Schroder Income Growth (SCF)

Schroder Income Growth (SCF) aims to deliver real income growth—outpacing inflation—alongside a strong total return competitive with the FTSE All-Share Index. Lead manager Sue Noffke, at the helm since 2011, focusses on UK-listed companies with strong fundamentals, resilient cash flows, and sustainable dividends, maintaining a diversified Portfolio across sectors.

Rather than simply chasing the highest yielders, which can often take unsustainable risks to maintain payouts, Sue blends dependable income generators with select high-yielders and lower-yielding stocks that offer greater capital and dividend growth potential. She also actively seeks opportunities across the UK market, combining established large-caps with carefully selected mid-cap stocks, which help diversify the portfolio providing exposure to varied drivers of income and capital growth.

This disciplined approach, supported by the trust’s historically healthy revenue reserves, has helped SCF navigate market downturns and sustain Dividend growth through market crises, including COVID-19. Notably, 2024 marked the trust’s 29th consecutive annual dividend increase, cementing its AIC Dividend Hero Status. Additionally, SCF’s current 4.9% dividend yield sits above both the market and the average yield of peers in the UK equity income sector.

Despite broader economic headwinds - slow growth, stubborn inflation, higher-for-longer interest rates to name a few—UK equities have delivered positive returns over the past 12 months. Sue’s disciplined, style-agnostic approach—focussed on stock fundamentals, cutting through top-down market noise, and avoiding rigid adherence to value or growth investment styles—has helped capitalise on this strength. Strong stock selection, particularly in financials, and positive gearing contribution (net of costs) have driven absolute gains, though performance has slipped slightly behind the index on a relative basis.

SCF currently trades at a 10.4% Discount - wider than both its five-year average and the sector’s—a possible disconnect, given SCF’s long-term track record, presenting investors a potentially attractive entry point.