Interactive Investor

The 17 investment trusts that have raised dividends for over 20 years

14th March 2022 12:40

Sam Benstead from interactive investor

Seven of these ‘dividend heroes’ boast more than 50 years of consecutive increases.

There are 17 investment trusts that have increased their dividends for more than 20 years, two fewer than last year as Invesco Income Growth and Scottish Investment Trust merged with other trusts. 

The Association of Investment Companies’ (AIC) latest list of “dividend heroes” includes seven funds that have now increased their dividends for 50 or more consecutive years.

City of London (LSE:CTY)Bankers (LSE:BNKR) and Alliance Trust (LSE:ATST) are out in front with 55 years of dividend rises, followed by Caledonia Investments (LSE:CLDN) (54 years), BMO Global Smaller Companies (LSE:BGSC) (51 years), and F&C Investment Trust (LSE:FCIT) (51 years). The latest addition to the over 50 years club is Brunner (LSE:BUT), which announced its 50th year of increased dividends in February this year. 

A further four dividend heroes have increased their dividends each year for between 40 and 49 years and three dividend heroes have increased their dividends consecutively for between 30 and 39 years, according to the trade body.

interactive investors’ Super 60 list of recommended funds includes three dividend heroes: City of London (LSE:CTY), F&C Investment Trust (LSE:FCIT) and Scottish Mortgage (LSE:SMT).

F&C, the UK’s oldest investment trust, last week announced it had upped dividends by 5.8% in 2021. This was ahead of an inflation rate of 5.4% in December, as measured by the Consumer Prices Index.

Investment companies’ ability to hold back up to 15% of the income they receive each year in a revenue reserve gives them an advantage in delivering income to investors.

This structure came into its own during the global financial crisis and again during the Covid-19 pandemic. Boards dipped into their reserves to top up income shortfalls from underlying investments so that they could maintain their long track records of raising their dividend year in, year out.

While buying investment trusts that are committed to increasing dividends is an important consideration for income seekers, not all dividend heroes have attractive yields.

Technology investor Scottish Mortgage yields just 0.39% despite raising its payout for 39 years, and BMO Global Smaller Companies yields just 1.2% even though it has notched up 51 years of consecutive dividend increases.

The highest yielding dividend heroes are Aberdeen Standard Equity Income (LSE:ASEI), City of London (LSE:CTY), Merchants Trust (LSE:MRCH) and Value and Indexed Property Income (LSE:VIP). All yield around 5%.

Annabel Brodie-Smith, communications director of the AIC, said: “It’s a great achievement that we now have seven dividend heroes with at least half a century of unbroken annual dividend increases.

“These dividend heroes have consistently raised their dividend every year during the inflationary environment of the 1970s and through the market crashes of Black Monday, the tech bust, the financial crisis and the pandemic.”

Investment company AIC sector Number of consecutive years dividend increased Dividend yield (%) Five-year annualised dividend growth rate (%)
City of London UK Equity Income 55 4.97 3.74
Bankers Global 55 2.13 5.06
Alliance Trust Global 55 2.08 8.33
Caledonia Investments Flexible Investment 54 1.86 3.64
BMO Global Smaller Companies Global Smaller Companies 51 1.20 10.34
F&C Investment Trust Global 51 1.60 5.38
Brunner Global 50 2.04 4.98
JPMorgan Claverhouse UK Equity Income 49 4.49 5.81
Murray Income UK Equity Income 48 4.30 1.36
Scottish American Global Equity Income 48 2.73 3.21
Witan Global 47 2.59 8.06
Merchants Trust UK Equity Income 39 5.15 2.53
Scottish Mortgage Global 39 0.39 2.93
Value and Indexed Property Income Property - UK Commercial 34 5.47 3.22
BMO Capital & Income UK Equity Income 28 3.99 2.41
Schroder Income Growth UK Equity Income 26 4.35 3.84
Aberdeen Standard Equity Income UK Equity Income 21 6.29 6.60

Source: AIC/Morningstar. Data at 09 March 2022.

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