- AIC has published its latest list of investment trust dividend heroes
- 10 dividend heroes have increased their dividends by 50 consecutive years or more.
- 6 of these also feature within HL’s most popular investment trusts and have grown dividends through tough times for markets.
Kate Marshall, lead investment analyst, Hargreaves Lansdown:
“The AIC (Association of Investment Companies) has published its latest list of dividend heroes – investment trusts that have increased their dividends for at least 20 years in a row.
Half of the 20 dividend heroes published have increased their dividends by 50 consecutive years or more – including six of HL’s most popular trusts. This will come as welcome news to investors seeking a regular and growing income.
Investment trusts have some tricks up their sleeves to maintain strong records of dividend growth, and to smooth out the ups and downs of the stock market and help maintain a rising and sustainable income.
For example, they can store up to 15% of the income they make each year and pay it out during tougher times for the market. This has seen several trusts maintain and grow their dividends during challenging periods like the 2008 global financial crisis and the 2020 Covid pandemic.
The six trusts that are some of HL’s most popular investment trusts, and have also grown their dividend for 50 years or more, are City of London Investment Trust, F&C Investment Trust, Scottish American Investment Company, Bankers Investment Trust, Alliance Trust and Murray Income Trust. Here are some details on three of them:
City of London Investment Trust – 57 years
UK equity income investment trusts are a convenient way to invest in a mix of dividend-paying UK companies, and to access one of the highest-yielding stock markets in the world. Job Curtis, manager of this trust for over three decades, likes larger, more stable companies which often have multinational operations. City of London Investment Trust has increased its dividend for 57 years, the longest record of any investment trust, and currently has a yield of 5.12%.
F&C Investment Trust – 53 years
Global investment trusts provide a good level of diversification in a single trust. Paul Niven, the manager of this one, uses a multi-manager approach to invest in both public and private companies around the globe. This means several managers are responsible for running different parts and regions within the trust, so it has lots of experience behind it. F&C Investment Trust is the oldest in existence, having been founded in 1868. It has increased its dividend for 53 years and is currently yielding 1.50%.
Scottish American Investment Company – 50 years
This trust is also one of the oldest investment trusts around, having launched in 1873. James Dow and Toby Ross, the current managers, search globally for companies with the potential for sustainable growth and a reliable dividend. They mainly invest in shares in developed markets, which should provide a dependable income stream and the potential for above inflation profit growth. Some investments in UK commercial property and global bonds provides useful diversification, while some infrastructure and property shares help diversify the income paid to investors and could deliver growth ahead of inflation. The trust has increased its dividend every year for 50 years and has a current yield of 2.83%.”
