London, UK, 11 October 2023

Edison issues update on Lowland Investment Company (LWI): Dividend growth and NAV outperformance

Since we published our detailed review of Lowland Investment Company (LWI) in August, quarterly DPS has been increased 4.9% to 1.6p, continuing a long track record of progressive dividends, and maintaining the trust’s position as one of the highest yielding in the UK Equity Income sector. In the financial year to 30 September 2023 (FY23), its NAV total return of 17.2% was 3.4 percentage points ahead of the benchmark, despite larger-cap stocks continuing to lead market performance, a strong headwind to the trust’s multi-cap approach in the previous year. Although market uncertainties prevail, the managers continue to identify opportunities in market leading, well managed businesses with growth potential.

LWI’s flexible, bottom-up, multi-cap approach differentiates it from most peers and its portfolio comprises a highly diversified blend of exposures to companies ranging from constituents of the top 100 companies right down to smaller companies, including those listed on AIM. Although underweight its broad market benchmark, LWI’s large-cap exposure is c 50%, typically providing more immediate income and, in an uncertain market, opportunities for growth in more liquid stocks from within more defensive sectors. However, the managers increasingly see the most attractive opportunities in mid- and small-cap (SME) companies and domestic earners and are selectively and slowly rebalancing the portfolio in this direction. With investor confidence weak, these have significantly trailed the broader market; their valuations are particularly low, and they typically have the potential to grow faster, increasing the capital base of the portfolio and distributable income over time. LWI’s broad opportunity pool and risk-return spectrum make LWI an interesting complement to more mainstream trusts. Narrowing of the 13% discount to NAV offers additional potential to enhance shareholder returns.

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