Scottish Mortgage Exercises Treasury Option as 43-Year Dividend Streak Enters New Chapter

Scottish Mortgage Investment Trust raises £17.3M by issuing treasury shares at a premium to NAV, reversing its buyback strategy as strong returns and SpaceX growth drive investor sentiment.

The market’s re-rating of Scottish Mortgage Investment Trust has handed management a rare tactical opportunity. With the trust’s shares now commanding a premium to net asset value, the board has taken the unusual step of issuing stock from its own treasury rather than buying it back—a clear signal of how far sentiment has shifted over the past year.

On 28 May 2026, Scottish Mortgage placed 1.15 million fully paid ordinary shares from its treasury at 1,502.02 pence each, raising approximately £17.3 million. Crucially, the issuance price stood above the fair-value NAV of 1,409.70 pence, ensuring no dilution for existing shareholders. After the transaction, 374.7 million shares remain in treasury, while the total number of shares in circulation outside treasury rose to just under 1.11 billion.

The move represents a complete reversal of the buyback strategy that dominated recent years. When a trust trades below NAV, share repurchases signal value and help narrow the discount; when it trades at a premium, issuing from treasury allows capital to flow in without forcing portfolio sales. At the time of the placement, the market price of 1,499.25 pence comfortably exceeded the portfolio’s underlying value.

That premium is no accident. It reflects a powerful annual performance that has reshaped investor perceptions. For the fiscal year ended March 2026, Scottish Mortgage delivered a NAV total return of 27.4% (debt at market value), handily beating the FTSE All-World Index’s 18.0% gain in sterling terms. The share price itself rose 26.8% over the same period, and has since added roughly another 28% since the start of the calendar year to trade at €17.73—fully 50% above the 52-week low hit in November 2025.

SpaceX proved the standout contributor, with the private-equity portfolio shouldering much of the heavy lifting. Management noted that operating performance across the ten largest private holdings was broadly convincing, even amid a sluggish IPO market. Income generation also rebounded, returning to 2024 levels after the previous year’s results were dragged down by a write-off on the Northvolt convertible bond. Many of the trust’s top positions continue to reinvest cash flows internally rather than pay dividends—a long-standing feature of the growth-oriented strategy.

Debt management remained disciplined. Gearing declined from roughly 13% to 11% over the year, not because the trust paid down borrowings but because the portfolio expanded. The average cost of debt stands at about 3.6%, a comparatively low level, and the board broadened the debt structure through several refinancings to lock in flexibility should markets turn choppy.

Scottish Mortgage’s 43rd consecutive year of dividend growth—earning it admission to the UK’s “Dividend Hero” cohort—adds a conservative counterweight to the high-octane private equity bets. The board intends to maintain its existing strategy: buying back shares when the NAV discount widens, and issuing from treasury when a premium emerges. With the share price now well above its 50-day moving average of €16.09 and momentum still strong, the treasury remains a live option for further accretive issuance—provided the premium holds.