More than 130 years later, this pragmatic trust still offers something new

Law Debenture boasts a unique structure with two valuable sources of outperformance.

12 June 2025

Questor is The Telegraph’s stockpicking column, helping you decode the markets and offering insights on where to invest for the past six decades.

The UK equity market has been a happy hunting ground for income-seeking investors, and it continues to offer a yield premium to other developed equity markets. However, more recent events, particularly across competing income-producing asset classes, have shifted the emphasis for equity income investors towards total returns, dividend growth and the benefits of a pragmatic approach to stock selection.

In the context of an evolving landscape of UK equity income strategies, few names stand out as consistently as Law Debenture. This venerable institution, with almost 136 years of history, combines an actively managed UK equity investment portfolio with the robust growth of its wholly-owned independent professional services (IPS) business, which is comprised of three divisions – pensions, corporate trust and corporate services. This combination creates a unique structure that supports the trust’s history of consistent outperformance.

The investment portfolio is managed by the experienced Janus Henderson duo of James Henderson and Laura Foll, and benefits from a contrarian and value-focused style. The investment approach followed by Henderson and Foll is unconstrained by the equity income mandate, can invest across the market cap spectrum and targets companies trading at reasonable valuations with conservative balance sheets and experienced management teams.

One of the standout features of Law Debenture is the IPS business, which accounts for around 19pc of its net asset value (Nav) and has funded approximately 30pc of its dividends over the past decade. IPS has delivered mid-to-high single-digit growth and around two thirds of IPS revenues are recurring.

Law Debenture has consistently delivered outperformance in the UK equity income sector. Over the five years to the end of April 2025, it reported a Nav total return of 108pc and a share price total return of 120pc, far beating the FTSE All Share Index’s 68pc. Over the past decade, the trust has outperformed the FTSE by 49 percentage points. This outperformance reflects its ability to navigate market volatility and deliver value to its shareholders through active portfolio management, supported by the steady growth and income generation of IPS.

In Law Debenture’s accounts, the IPS business has a valuation multiple of 10.5x by enterprise value over earnings before interest, tax, depreciation and amortisation (EV/Ebitda), which remained consistent year on year. The total valuation of the IPS business has increased by £116m (148pc) since the first valuation at end-December 2015. This valuation underscores the growth potential and stability of the trust’s business model.

The investment portfolio’s largest sector exposures as of April 2025 were financials (30pc) and industrials (23pc). Top holdings included names such as HSBC, Barclays, Shell, Rolls-Royce and Flutter Entertainment, but the portfolio is multi-cap and it is currently benefitting from mid and small-cap exposure in UK companies.

At the end of April 2025, Law Debenture’s net gearing was around 13.6pc. In the context of global uncertainty – whether policy-driven or macroeconomic – leading to heightened equity market volatility, the investment portfolio has benefited from access to a diverse list of companies and its valuation discipline. The investment portfolio’s average valuation (historic price-to-earnings ratio) of 11.6x compares favourably with the UK market of around 12.6x and the US market’s roughly 24x earnings.

Law Debenture has delivered an 8pc annual dividend growth over the past 10 years and has increased or maintained its dividend for 46 consecutive years. The board proposed a total dividend of 33.5p for FY24, up 4.7pc from 32p in 2023, resulting in a yield of approximately 3.5pc on the current share price. The diversified income stream provided by IPS to the trust provides a cushion against market volatility and supports its dividend distributions. This blended approach makes the vehicle an attractive option for income-focused investors.

The trust currently trades on a small premium to Nav, a positive reflection of the demand for the strategy and the returns generated for shareholders. Over the past five years, its share price has traded at an average premium of 0.4pc to Nav, supporting steady growth of the strategy over time. Law Debenture’s ongoing charges figure of 0.51pc is one of the lowest fees in its sector and one of the lowest fees across the entire investment trust universe.

In our view, Law Debenture’s unique structure supports its consistent outperformance. The ability to invest in an unconstrained manner and hold low or zero dividend yield shares, backed by the IPS business’s growth and income contribution, has made the company one of the best-performing trusts in the UK equity income sector.

