Last year was a good one for JPMorgan Claverhouse (JCH) with the £452m equity income trust outperforming the UK stock market and taking a big step towards restoring dividend earnings cover in the first full year under new fund managers.

The 63-year-old investment company achieved a 27.6% total underlying investment return in 2025 on account of being overweight in the three best sectors of aerospace, defence and financials.

This beat the 24% from the FTSE All-Share index by 3.6 percentage points and underpinned an even better 28.9% total return to shareholders as the discount – or gap – between the share price and the net asset value of Claverhouse’s investments narrowed to 4.9% from 5.6%.

The total return includes the quarterly dividends, which rose 2.3% to 36.2p from 35.4p, the 53^rd consecutive year the Association of Investment Companies’ “dividend hero” has lifted its pay-out.

Encouragingly, the results showed the positive impact of the increased focus on dividend growth stocks by fund managers Anthony Lynch and Katen Patel since taking on the portfolio in July 2024.

Revenue return per share last year jumped 11.8% to 33.71p from 30.15p, still short of covering the dividends but halving the gap to 6.9% from 14.9% in 2024, which should reassure its income investors.

Chair Victoria Stewart said the board was pleased with the performance that the new managers had generated with co-manager Callum Abbot, who worked with the previous lead manager William Meadon who left JP Morgan after 28 years in August 2024. The non-executive directors remained “very focused” on returning to a fully covered dividend, she said.

For this year, the board plans to pay three dividends of 8.5p per share, up from 8.4p last year, before announcing a fourth dividend next January.

The fund managers highlighted Softcat, the IT value-added reseller, as a dividend growth stock they added to the portfolio. The company has grown its basic dividend by 12% a year in the past five years and paid a special additional dividend every year since flotation 11 years ago. They expected further “significant dividend growth in coming years”.

The trio also made a well-timed reduction in analytics group RELX and sold London Stock Exchange Group believing they had become expensive. This was before their shares slumped on fears they could be “AI losers”, a view they were unconvinced about, opening up the possibility that they could buy back in if they became too cheap, potentially following the Janus Henderson managers of rival Law Debenture (LWDB) who have already done so.

Over five years Claverhouse has provided a 59% total shareholder return ranking it seventh out of 17 trusts in the AIC UK Equity Income sector and behind the 66% return of the All-Share index. The 4,3%-yielding shares stand around 5% below NAV.

Our view

Matthew Read, senior analyst at QuotedData, said: “These are a solid set of results for JPMorgan Claverhouse. In a year when UK equities benefited from a rerating as global investors rotated out of the US, the trust was well positioned, with overweights to financials and defence proving particularly helpful. Higher interest rates and rising geopolitical tensions supported these sectors, driving share price gains. Stock selection also added value and, with the UK market still looking relatively cheap, there may be further upside ahead.

“Dividends remain an important part of JCH’s proposition. The focus on companies with stronger dividend growth prospects appears to be working, and the board expects coverage to improve over the coming years. The discount continues to be actively managed, with buybacks helping to keep it within a relatively tight range.”

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