The Law Debenture Corporation (LWDB) is a UK investment trust, with a long history, dating back to 1889. It is one of largest constituents of the Association of Investment Companies’ UK Equity Income sector and targets long-term capital growth and steadily increasing income. Unlike other investment trusts, alongside its investment portfolio it includes an operational business, a leading provider of independent professional services (IPS). The combination is a well proven model which has delivered strong and consistent long-term performance.

1. LWDB’s unique structure has been key to its strong long-term performance.

IPS is a crucial differentiator in driving LWDB’s long-term performance. It is highly cash generative and accounts for around 20% of the trust’s NAV, but funds around a third of the dividends. The strong and consistent cashflow from IPS provides the investment portfolio managers with much greater flexibility to invest across a wide range of investments including low or zero yielding stocks, including growth stocks, balancing the need for immediate income to pay dividends, whilst also growing the capital and dividends over time. Some of its top performers in recent times have been recovery stories like Rolls Royce and Marks & Spencer, and its flexibility has helped it avoid some high yielding “value traps.” Being part of a large, £1.2bn, well-governed listed company is also hugely important to IPS when it comes to winning business.

2. IPS underpins the stable growth of LWDB.

Within IPS there is a diversified range of growing businesses, all in some way based on independence and trust, often benefitting structurally from legislative or regulatory developments, and are relatively insensitive to short-term economic and market fluctuations. Law Debenture was established 136 years ago as a bond trustee and corporate trust is one of the three business groupings within IPS, the other two being pensions and corporate services, each of which is broadly similar in size. The revenue streams are diverse and significantly recurring and this underpins the stability of the business.

3. The portfolio invests in companies of all sizes with around 150 stock holdings.

The investment portfolio has been managed on a consistent basis, over many years, by James Henderson and Laura Foll from Janus Henderson Investors. It is invested in mostly UK equities (around 90%) and is managed on a long-term, bottom-up basis, with a strong valuation overlay. It has a has a ‘multi-cap’ approach, searching out investment opportunities right across the market, but at present with strong active overweighting to small- and midcap stocks with above average growth potential compared with the trust’s broad UK equity market benchmark. Small- and mid-cap stocks are often under-researched and overlooked by investors, providing opportunities to invest at attractive valuations.

4. LWDB has a strong track record of outperformance and dividend growth.

Always a solid performer, IPS was reinvigorated under new leadership in 2017and is well into its eighth year of mid-to-high single-digit growth, in line with the company’s medium-term expectations, and sees plenty of opportunities for further growth. From 2017 to the end of 2014, in an often-challenging environment, underlying profit before tax increased by almost two-thirds, or an average 7.6% per year. The operational fair value of the business grew by more than 160%.

LWDB’s outperformance has been consistent over many years. As of 30 June 2025, it had outperformed its broad UK equity market benchmark over one, three, five and 10 years, with a 10-year fair value NAV total return of 160% or 67bp above the benchmark. Over 10 years and 25 years it has delivered a materially higher share price total return than large peers in its sector and is well ahead of the peer average over three years and five years.

LWDB is now into its 16th year of unbroken dividend growth, a period that included the COVID-19 pandemic when many corporates and some peers reduced payouts. The dividend has been held or increased for 46 consecutive years. Reflecting the investment strategy of balancing immediate income returns with long-term capital growth, building the asset base from which dividends can grow, LWDB’s dividend growth has been much faster than for peers. Over the past 10 years, DPS has more than doubled.

Published 3 December 2025