With its strong record, diversified portfolio, robust IPS business and reliable dividend policy, Law Debenture presents a compelling case for investors seeking stability, income and growth potential. In addition, for those looking to diversify their investment portfolio and access the valuation opportunity in the UK equity market, the trust offers a compelling combination of actively managed stock picking, attractive yield and strong dividend growth.

Questor says: buy
Ticker: LWDB
Share price: £9.74

If Mr. Market ever offers you a yield of around 5% would be of interest to pair trade it with a higher yielder.

It’s general market consensus that a high dividend yield is something to be wary of but is the market always right ?

Re: Dividend Announcement

The Directors of TwentyFour Select Monthly Income Fund Limited (“SMIF“), the listed, closed-ended investment company that invests in a diversified portfolio of credit securities, have declared that a dividend of 0.5 pence per share will be paid, in line with the Prospectus, representing the regular monthly targeted dividend for the financial period ended 31 May 2025 as follows:
Ex-Dividend Date              19 June 2025
Record Date                       20 June 2025
Payment Date                    4 July 2025
Dividend per Share          0.50 pence (Sterling)

AEW

AEW fell during covid, one reason people were working from home and wouldn’t need a workplace.

You will note the yields had been rising, due to the higher interest rates, as the price falls the yield should rise, it accelerated during covid.

Now you would have been hesitant to press the buy button as you didn’t know if the price would continue to fall , it’s always easy with hindsight, if only you could bottle it. But if you liked the yield, you might have bought.

Currently you could have taken out your stake and still receive a yield of around eleven per cent on your remaining shares, which sits in your account at zero, zilch, nothing.

If you re-invested at say a yield of 9%, your running yield would be 20%

Remember all views of everyone in the market, including insiders, will appear in the chart first.

The holy grail of investing is to have an income producing share that pays you a regular income whilst it sits in your account at zero, zilch, nothing.

If you wait for a market crash, you will be rewarded, if you have cash to invest. Whilst you wait let’s look at SEIT.

The current yield is 13% so your cash will be returned in around 8 years, you will also have income from the dividends re-invested but let us ignore that for now.

SEIT trades at a discount to NAV but that is no guarantee that the price will rise, especially if the quoted NAV falls in the future but we will also ignore that for now.

The first consideration is the dividend ‘secure’. The first check is to look is at its dividend history.

The second check is to see what the company says about it dividend.

Jonathan Maxwell, CEO of the Investment Manager, SDCL, said:

“SEEIT’s active management of the assets in its portfolio has delivered substantial income to the Company, in line with previous years. This stable performance ensures that we can cover the target dividend of 6.32p which represents a double-digit yield for investors at the current share price.

“We are confident that the portfolio is well positioned to maintain its performance and secure opportunities that are accretive to NAV. As the market challenges faced by SEEIT and its peers continue, our priority remains reducing the current discount to NAV. We are highly focused on preserving value and upside for shareholders, while at the same time considering ways to cut costs and find capital efficiencies at project and company level.”

Operational Update

During the Period, SEEIT’s operational performance has been generally in line with expectations, delivering the expected distributions to the Company:

Shareholder dividend

During the Period, the portfolio’s stable operational performance has supported distributions to SEEIT that have covered the target dividend of 6.32p per share, with a cash cover in line with the previous year.

If you invest, you must trust what the management say, until your trust is misplaced.

Check three, are there any positive broker comments.

Your duty if you buy, is to check any news from the company about its next and future dividends and wait. The dividend could be cut and still be a valid reason to hold the share.

This dividend stock yields 14.15% and is potentially 52% undervalued

Jon Smith explains why the highest-yielding dividend stock in the FTSE 250 could offer him a good option to include in his portfolio.

Posted by Jon Smith

Published 10 June

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.

When it comes to dividend stocks, a double-digit percentage yield is impressive. Shares in this bucket draw a lot of attention, but should be treated carefully. Usually, stocks with a high dividend yield carry an elevated level of risk. So when I saw a company with a very generous yield but that could also be undervalued, I naturally needed to look closer.

