For income-focused investors, a change to a trust's dividend policy is big news. The Finsbury Growth and Income Trust has just announced significant changes designed to reward shareholders.
A much bigger dividend
The headline change is a major increase in the dividend. From October 2026, the trust's annual payout will rise by at least 50% from around 20p per share to about 30p per share.
For shareholders, that means more income from the same number of shares. It also lifts the trust's yield (the income as a percentage of the share price) from roughly 2.6% to around 3.9%. That brings it broadly into line with other trusts in the UK equity income sector, where it had previously offered less.
Quarterly, not twice a year
The trust is also changing how often it pays. Previously, it paid dividends twice a year. Under the new policy, it will pay four times a year (quarterly).
This is a practical improvement for income investors, especially those who rely on their investments for regular cash flow. Quarterly payments are smoother and more predictable, and they match what most equity income trusts already do.
Why now?
The changes come after a tough period for the Finsbury Growth & Income Trust, which underperformed the wider market. The board, led by chairman Pars Purewal, pledged to do "whatever it takes" to improve shareholder returns and a more generous, more frequent dividend is part of that promise.
It is a way of rewarding loyal shareholders directly, while the manager waits for the trust's out-of-favour holdings to recover.
More borrowing to fund growth
Alongside the dividend, the board is changing its approach to borrowing (known as "gearing"). Investment trusts can borrow money to invest more, which can boost returns when markets rise.
The trust had been cautious, using only a small part of its £100 million borrowing facility. Now it plans to use much more of it, reflecting the board's belief that UK shares are particularly cheap right now.
It's important to understand the trade-off: borrowing can amplify gains, but it also amplifies losses. For an already concentrated portfolio, this raises the risk level something income investors should weigh carefully.
What it means for investors
Putting it together, here's the practical picture for shareholders:
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More income: a 50%+ bigger dividend.
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More regular income: quarterly instead of twice-yearly.
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A competitive yield: around 3.9%, in line with peers.
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Higher potential returns and higher risk: through increased borrowing.
These are meaningful, shareholder-friendly moves, but they come in the context of a trust working hard to recover from underperformance.
The takeaway
The Finsbury Growth & Income Trust's new dividend policy is a clear win for income investors: a significantly larger payout, paid more frequently, lifting the yield to a competitive level. Combined with greater use of borrowing, it shows a board determined to reward shareholders and improve returns. As always, the higher potential rewards come with higher risks worth understanding.
FAQ
How much is the dividend rising?
By at least 50%, from around 20p to about 30p per share, from October 2026.
Will payments be more frequent?
Yes moving from twice a year to quarterly.
What is the new yield? Around 3.9%, up from roughly 2.6%.
