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

There are 20 investment trusts that have increased their dividends for more than 20 years, with BlackRock Smaller Companies and Henderson Smaller Companies the newest additions to the prestigious list. 

The Association of Investment Companies’ (AIC) latest list of “dividend heroes” also includes 10 funds that have now increased their dividends for 50 or more consecutive years.

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City of London (LSE:CTY), Bankers (LSE:BNKR) and Alliance Trust (LSE:ATST) are out in front with 57 years of dividend rises, followed by Caledonia Investments (LSE:CLDN) (56 years); Global Smaller Companies Trust (LSE:GSCT) (53 years); F&C Investment Trust (LSE:FCIT) (52 years); Brunner (LSE:BUT) (52 years); and JPMorgan Claverhouse Ord (LSE:JCH) (51 years). The latest members of the 50-club are Murray Income Trust and Scottish American.

A further five dividend heroes have increased their dividends each year for between 30 and 49 years and another five have between 20 and 29 years of increases, according to the trade body.

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

Job Curtis has managed City of London since 1991 and his track record over the past 10 years has been strong, with the share price total returns of 63% compared to 48% for the typical UK Equity Income investment trust.

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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 0.5% despite raising its payout for more than 40 years, and The Global Smaller Companies Trust (LSE:GSCT), formerly BMO Global Smaller Companies, yields just 1.5% even though it has notched up 53 years of consecutive dividend increases.

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The highest-yielding trusts are abrdn Equity Income (8.4%), Value and Indexed Property Income (7.1%), Athelney Trust (5.4%) and Merchants Trust (5.2%). 

The dividend heroes with the greatest five-year annualised growth rates are Alliance Trust (13.2% growth a year), The Global Smaller Companies Trust (9.8%) and BlackRock Smaller Companies (9%).

Annabel Brodie-Smith, communications director of the AIC, said: “Despite a tricky few years for the dividend heroes, 10 investment trusts now have at least half a century of consecutive annual dividend increases. They have continued to raise their payouts through the high inflation of the 1970s, recession of the 1990s, the global financial crisis in 2008 and the pandemic – showing their remarkable resilience.”

Source: AIC/Morningstar. Data at 08 March 2024.