Undervalued relative to assets

The stock I’m talking about is the SDCL Energy Efficiency Income Trust (LSE:SEIT). Its current dividend yield is 14.15%, making it the highest-yielding option in the FTSE 250.

A big question relates to how I reached the presumption of it being 52% undervalued. This metric was configured by comparing the net asset value (NAV) to the current share price. With trusts like SDCL,, company’s value is mostly based on the sum of the assets being held. In this case, the assets are energy efficiency and decentralised energy projects across the UK, Europe, North America, and Asia.

Based on the latest reported NAV value, the stock is at a 52% discount. Of course, in a few months, we should get an updated NAV figure, which could see the discount either increase or decrease. But with the stock down 35% in the past year and no major company updates suggesting the portfolio has been significantly hit in value, I don’t see the discount reducing.

Caution still needed

Without a large hit to the NAV, the discount tells me that the share price move is mostly due to negative sentiment. This could put off some investors. Some would flag up worries about renewable and energy-efficiency trusts, saying that the hype around them is dying down. It’s true that some companies are pivoting back to traditional fuels, with volatile commodity prices also to blame.

Another point to note is that the high dividend yield is primarily being driven by the falling share price. But the dividend per share has indeed been increasing each calendar year for several years now. Given that the dividend cover is above one, I’m not concerned about it being paid out. But the falling share price has pushed the yield higher, which is a bit of a red flag.

The bottom line

From where I’m standing, I don’t see any big problems that should justify the negative sentiment around the trust. Yet I appreciate that I may have missed something or that the sector might be heading for a multi-year downtrend before things change. So, I’m seriously considering putting some of my money to work here, but only a small amount. That way, I can still benefit from the high yield but am not going to be seriously impacted if the stock keeps dropping.

Key Information TG26

Par Value£100Maturity Date22/7/2026 Coupons per year 2 Next coupon date 22/7/25

Coupon1.5%Income Yield1.54% Gross redemption yield 3.74% Accrued interest 58.01p

I’m going to make an opening purchase in TG26 of 2k.
Remember if held outside a tax free wrapper you need a low coupon.

Cash left to invest £837 plus dividends for June of £1,329.00. Either 2k to be pair traded with the gilt or added to the gilt depending on markets at the end of this month.

layanan ai erpn.storex Groetken44470@gmail.com 185.235.142.230

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I’m considering writing a low cost e-book as a sort of work book/reference book.

When markets fell because of Covid the price low for AEW was

55p the dividend was 8p a yield of 14.5%

You would receive this dividend, as long as it wasn’t cut for as long as you owned the share. You would have also achieved the holy grail of investing

in that you could have taken out your stake and re-invested in another high yielder whilst receiving income at a zero, zilch cost.

Also you would be receiving income on the dividends re-invested.

The dividend has been paid at a rate of 8p per year since then.

The current yield: share price 103p dividend 8p a yield 7.7%

As nearly all shares fell at the same time, unless you decided to sell, which in hindsight is easy but in real time much more difficult, you wouldn’t have the funds to bag a ‘bargain’ Trust.

You need a rainy day fund, pair traded with a higher yielder to maintain a yield of 7%. So the Snowball will start a rainy day fund by investing 2k into a UK Government gilt, hoping that the market doesn’t crash until the amount squirreled away is a lot higher.

VPC Specialty Lending Investments PLC

(the “Company”)

DIVIDEND DECLARATION

The Board of Directors of the Company has declared an interim dividend of 0.55 pence per share for the three-month period to 31 March 2025. The dividend will be paid on 17 July 2025 to shareholders on the register as at 20 June 2025. The ex-dividend date is 19 June 2025. The 0.55 pence per share dividend represents the net revenue return earned by the Company for the three-month period to 31 March 2025.

In future periods, the Company will move to annual distributions with the next dividend declaration likely to be announced in February 2026, then every year thereafter. The dividends will not be less than 85% of net revenue return of the period distributed, as previously disclosed.