Strong dividend growth: BlackRock Income & Growth

BlackRock Income and Growth (BRIG) has either raised or held its Dividend every year since Adam Avigdori took the helm in 2012, an unbroken run that held firm even through the pandemic. That record owes much to Adam and co-manager David Goldman’s bottom-up, style-agnostic approach, whereby they place great emphasis on cash-generative businesses with durable free cash flow

Portfolio activity has been high over the past year, with the managers building exposure to electrification and power infrastructure through new positions in Eaton and United Utilities. There were also several changes within its financial allocation: selling Ashmore following a strong run, ICG on growing concern around private credit and exiting NatWest entirely in favour of Barclays, where the managers see stronger earnings and cash-return momentum.

Performance over the 12 months to 03/09/2026 was positive in absolute terms, with NAV up 16.3%, but lagged the FTSE All-Share’s 21.5% climb, as narrow index leadership and volatility from the Middle East conflict left BRIG’s domestically focussed, quality-tilted portfolio out of favour. That dynamic has weighed on the five-year numbers too, with BRIG’s NAV total return around 19 percentage points behind the index. However, the managers’ process has delivered real resilience at points, protecting more on the downside in 2020 and outpacing the index in 2023, when their tilt to quality returned to favour.

At the time of writing, BRIG trades on a 11.5% Discount, wider than its 10.3% five-year average.

BRIG’s dividend record is, in our view, one of its most compelling features: an unbroken run of increases or holds stretching back to Adam’s appointment in 2012, underpinned by a process built on cash generation and balance sheet discipline rather than yield-chasing. The lowering of the ongoing Charges cap to 1.08% is also a welcome move, though costs remain high for the sector given the trust’s smaller size.

Whilst it has been a hindrance at points over the past five years, we think BRIG’s above-market smaller companies allocation is where the potential opportunity now lies. Valuations across small and mid-sized UK companies remain well below their larger peers, despite many performing well operationally. Take the FTSE 250 as a guide: trading on around 12× forward earnings, a discount to both UK large caps and developed market peers, even as balance sheets remain strong and earnings hold up well. But that gap between price and underlying worth appears to be attracting attention, with trade buyers and private equity firms increasingly stepping in, driving a marked pick-up in takeover activity across UK mid and small caps. This pick-up in M&A, and sentiment for smaller companies turning, could be good news for BRIG.

But there are also risks to consider. Performance has lagged the index over the past five years, and the headwinds behind that gap, BRIG’s quality tilt and smaller companies exposure remaining out of favour, could persist. Moreover, a prolonged period of higher rates and inflation could add further pressure too, like we saw in 2022/2023, where higher-yielding, risk-off assets like cash added competition to equity income investment trusts, like BRIG. For investors, though, BRIG’s combination of dependable income and access to a comparatively cheap market with re-rating potential remains a potentially compelling one, especially given its current wider-than-average discount.