LondonMetric Dividend Yield Backed by Eleven Years of Consecutive Growth

LondonMetric Property’s dividend yield of just below 7% is attracting attention from income-focused investors looking to build a second income from UK dividend shares, and the company’s full-year results to 31 March 2026 provide some of the most detailed evidence yet of what underpins that payout.

The Case for 7%-Yielding UK Dividend Shares

The appeal of dividend investing over holding cash in a savings account is straightforward: highly profitable companies return spare capital to shareholders, and UK equities regularly offer yields that savings rates cannot match. A portfolio targeting a 7% average yield is achievable, though it typically requires blending steadier blue-chip names with some higher-yielding, less-established stocks to lift the average.

The five UK dividend shares most commonly cited in this bracket illustrate the range available:

The sectors represented here finance, food distribution, tobacco and utilities tend to sell products and services that remain in demand regardless of the economic cycle. That relative resilience is what allows these businesses to sustain payouts over time. A company whose revenue is tied to a fad or a single customer is a very different proposition.

The compounding effect matters over longer horizons. Based on one investor’s own calculations, investing £200 a month at a 7% average yield, with dividends reinvested, could compound to close to £130,000 over 20 years, generating roughly £10,000 a year in annual income at that yield. Patience and consistency are the inputs; careful stock selection is what makes the maths hold together.

LondonMetric Dividend Yield: What the Latest Results Show

Among UK income shares, London Stock Exchange (LSE)-listed LondonMetric Property (LSE: LMP) occupies an unusual position. As a real estate investment trust (REIT), it benefits from corporation-tax relief on the condition that it distributes at least 90% of qualifying profits to shareholders, which structurally limits management’s discretion to cut the dividend.

The full-year figures to 31 March 2026 show why the payout has held up. Net rental income rose 16.6% to £455.3m, with nine months of contribution from the Urban Logistics REIT acquisition. EPRA earnings increased 13.9% to £305.3m, translating to 13.5p per share, up 2.4% and 24% higher than two years ago. The full-year dividend came in at 12.45p per share, up 3.8%, and was covered 108% by EPRA earnings. That marks the eleventh consecutive year of dividend progression. A fourth-quarter dividend of 3.3p was declared.

Across the same period, LondonMetric delivered a total property return of 7.1%, outperforming the MSCI All Property UK Index by 170 basis points. EPRA net tangible assets per share rose 0.7% to 200.6p, and the IFRS reported profit was £295.7m.

The portfolio, now valued at £7.6bn, has been deliberately repositioned towards logistics, which accounts for 53% of assets, up from 46% a year earlier. Urban logistics represents 38% of the portfolio. LondonMetric completed £1,549m of acquisitions during the year, 80% of which were logistics assets, alongside £318m of disposals. Contractual rental uplifts apply to 69% of income, with £38m of rent uplift expected over the next two years.

One key metric for assessing income durability in REITs is the weighted average unexpired lease term (WAULT): the longer it is, the more years of contracted income are already locked in. LondonMetric’s WAULT stands at 17 years as at 31 March 2026, with occupancy at 98%. The snippet from which this article draws noted a figure of around 18 years; the company’s own latest filing states 17 years.

Why the Balance Sheet Bears Watching

The structural advantages of the REIT model do not eliminate balance-sheet risk, and LondonMetric’s leverage is worth monitoring. As at 31 March 2026, the loan-to-value ratio stood at 36.7%, with a cost of debt of 4.0% on borrowings that were 99.8% hedged. Debt maturity averaged 4.4 years, or 5.2 years including extension options, with no material refinancing required until FY30.

That hedging position limits the immediate exposure to any further moves in base rates, though a sustained higher-rate environment would eventually feed through as hedges roll off. The EPRA cost ratio fell a further 10 basis points to 7.7%, leaving the business lean relative to its income base.

The dividend growth rate averaged 5.56% annually over the past decade. With earnings coverage at 108%, the payout looks secure for now. The next test is whether the logistics rental cycle, which has driven above-market rent reviews of 19% on a five-yearly equivalent basis, continues to outpace the cost of refinancing as FY30 approaches.