 million of their own money on improvements.
Usually, landlords have to pay for expensive refurbishments to attract tenants.
Here, the tenant is footing the entire bill. This immediately increases the capital value of Regional REIT’s portfolio without Regional REIT spending a single penny.
1 & 2 Newstead are each listed as below £5m so that is approximately a 50% gain on the value of the property subject to valuation rules.
High-Quality Lease Terms The structure of the 20-year lease is highly favourable to RGL:
Long-Term Stability: A 20-year lease is exceptionally long for modern office spaces, guaranteeing long-term income. While there are “breaks” (opportunities for the tenant to cancel) at years 10 and 15, securing at least 10 years locked-in is a great result.
Inflation Protection: The lease includes five-yearly RPI (Retail Price Index) rent reviews. This means every five years, the rent will automatically increase to keep up with inflation, protecting the landlord’s real returns.
Strong ESG Standing: Both buildings already hold an EPC B rating, which is highly energy efficient. This protects the landlord from looming, stricter environmental regulations that are currently forcing other landlords to spend millions retrofitting older buildings.
The Strategic Takeaway The CEO’s commentary highlights a broader trend: because developers aren’t building new regional offices, there is a supply shortage.
Regional REIT is proving that even “raw,” unrefurbished office space is highly valuable if it’s in the right location (like right off the M1 motorway). By getting a manufacturing tenant to lock in for 20 years and inject £5m of their own capital into the buildings, Regional REIT has successfully de-risked these assets while significantly boosting their dividend-paying capacity.
Location, Location, Location – the Portfolio Breakdown According to Regional REIT’s latest property and strategy assessments, approximately 80% of its portfolio is classified as being in the right location and meeting modern occupier preferences (or capable of being enhanced to do so).
With a total portfolio of 110 properties, I was curious as to the breakdown of what is in the “right location” versus what is being phased out is distributed as follows:
The Core Portfolio (~80% / approx. 90 properties): These are the high-quality assets located in major regional UK hubs outside the M25 motorway (such as the Nottingham offices mentioned in the update). These properties benefit from excellent transport links, strong regional tenant demand, and are being actively retained to drive long-term rent and capital growth.
The Non-Core Portfolio (~20% / approx. 20 properties): These are properties that no longer fit the “right location” or quality criteria due to structural shifts in the office market. Regional REIT is aggressively selling off these underperforming or non-core assets to reduce debt and reinvest capital into its core regional assets.
Analysis of Postcodes: This was an interesting exercise. Analysis shows of RGL 112 properties (as at 31/12/25):
a/ 41 are within 0.5 miles of a railway station.
b/ 50 are within 1.5 miles of a Motorway Junction
c/ 21 are outliers i.e. neither of these. Let’s examine those.
c1. Regional High Street Retail Assets A few assets are located deep inside historic regional town centers. Motorways are miles away and no railway station serves them, but they are close to the town’s primary shopping footfall, their specific physical entrances sit just outside our strict half-mile rail-station boundary:
27/29 King St, Belper (6.5 miles to M1 link)
Shrewsbury Arms Shopping Mall, Rugeley (9.8 miles to M6 Toll)
High Street/Bank Street, Dumfries (13.1 miles to A74(M))
c2. Deep Urban / Infill Corporate Offices These are offices located in the suburban areas of major cities (like Leeds or Birmingham). Their nearest motorway junction is physically further than 1.5 miles away, and their walk to the central train terminal spans between 0.6 and 1.2 miles.
Trinity Court, Newport Road, Cardiff (3.8 miles to M4 / 0.6 miles to Cardiff Queen St)
31 Foleshill Road, Coventry (4.3 miles to M6 / 0.6 miles to Coventry Central)
Bennett House, Hanley, Stoke-on-Trent (3.8 miles to M6 / 0.9 miles to Stoke Station)
Global Reach, Cardiff (3.4 miles to M4 / 1.1 miles to Grangetown Station)
Northbank One, Sheffield (3.5 miles to M1 / 0.6 miles to Sheffield Station)
Albert Edward House, Preston (2.2 miles to M55 / 1.5 miles to Preston Central)
5 Temple Sq, Liverpool (3.5 miles to M53 / 0.7 miles to Lime Street mainline)
84 Albion Street, Leeds (1.9 miles to M621 / 0.6 miles to Leeds City)
c3. “Drive-To” Regional Business & Industrial Parks These are large commercial parks positioned on regional A-roads. They capture local vehicular commuter workforces but aren’t proximate to a motorway.
