LondonMetric Property (LSE:LMP) offers one of the higher yields in the FTSE 100 at 7.3%, backed by 11 years of consecutive Dividend growth. But the real estate Investment trust's Payout Ratio leaves little Margin for error. The figures below come from a data snapshot dated 7 October 2026, updated where newer dividend news is available.

Outlook reaffirmed

Recent reports say LondonMetric (LSE:LMP) has reaffirmed its outlook for its 2027 financial year. Reaffirmed guidance matters for income investors, since it suggests that management sees no immediate change to its expectations.

The company has also been declaring its dividends on a quarterly basis. Reports on the latest declarations give a figure of 3.15p for a quarterly payment, and that is useful because the snapshot leaves its latest dividend field blank. A company announcement has also shown the group issuing new shares under a scrip dividend, an option that lets shareholders take new shares in place of cash.

The dividend in the data

The snapshot puts the annual dividend at 12.45p per share. The trailing 12-month Yield is 7.3%, and the indicated yield is 7.2%. Multiplying the reported 3.15p by four gives 12.6p, a little above that trailing figure and consistent with a dividend on a gently rising path, though that is simple arithmetic and not company guidance.

Dividend per share rose 3.8% year on year, which is modest but valuable when added to a yield of more than 7%. The record is solid too: 19 years of continuous payout and 11 years of continuous growth. A July report also highlighted the 11-year growth run, and that consistency has clearly become part of how the shares are presented to income investors.

A high yield should always prompt the question of why the market is demanding it. Part of the answer lies in the nature of the vehicle. REITs are required to distribute most of their property rental income, so their yields naturally tend to look higher than those of ordinary companies. Share price performance also matters, because property shares are often sensitive to interest rates and to the attractions of competing income Options such as bonds.

A thin cushion, by design

The trailing payout ratio is 95.8%, which implies that cover is only about 1.04 times. For most FTSE 100 companies, that would raise serious questions. For a REIT, a high ratio is less surprising because of those distribution requirements, although Earnings measures can also be distorted by property revaluations, so the ratio should be interpreted with care. Investors commonly look at EPRA earnings or similar measures when judging REIT dividend cover, and it is worth comparing those figures in the company's reports with this headline ratio.

Even so, a figure this close to 100% means that continued dividend growth will need to come mostly from growth in rental income, either through rent reviews, acquisitions or both. There is little scope for raising the payout share further. That leaves the dividend heavily dependent on the rental performance of the portfolio and the financing cost of the business.

What to watch

The next half-year results should show whether earnings are on course to support the reaffirmed outlook, and whether cover of the dividend is holding, slipping or improving. Further quarterly declarations will also reveal whether payments remain at 3.15p or begin to step up, which would extend the growth run beyond its current 11 years. Given the sensitivity of property shares to the cost of money, Interest Rate expectations will also play a part in how the market values this yield.