Key Highlights

  • Gresham House Income & Growth 2 VCT plc (LSE:GHV2) yields 9.03%.
  • VCT dividends are tax-free for eligible UK investors.
  • Payouts are funded from exits, portfolio income and cash reserves.
  • The Dividend target is linked to NAV rather than set in pence.
  • Exit activity and portfolio valuations will drive future income.

Gresham House Income & Growth 2 VCT plc (LSE:GHV2), listed on the London Stock Exchange, offers a dividend Yield of 9.03%. As a Venture Capital trust, it invests in young, growing UK businesses, and its dividends are free of income tax for eligible investors, which makes the effective return considerably higher than the headline figure.

The trust has its roots in the former Mobeus income and growth VCT range, which built a strong reputation for consistent distributions backed by successful exits.

Latest Gresham House Income & Growth 2 News and Market Developments

Gresham House continues to back later-stage growth companies, typically using a mix of Equity and Loan instruments that produce some running income. In 2026, the exit environment for UK private companies has gradually improved, with trade buyers and Private Equity firms returning to the market, which supports realisations and special dividends.

VCT fundraising Demand has held up well, reflecting the continued attraction of 30% income tax relief and tax-free dividends for higher-rate taxpayers facing a heavier tax burden.

Dividend Growth and Payment History

The trust has a track record of regular dividends supplemented by specials following significant exits. Because the payout is tied to NAV, the pence-per-share figure has varied from year to year, but distributions have been paid consistently.

Payout Ratio and Dividend Cover

As with other VCTs, there is no conventional payout ratio. The sustainable dividend depends on long-term NAV total return matching distributions. Recent NAV stability supports the current policy.

Venture capital trusts do not run on a conventional payout ratio. Dividends are funded from realised gains on exits, income from loan stock and cash reserves, so the sustainable level of payout is ultimately tied to net asset value growth over time. A VCT that pays out more than its portfolio earns simply shrinks its NAV, which is why boards typically set dividend targets as a percentage of opening NAV rather than a fixed pence figure.

Cash Flow and Balance Sheet Strength

Liquidity at Gresham House Income & Growth 2 is supported by fundraising rounds, cash from portfolio exits and interest income on cash balances. Healthy cash reserves allow the trust to keep paying tax-free dividends and fund Buybacks even in years when exit markets are slow, but a prolonged drought in trade sales and private equity deals would gradually reduce the firepower available for distributions.

Loan instruments held within the portfolio provide a stream of interest income that helps cover running costs and part of the dividend, reducing reliance on exits in any single year and adding a degree of predictability uncommon among venture capital trusts.

Market Sentiment and Investor Focus

VCT investors watch LSE:GHV2 closely because tax-free dividends are a core reason for holding the shares. Discussion across financial media and investor communities has centred on the health of UK early-stage funding, the pace of exits, recent fundraising demand and the importance of income tax relief rules remaining in place for new subscriptions.

Income Outlook for Investors

Looking ahead, the outlook for Gresham House Income & Growth 2 depends on the health of the UK growth economy and the willingness of buyers to pay strong prices for successful private companies. A steadier exit market would support realised gains and the potential for special dividends, while new fundraising keeps the trust liquid enough to invest and pay. For investors in LSE:GHV2, the combination of tax-free income and exposure to early-stage UK enterprise remains the core attraction, provided they accept that payouts move with NAV.

Key Risks to the Dividend

Key dividend risks include falling valuations across unquoted growth companies, a weak exit environment, concentration in a handful of larger holdings and changes to the VCT tax regime. Because dividends are linked to NAV, any sustained NAV decline will translate into lower pence-per-share payouts.

Is the 9.03% Dividend Yield Sustainable?

The Gresham House Income & Growth 2 VCT dividend is sustainable in structure because it moves with NAV. The 9.03% yield reflects a generous tax-free payout policy rather than financial stress. Investors should expect variable annual amounts, but a policy-driven income stream supported by a diversified growth portfolio.