Law Debenture (LWDB) built on its strong track record by delivering a net asset value (NAV) total return of 28.4% for 2025. That was ahead of the 24% generated by the FTSE All-Share benchmark.
To the delight of shareholders, this unique trust extended its 47-year record of maintaining or increasing the dividend.
Trust with a twist
Law Debenture’s share price total return for 2025 was 22.2% for 2025 as the shares moved from a 2.4% premium to a 2.5% discount. This was ahead of the Association of Investment Companies’ (AIC) UK Equity Income weighted average of 20.2%.
Impressively, Law Debenture’s NAV has now outperformed the benchmark over one, three, five and 10 years.
Law Debenture is a unique trust with two distinct-yet-complementary components.
The first is a UK equity income portfolio managed with a ‘moderately contrarian’ approach by James Henderson and Laura Foll. The second is its Independent Professional Services (IPS) business.
The income generated by IPS gives the managers greater freedom to invest in lower-yielding yet faster-growing companies.
Law Debenture’s portfolio blends large, mid and small cap stocks. Henderson and Foll seek out high-quality businesses with strong competitive positions, resilient balance sheets and attractive growth prospects.
Superior value
‘Nearly 90% of the portfolio is in UK quoted companies at present, as this is where we are finding superior value despite concerns about the UK economy,’ wrote Foll and Henderson.
The pair pointed out that after the rise of last year, aggregate valuations for companies are not as low as they were. However, ‘they are still below their long-term averages’.
Therefore, ‘modest valuations and the possibility of better-than-expected operating profits as a result of falling interest rates can counter the concerns about geopolitical problems.’
For the second year in a row, three of the top five absolute contributors to Law Debenture’s performance were banks. The sector continued to benefit from higher interest rates boosting returns as well as a subdued loan losses.
Also among the best performers were aerospace and defence suppliers Rolls-Royce (RR.) and Babcock (BAB). ‘In both cases, we have taken substantial profits on valuation grounds,’ said the managers.
Dividend streak extended
Law Debenture has now increased the dividend for 15 consecutive years. It has also increased or maintained the shareholder reward for a remarkable 47 years.
This record continues to be underpinned by the consistent cash generation of IPS. This business provides a stable source of income alongside the dividends generated from the investment portfolio.
Denis Jackson, Law Debenture’s CEO, commented: ‘Law Debenture’s carefully constructed investment portfolio, together with the reliable and diversified income streams generated by our IPS business, continues to underpin our ability to perform through the cycle and we enter 2026 with confidence and strong momentum.’
We are big fans of Law Debenture, a UK equity income stalwart that continues to deliver for shareholders.
Managers Henderson and Foll continue to see value in the UK stock market, while the IPS business should help support rising payouts for years to come.
Read the press release here: https://www.lawdebenture.com/investment-trust/shareholder-information
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