Cyan Building, Rotherham (4.2 miles to M1 J36)
Fairfax House, Wolverhampton (2.8 miles to M54 J2)
Bering House & Timor House, Clydebank, Glasgow (3.4 miles to A82 / M8 link)
Tasman House & Caspian House, Clydebank, Glasgow (3.4 miles to A82 / M8 link)
Wilkinson Building, St Helens (3.9 miles to M57 J2)
Columbus House, Coventry (4.8 miles to M6 J3)
Eagle Court, Coventry Road, Birmingham (2.1 miles to M6 J6 / 2.5 miles to M42 J6)
Linford Wood Business Park, Milton Keynes (3.6 miles to M1 J14 / 1.2 miles to station)
Century Park, Altrincham, Manchester (2.8 miles to M56 J7)
Leo House, Wallington, London Periphery (5.4 miles to M23 J7)
The Whole List (this includes two disposed properties YTD – don’t know which those are) Flagship Properties Valued £10m+ As can be seen below these are located attractively for transport. The “worst” in terms of distance Eagle Court which is on a dual carriageway a short way from the NEC.
Midrange £5m to £10m The theme continues where few properties are not near transport links. The outliers tend to be retail/leisure and non-office therefore presumably part of the “Sale” cohort.
Finally the below £5m properties are generally also generally well located:
With nearly zero new office supply (compared with average new demand of 2m sq.ft per year) and a determination by the incoming PM for a “levelling up” (and some regions shall be more level than others?) who is better placed than RGL for this bounty of effort by the Labour Government from now until they’re gone in 2029?
RGL faces very little competition from new supply.
We’ve seen the transformative effect even just moving the BBC had back in the noughties on Media City Salford. Transformation indeed.
Conclusion From zero to hero? Stranger things and an outlaw hiding in places like the motorway junction edge of Sherwood Forest, could be the start of the revival of the regions. The signs of recovery are already there even before Burnham coronated his way into his post.
The ERV per tenant, per property and per unit of RGL’s portfolio has been rising for a while too.
The Equivalent/Reversionary Yield too.
Buying RGL for 92p buys 328p of property where you owe a net -£1.30 a share to lenders (£1.98 NAV) and where even the unwanted property has been selling at or close to its book value.
Maybe I’m wrong, and this article is your sell signal. RGL could descend in flames. Some appear to want to believe that. Just like the airship Hindenberg which disastrously leaked hydrogen and crashed in flames.
I get that people dislike RGL. I get that there are those who claim there are “better quality” alternative REITs. But you pay handsomely for that quality. I’ve checked.
When you look at RGL assets, and consider the average 1% GDP growth, things are not going as bad as the media would portray. The interventionist Labour government will likely be a tailwind for RGL. However you feel about that, in my opinion it is the way the wind is blowing.
RGL is, I believe, another of these and yes in the recent past RGL raised money and diluted shareholders and has a poor track record, you can point the finger at management, blah de dah de dah. The point is it’s now 2026. It’s just 92p a share. They have refinanced debt, reset the dividend, paid out £70m of dividends over the past 3 years, on a mar cap of £150m mind you. RGL debt is today much more under control (and falling) and the upside potential for well-located offices and a capex program driving EPC A and B upgrades and demand for upgraded regional offices is growing too.
Here’s a final thought: Two years ago post dilution, RGL was at 140p a share. Compared with its former self as at July 2024, the July 2026 version of RGL is over 40% cheaper…. fitter and leaner, but also unjustifiably cheaper, given its improving outlook.
Regards
The Oak Bloke.
Disclaimers:
This content is for educational and informational purposes only. It does not consider your personal circumstances and is not financial, investment, tax, legal, or professional advice. Nothing here is a recommendation, offer, or solicitation to buy, sell, or hold any investment.
