CT UK High Income Trust annual results 2026: strong income growth, but performance lagged the FTSE All-Share
CT UK High Income Trust PLC has delivered a solid set of annual results for the year ended 31 March 2026. For income-focused investors, the headline is pretty appealing: another rise in shareholder distributions, a yield comfortably above the wider UK market, and a bigger revenue reserve to help support future payouts.
That said, this was not a perfect year. The trust made money and grew net assets nicely, but it still fell short of its benchmark, the FTSE All-Share Index. In plain English, shareholders did well – just not quite as well as they would have done in the index.
CT UK High Income Trust 2026 results at a glance
| Key metric | 2026 | 2025 |
|---|---|---|
| NAV total return | +18.3% | Not disclosed in highlights |
| Benchmark total return | +21.5% | Not disclosed in highlights |
| Ordinary share price total return | +15.3% | Not disclosed in highlights |
| B share price total return | +12.4% | Not disclosed in highlights |
| Total distribution per share | 5.96p | 5.79p |
| Ordinary share yield | 5.5% | Not disclosed |
| B share yield | 5.8% | Not disclosed |
| Net assets | £137.5 million | £116.1 million |
| NAV per share | 113.21p | 101.12p |
| Profit and total comprehensive income | £20.8 million | £14.0 million |
| Ongoing charges | 1.03% | Not disclosed here |
Why the results are good news for income investors
The trust increased total dividends and capital repayments by 2.9% to 5.96p per share. That marks the thirteenth consecutive year of increases, which is exactly the kind of record income investors like to see from a UK equity income trust.
The yield is also doing the heavy lifting here. At 31 March 2026, the Ordinary shares yielded 5.5% and the B shares yielded 5.8%, both well ahead of the FTSE All-Share Index yield of 3.2%.
There is another encouraging detail tucked into the statement. After paying the fourth interim dividend, the company says £405,000 was transferred to the revenue reserve, taking that reserve to £3.34 million, equivalent to 3.69p per Ordinary share. Revenue reserve is the cash buffer an investment trust can hold back from income in stronger years to support dividends in weaker ones.
CT UK High Income Trust performance: respectable, but not benchmark-beating
The trust’s net asset value, or NAV, total return was +18.3%. NAV is the value of the portfolio minus liabilities, expressed per share. That is a strong absolute outcome, but it still trailed the FTSE All-Share Index return of +21.5%.
The share price returns were weaker than the NAV return, with Ordinary shares up 15.3% and B shares up 12.4% on a total return basis. That gap matters because it shows that sentiment towards the trust’s shares weakened a bit, even though the underlying portfolio grew.
Management was very clear on what hurt performance. Asset allocation detracted, especially an overweight position in household goods and home construction, while stock selection also disappointed in construction and materials. Holdings including Smurfit Westrock, Breedon and Ibstock were named as detractors.
On the flip side, there were some decent calls too. The underweight exposure to Diageo and Unilever helped, and Rio Tinto contributed positively. So this was not a case of the whole portfolio going wrong – more a story of a few sector and stock decisions leaving returns short of the benchmark.
Discounts, treasury share sales and what the market is saying about demand
Investment trusts often trade at a discount or premium to NAV. A discount means the share price is below the underlying asset value. At the year end, the Ordinary shares traded at a discount of -4.6% and the B shares at -9.0%.
That looks a bit disappointing on the face of it, but the full picture is more balanced. During the year, the company sold 6,400,000 Ordinary shares and 400,000 B shares from treasury at an average premium to NAV of 1.5%, which tells you there was genuine investor demand through much of the period.
The widening discount at the year end appears to reflect a risk-off market mood tied to geopolitical tensions rather than a collapse in trust-specific confidence. Even so, persistent discounts can cap shareholder returns, so it is something worth watching.
B shares explained: attractive yield today, but a conversion issue is coming
The B shares are a slightly unusual feature. Instead of dividends, B shareholders receive capital repayments in an amount equal to the Ordinary share dividend, funded from a special capital reserve.
That reserve is not endless. The board estimates the remaining life of the special capital reserve is just over two years, to early in the financial year to 31 March 2029. Once it runs out, all Ordinary shares and B shares will automatically convert into Ordinary shares with identical rights, and payments would then be dividends taxable as income rather than capital repayments.
That is a genuinely important point for B shareholders. The yield remains attractive, but the structure has a shelf life, and investors who own B shares for tax reasons should keep a close eye on this.
Balance sheet, gearing and cash: cautious but still positioned to invest
The trust ended the year with £147.6 million of investments, net assets of £137.5 million and cash and cash equivalents of £7.2 million. Borrowings under its revolving credit facility rose to £20.0 million from £15.0 million a year earlier.
Interestingly, the facility was fully drawn at the year end, but £7.2 million of that was sitting in cash awaiting investment. That reflects a fairly cautious stance from the manager as volatility picked up around the Iran conflict. In other words, the trust kept its firepower, but did not rush to deploy it into a messy market.
Gearing – borrowing used to amplify returns – stood at 7.3%. That is not reckless, but it does add risk if markets fall sharply. The sensible part is that the manager reduced leverage tactically when the outlook became murkier, which looks like prudent portfolio management rather than heroics.
Board changes, governance and the broader outlook for UK equities
There is a notable boardroom change coming. Chairman Andrew Watkins will retire at the conclusion of the AGM on 28 July 2026, with Stephen Mitchell expected to succeed him. A new non-executive director is also being recruited.
From a governance angle, nothing looks alarming here. The audit was unqualified, there were no emphasis-of-matter warnings, and the board says the company remained compliant with its borrowing covenants throughout the year.
On outlook, the manager remains constructive on UK equities. The case is familiar but still credible: UK shares look attractively valued, overseas buyers continue to see takeover opportunities, and the market has a defensive tilt with plenty of globally exposed earnings.
The obvious risk is macro. The statement repeatedly points to inflation, geopolitical turmoil and energy price shocks. If those worsen, higher rates and weaker sentiment could hit both portfolio companies and the trust’s discount.
My take on CT UK High Income Trust’s annual results
This is a good result, not a brilliant one. The income story is strong, the balance sheet is sound, the revenue reserve is moving in the right direction, and a 5.5% to 5.8% yield will stand out to plenty of retail investors.
The negative is straightforward: benchmark underperformance and weaker share price returns than NAV growth. That does not ruin the investment case, but it does stop this update from being an outright slam dunk.
Overall, CT UK High Income Trust still looks like what it says on the tin – a UK equity income trust built for investors who want dependable distributions with some capital growth on top. If you already own it for income, this RNS should feel reassuring. If you are looking at it fresh, the big questions are whether you are happy with the discount risk and, if you are buying B shares, whether you understand the coming conversion issue.
