HICL Infrastructure annual results 2026: strong NAV growth, better dividend cover and a still-stubborn discount
HICL has put out a genuinely strong set of annual results for the year to 31 March 2026. The headline number is a 10.3% Total NAV Return, with NAV per share up to 160.2p from 153.1p a year earlier. For an infrastructure investment trust, that is a big step up from last year’s 2.0% return.
The simple version is this: the portfolio performed well, management sold assets at attractive prices, dividend cover improved, and the board has squeezed better fee terms out of the investment manager. That is the good news. The less good news is that the shares are still trading on a wide discount to NAV, which means the market is not fully buying the story yet.
Key HICL Infrastructure results: the numbers retail investors need to know
| Metric | FY26 | FY25 |
|---|---|---|
| NAV per share | 160.2p | 153.1p |
| Total NAV Return | 10.3% | 2.0% |
| Portfolio return | 12.2% | 7.7% |
| Earnings per share | 13.8p | 2.3p |
| Dividend per share | 8.35p | 8.25p |
| Dividend cash cover excluding disposals | 1.10x | 1.07x |
| Dividend cash cover including disposals | 2.38x | 1.56x |
| Disposals completed | £536 million | Not disclosed here |
| Share buybacks in year | £103 million | Not disclosed here |
Why HICL’s 10.3% NAV return matters more than it first appears
NAV means net asset value – basically what the board thinks the portfolio is worth after liabilities. For infrastructure trusts, growing NAV while also paying a healthy dividend is exactly the job. HICL did both.
The portfolio return of 12.2% was helped by strong operational performance and by selling assets above book value. Even stripping out the effect of disposals, the underlying portfolio return was 10.5%, ahead of the 8.4% weighted average discount rate used last year. That tells you value creation was not just accounting smoke and mirrors.
I think that is an important point. If a trust is only relying on rising valuation assumptions, I get twitchy. Here, HICL is pointing to operational outperformance, growth in EBITDA – earnings before interest, tax, depreciation and amortisation – and hard evidence from asset sales.
HICL asset disposals and share buybacks: management has actually executed
HICL completed £536 million of disposals in the year, miles ahead of the board’s £200 million target. Over the past three years it has realised more than £1 billion at an average premium to carrying value of 11%. That is a strong endorsement of the portfolio valuation.
The standout was the sale of the A63 Motorway stake for £311 million, at a 21% premium to its 30 September 2025 valuation. HICL says that added 2.2p per share to NAV. That is real value crystallised, not theoretical value sitting in a spreadsheet.
The company then used some of that firepower sensibly. It bought back £103 million of shares during the year, adding 1.6p to NAV per share, and has completed a further £25 million since year-end. Buybacks only make sense when shares trade materially below asset value, and with HICL still on around a 20% discount at publication, they do make sense.
Still, I also like that the board is not blindly throwing every spare pound into buybacks. It has also made selective reinvestments, including an additional 6.65% stake in Cross London Trains for about £52 million, because it says the return beats buybacks. That is what disciplined capital allocation should look like.
HICL dividend target for FY27 and FY28: reassuring, but not bulletproof
Income investors will focus on this part. HICL paid a full-year dividend of 8.35p per share and has reiterated its FY27 target of 8.50p and introduced FY28 guidance of 8.65p. The company is careful to say these are targets only, not profit forecasts.
The encouraging bit is the improvement in dividend cover. Excluding profits on disposals, cash cover rose to 1.10x from 1.07x. That might not sound dramatic, but it matters because it suggests the dividend is being supported more comfortably by underlying portfolio cash flow rather than by asset sales.
For me, that makes the dividend story more credible. It is not bombproof – no dividend ever is – but this is better quality cover than before.
Improved management fee terms are a clear shareholder win
This is one of the most shareholder-friendly parts of the announcement. From 1 July 2026, HICL’s management fee will move to a 100% market capitalisation-based structure, rather than being linked partly or wholly to asset value. In plain English, when the share price is weak, the manager gets paid less.
If this had applied for the full year to 31 March 2026, HICL says the fee would have been 11% lower than the current arrangement and 24% lower than the old gross asset value basis. The pro forma operating expenses ratio would have been 0.90%, versus 1.10% in FY25.
That is good progress. It aligns the manager more closely with shareholders and trims costs. The only caveat is that the new terms are subject to finalisation of contractual arrangements, so investors should treat it as agreed in principle rather than fully done and dusted.
Why the HICL share price discount is still the big problem
For all the good work here, the market is still not giving HICL full credit. At the date of publication, the share price was 127.8p, which the company says is a 20% discount to NAV. That is narrower than before, but still far too wide for comfort.
This is the central frustration. HICL is producing decent cash flow, selling assets above carrying value, improving governance and cutting fees – yet the discount remains stubborn. That tells you investor scepticism around listed infrastructure trusts is still alive and well.
The board is responding with a proposed biennial continuation vote from the 2028 AGM, triggered if the shares trade at an average discount of more than 10% over the preceding financial year. I think that is a sensible pressure valve. It adds accountability without immediately forcing the company into drastic action.
Portfolio quality, risks and what to watch next at HICL Infrastructure
Operationally, the report reads well. Growth assets delivered 9% EBITDA growth, Affinity Water resumed distributions, and the PPP portfolio – public-private partnership assets with contracted revenues – maintained over 99% availability. That is what investors want from infrastructure: boring in a good way, with some growth on top.
There are still risks. Lewisham Hospital has seen a valuation reduction because of a contractual dispute and performance deduction risk. HICL also acknowledges macro uncertainty, including inflation, bond yields and geopolitical volatility. None of that is trivial for an asset class whose valuations are sensitive to discount rates.
The good news is that liquidity looks strong. HICL finished with £87.7 million of cash, £333.3 million of disposal proceeds held beneath the corporate group, and an undrawn revolving credit facility, or RCF – a flexible borrowing line. That gives it options.
My verdict on HICL annual results 2026
Overall, this is a strong update. HICL has delivered better returns, better dividend cover, meaningful asset sale gains, active buybacks and improved management terms. On the fundamentals, I think this is one of the better annual results you could reasonably ask for from a listed infrastructure trust in the current market.
The catch is obvious: the discount. Until the share price starts reflecting the underlying performance, there will be a nagging sense that management is doing the right things but not yet getting the market reward. If HICL can keep growing NAV, maintain dividend credibility and continue proving asset values through disposals, that gap should narrow over time. But for now, the market still wants more proof.
