Foresight VCT plc (LSE:FTV) paid a final Dividend of 3.6 pence per share on 26 June 2026 after a 2025 in which a Special Dividend of 6.4 pence and a final of 4.1 pence took the Yield to 16.0%. This article looks at how exits, reserves and fundraising support the dividend policy.

Company Overview

Foresight VCT is a Venture Capital trust managed by Foresight Group LLP that aims to provide regular dividends and capital growth from fast-growing unquoted UK companies. Net Assets rose from GBP 214.0 million at 31 December 2025 to GBP 231.2 million at 30 June 2026, helped by fundraising. In early 2026 it raised GBP 38.6 million net of expenses through an offer for subscription.

Dividend Profile

In 2025 the trust paid a special Interim Dividend of 6.4 pence in May, distributing GBP 19.3 million, and a final dividend of 4.1 pence in June. A final dividend of 3.6 pence for 2025 was then paid on 26 June 2026. The stock table shows a trailing Dividend Yield of 5.90% and trailing Diluted Earnings per Share of negative GBP 0.02, so no price-to-earnings ratio applies.

Dividend Sustainability Analysis

The board's objective is to pay annual Ordinary Dividends of at least 5% of the latest announced net asset value, and it has said it continues to exceed that target. Special dividends can follow successful exits, and the trust has distributable reserves to support payments between realisations.

Payout Ratio and Earnings Coverage

Net asset value per share was 71.6 pence at 31 December 2025 and 65.7 pence at 30 June 2026. After adding back the 3.6 pence final dividend paid in the period, net asset value total return was negative 3.2%. For 2025 net asset value total return was 0.1%, which the board described as flat, with a large part of the return distributed to shareholders. Negative trailing earnings per share reflect valuation changes.

Adjusted Cash Flow Coverage

Cash flow arises from Investment income and from realisations. In 2025 a healthcare services exit returned GBP 27.1 million, 8.3 times its cost, and funded the special dividend. Amounts available for distribution at the year end were GBP 74.2 million, which is well above the cost of regular dividends.

Balance Sheet and Leverage

The trust has no borrowings, and net assets of GBP 231.2 million include the proceeds of the recent fundraising and a portfolio of unquoted holdings. Dividends are paid out of distributable reserves and reduce net asset value per share directly.

Liquidity

Liquidity comes from cash raised in the offer, realisations and Loan repayments. The trust has made a significant number of new and follow-on investments, which meet and exceed the requirements to maintain venture capital trust status.

Revenue Stability and Profit Trends

Portfolio valuations reflect early-stage companies, and net asset value moves with company performance and market conditions. The board said it was encouraged by a slowly recovering market for company sales and had benefited from some very profitable exits.

Interest Rate and Commodity Exposure

Interest rates affect the valuations of growth companies and returns on cash. There is no direct commodity exposure.

Counterparty Concentration

The portfolio is spread across a range of sectors and stages, and the top ten investments are disclosed in each annual report. The trust shares its manager and investment approach with a sister trust.

Management Commentary

The chair reported a dividend yield of 16.0% for 2025, including the special dividend, and said the portfolio had performed well on exits while the year's net asset value total return was flat. The board continues to target at least 5% of net asset value and aims to enhance it with special dividends when particularly successful exits are made.

Sector-Specific Dividend Risks

Venture capital trusts depend on private company valuations and exits. Tax reliefs depend on qualifying investments, and from April 2026 the upfront income tax relief for new investors fell from 30% to 20%, which affects future fundraising.

Key Risks to Monitor

1. Valuations of earlier-stage holdings.

2. Timing and size of exits.

3. Net asset value declined 3.2% in the first half on a total return basis.

4. Share price discount.

5. The reduction in upfront tax relief for new investors.

Bull Case

Supporters point to distributable reserves of GBP 74.2 million, net assets of GBP 231.2 million, a 2025 yield of 16.0%, an exit at 8.3 times cost, new capital of GBP 38.6 million and a stated target dividend of 5% of net asset value.

Bear Case

A measured view recognises that net asset value fell in the half year, that earnings per share are negative on a trailing basis, and that the 2025 special dividend will not necessarily be repeated. Payouts depend on exits.

Latest News and Developments

The half-year report on 17 September 2026 showed net asset value per share of 65.7 pence and net assets of GBP 231.2 million. Investors can consult the company's latest announcement for the next dividend.

Dividend Sustainability Rating

Rating: Moderately Sustainable

The rating reflects substantial distributable reserves, a successful exit and new capital, balanced against valuations that move and dividends that depend on realisations.

Investor Takeaway

Foresight VCT has used exits and reserves to deliver a high 2025 distribution and continues to target at least 5% of net asset value. Future exits and net asset value will guide the size of future payments.