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North American Income Trust annual results: 8.8% NAV return, dividend growth to 12.8p, discount narrows. Stock picking outperforms benchmarks. Positive for income investors.
This article covers information on North American Income Trust (The).
LON:NAITThe North American Income Trust PLC has put in a solid year. For the 12 months to 31 January 2026, net asset value, or NAV, total return came in at 8.8%, comfortably ahead of both of its reference indices – the Russell 1000 Value Index at 4.9% and the S&P High Yield Dividend Aristocrats Index at 3.1%.
That matters because this is an income-focused investment trust investing mainly in large North American shares. If you are buying it for a mix of dividends and long-term capital growth, this is exactly the kind of result you want to see – outperformance, a higher dividend, and a narrowing discount.
| Key figure | 2026 | 2025 |
|---|---|---|
| NAV total return | 8.8% | 23.8% |
| Share price total return | 13.8% | 24.9% |
| Revenue return per share | 12.89p | 12.44p |
| Total dividend per share | 12.80p | 12.20p |
| Year-end share price | 380.0p | 347.0p |
| Year-end NAV per share | 402.8p | 382.5p |
| Discount to NAV | 5.7% | 9.3% |
| Ongoing charges | 0.73% | 0.77% |
The headline number is good, but the more interesting point is how the trust got there. Management says outperformance was driven mainly by stock selection rather than sector bets. In plain English, they picked more winners than losers.
Financials were a big help, with Citigroup, Morgan Stanley, Goldman Sachs, American Express, OneMain and Bank of New York Mellon all contributing. Healthcare also chipped in, with CVS Health, Johnson & Johnson and Danaher offsetting weaker names such as Bristol-Myers Squibb and Zoetis.
The biggest individual contributor was Lam Research. That was helped by strong demand for advanced chips plus shareholder-friendly moves like a dividend increase and buyback.
On the negative side, industrials and communication services held things back a bit. Booz Allen Hamilton disappointed enough for the managers to exit, while an underweight in Alphabet hurt because the shares performed strongly after joining the Russell 1000 Value Index.
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My take – this is a pretty healthy pattern. Beating the benchmark through stock picking is generally more encouraging than getting lucky with one big sector call. It suggests the managers are actually adding value, which is what shareholders are paying for.
Income investors will naturally look at the dividend first, and the news is good. The board has declared a fourth interim dividend of 4.4p, taking the total for the year to 12.8p per share, up from 12.2p. That is dividend growth of 4.9%.
Even better, revenue return per share rose to 12.89p from 12.44p. So this was not a dividend increase built on thin air. The trust also had revenue reserves of 20.2p per share before the fourth dividend, up from 18.4p, which gives it more than one year of dividend cover.
That reserve is important. It acts like a rainy-day fund, letting the trust smooth dividends if portfolio income wobbles. For retail investors who prize dependable income, that is a valuable feature.
The dividend yield at the year end was 3.4%. That is not the highest in the investment trust universe, and the chairman says so openly, but the attraction here is steady dividend growth rather than a flashy headline yield.
The trust’s share price total return was 13.8%, ahead of the 8.8% NAV total return. The reason is simple – the discount narrowed.
A discount is when the share price trades below the value of the underlying portfolio. NAIT’s discount moved from 9.3% to 5.7% over the year on a debt fair value basis. The managers also note it was 2.2% at the time of the report, which is even tighter.
That is good news for shareholders because it means the market is placing a higher value on the trust. It also shows buybacks are doing their job. During the year, NAIT bought back 8,627,316 shares, which added 4.2p per share to NAV.
That is a meaningful boost. Buybacks are not magic, but when a trust trades on a wide discount they can be an efficient way to improve value for remaining shareholders.
The portfolio ended the year overweight financials and healthcare relative to the Russell 1000 Value Index. Financials made up 22.1% of the portfolio, healthcare 12.7%, and information technology 12.3%.
The top holdings include Chevron, Philip Morris, Johnson & Johnson, CVS Health and PNC Financial Services. That tells you a lot about the trust’s style – large, cash-generative businesses with the ability to pay dividends and, ideally, grow them.
The managers say the portfolio trades at around 17x forward earnings, which is below the broader US market. If that is right, investors are getting a portfolio of quality businesses without paying the full growth-stock premium seen elsewhere.
Still, there are clear risks. The trust does not usually hedge its US dollar exposure, and sterling investors felt that this year as the dollar weakened by roughly 10%. The company also uses gearing, meaning borrowing to invest, with US$50 million of borrowings and net gearing of 5.9% at the year end.
Neither of those is alarming in context, but both matter. A weaker dollar can drag on returns for UK investors, and gearing amplifies market moves in both directions.
Net assets fell to £458.3 million from £467.8 million, despite positive investment performance. That might look odd at first glance, but it largely reflects capital returned through buybacks and dividends.
The board is also proposing to cancel the share premium account of £51.8 million and the capital redemption reserve of £16.3 million. This sounds technical, because it is, but the key point is simple – it would create more distributable reserves and give the trust more flexibility over how it uses capital.
I would file that under sensible housekeeping rather than game-changing news. Useful, not thrilling.
Overall, this is a positive set of annual results. The trust beat its benchmarks, raised its dividend again, increased revenue reserves, reduced ongoing charges and used buybacks effectively to narrow the discount.
The big positives are the quality of the outperformance and the continued dividend discipline. The less cheerful bits are the currency headwind, geopolitical uncertainty, and the fact this is still an equity income trust investing in a market that can be volatile.
For existing shareholders, this report should be reassuring. For new investors, the key question is whether the discount stays tight from here. If it does, future returns may need to come more from underlying portfolio performance than from discount narrowing.
That said, NAIT looks in decent shape. It is not the highest-yielding trust on the shelf, but it is making a credible case for investors who want growing income from North American equities rather than just a big yield number slapped on the label.
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