Fund Spotlight: a new era for investment trust dividend hero

UK companies continue to demonstrate impressive dividend resilience, with 2026 shaping up to be one of the strongest years for dividend growth since before the pandemic.

The Computershare UK Dividend Monitor report for the third quarter of 2026 notes that regular UK dividends are expected to grow by 4.8% this year, marking the strongest outcome since 2019 despite a mixed economic backdrop. Higher payouts from banks, utilities and other cash-generative businesses are providing a supportive backdrop for investors seeking a growing income stream from equities.

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Against this favourable dividend environment, we assess a popular UK equity income investment trust, Murray Income Trust Ord (LSE:MUT).Notably, the £1.1 billion trust underwent a transition of portfolio management responsibilities earlier this year, moving from Aberdeen to Artemis, in turn creating a renewed opportunity to review the trust’s positioning and prospects.

The trust is now managed by Artemis’ Adrian Frost, Nick Shenton, and Andy Marsh, who bring extensive experience in UK equity income investing. Frost has managed the flagship Artemis Income I Inc (B2PLJJ3) strategy since 2002. The fund is designed to deliver attractive total returns through income and capital growth.

What does the investment trust invest in?

Murray Income aims to achieve a high and growing income alongside capital growth. It invests in a diversified portfolio of UK-listed companies, with the investment process centered on free cash flow. Rather than starting with dividend yield, the managers focus first on identifying businesses capable of generating attractive and sustainable cash flows, believing this provides the strongest foundation for long-term dividend growth.

The portfolio is managed with a genuinely long-term mindset, reflected in an average holding period of around 8.5 years, which is longer than many peers in the UK equity income sector. The managers take a style and benchmark agnostic approach, rather than adhering to a particular investment style or index composition.

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Portfolio construction emphasises diversification across both cash flow and dividend sources. While the strategy typically holds between 50 and 70 stocks, the trust currently owns 48 companies. Recent purchases have included Marks & Spencer Group (LSE:MKS), Reckitt Benckiser Group (LSE:RKT), British American Tobacco (LSE:BATS) and Standard Chartered (LSE:STAN).

Notable is the absence of HSBC Holdings (LSE:HSBA) from the portfolio given its the second-largest constituent of the FTSE All-Share index, with a weighting of 7.8%. This illustrates the managers’ willingness to diverge meaningfully from benchmark weightings where they believe more attractive opportunities exist elsewhere.

With a median market capitalisation of £9 billion, the portfolio is predominantly invested in larger, well-established businesses. The team remain interested in opportunities down the market-cap scale but are conscious of the risk of becoming exposed to prolonged value traps. The managers are also willing to invest overseas when they identify superior opportunities, drawing on Artemis’ wider research capabilities rather than targeting international exposure for its own sake.

The portfolio has evolved materially since Artemis assumed responsibility for the mandate. Approximately 75% of inherited assets were sold as the managers reshaped the portfolio, which is now considered fully aligned with its intended positioning. This repositioning has been accompanied by an increase in active share from 68% to 74%, placing the trust comfortably within the team’s target range of 70-80% and reflecting a more differentiated portfolio.

The trust appears well positioned to benefit from areas of the UK market that have helped drive dividend growth in 2026. The largest allocation by sector is to financials (35%), which remains an important source of income. NatWest Group (LSE:NWG), Aviva (LSE:AV.), Lloyds Banking Group (LSE:LLOY) and Barclays (LSE:BARC) all feature among the portfolio’s largest holdings. 

However, the portfolio is not solely reliant on banks, with meaningful exposure across consumer businesses, and healthcare. Sector positioning remains differentiated, with notable overweight positions in media (+8.6%) and financials (+5.2%) and underweight allocation to material (-4.1%) and to industrials (-4.0%).

The managers continue to favour businesses where they believe cash-flow generation is under-appreciated by the market. Encouragingly, several core holdings including NatWest, 3i Group Ord (LSE:III) and London Stock Exchange Group (LSE:LSEG) have delivered particularly strong dividend-per-share growth, supporting the trust’s objective of providing shareholders with a growing level of income over time.

How has the trust performed?

Given the relatively recent transition of the mandate in March 2026, the Artemis Income fund can be used as a useful proxy for the investment approach over the long term.

Since launch in 2000, the strategy has generated annualised returns of 9.2% compared with 5.9% for the FTSE All-Share index, an impressive track record across market cycles.

Performance since the transition has been encouraging. Between April and October 2026, MUT generated a return of 15.5%, ahead of both the FTSE All-Share index (8.2%) and the Association of Investment Companies (AIC) UK Equity Income sector average (13.9%). Although this remains a limited period over which to assess the strategy, the trust has delivered early evidence that the portfolio repositioning undertaken by Artemis is gaining traction.

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When it comes to its income objective, the trust has a long-standing record of dividend growth, with 53 consecutive years of dividend increases. The management team is committed to continuing this record, with dividends primarily funded by portfolio income but supported by accumulated revenue reserves when required.

The trust currently yields 4.1%, ahead of the 3.1% yield available from the FTSE All-Share index. This provides investors with an enhanced level of income while maintaining exposure to a broad range of companies.

Source: Morningstar (Market Return) GBP to 28 October 2026. Past performance is not a guide to future performance.

Why are we highlighting this trust?

The appointment of the Artemis team marks a new chapter in MUT’s long history, and we hold a positive view of the managers given their long-term track record of navigating different market environments.

UK equities continue to trade on relatively attractive valuations compared with many overseas markets, while dividend growth has strengthened across several areas of the UK market. The trust’s focus on generating income from a diversified range of companies, rather than relying on a handful of high-yield stocks, may also support the resilience of future dividend payments.

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The trust structure offers an alternative vehicle to access the Artemis Income strategy and it currently trades on a 6.2% discount to net asset value, which long-term investors may view as an attractive entry point. Ongoing charges of 0.48% are among the most competitive in the AIC sector and compare favourably with the 0.8% charge on the open-ended Artemis Income fund. The trust’s ability to employ modest gearing can enhance returns in rising markets, although it also increases risk by magnifying losses when asset values fall.

With the portfolio transition complete, and an improving UK dividend environment, we believe Murray Income Trust continues to be a compelling option in the UK equity income sector.

The trust’s instrument page can be viewed here.

Please note, the trust highlighted was selected using the Highly Rated Funds Tool. For more investment ideas, explore tool here. The information provided should not be considered a personal recommendation.