Interactive Investor

The 2021 list of ‘next generation’ investment trust dividend heroes

23rd March 2021 11:06

Kyle Caldwell from interactive investor

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Discover the 23 investment trusts that have increased their dividends each year for 10 to 20 years.

Investors on the lookout for consistent dividend growth have plenty of choice among investment trusts, with new data showing there are 23 trusts waiting in the wings to become ‘dividend heroes’.

The Association of Investment Companies’ (AIC) updated list of trusts that have increased dividends for 10 or more consecutive years, but less than 20, has seven new entrants compared to a year ago. Its ‘dividend heroes’, of which there are 19 in total, have raised dividends for at least two decades

The new joiners have all notched up a decade of dividend increases: Chelverton UK Dividend (LSE:SDV), Invesco Select Trust Global Equity Income (LSE:IVPG), JPMorgan Elect Managed Income (LSE:JPEI), Aberforth Smaller Companies (LSE:ASL), TR Property (LSE:TRY), Henderson Opportunities Trust (LSE:HOT) and Fidelity European Trust (LSE:FEV).

However, there have been some dividend casualties. A year ago, there were 25 trusts that had raised dividends for between 10 and 20 years. With the seven additions to this year’s list, nine trusts have therefore lost their place.

Of those nine trusts, eight either maintained or cut dividends. The exception was Aberdeen Standard Equity Income (LSE:ASEI), which was promoted to the ‘dividend hero’ list following its 20th consecutive year of dividend increases.

Five trusts maintained dividends in 2020: TR European Growth (LSE:TRG), BlackRock Throgmorton Trust (LSE:THRG), Henderson European Focus (LSE:HEFT), Standard Life UK Smaller Companies (LSE:SLS) and Edinburgh Investment Trust (LSE:EDIN). Although, it is worth pointing out that Edinburgh Investment Trust said last November that it will be lowering dividends to a more sustainable level this year. 

The remaining three trusts cut dividends: Henderson EuroTrust (LSE:HNE), Schroder UK Mid Cap (LSE:SCP) and Tetragon Financial Group (LSE:TFG)

Athelney (LSE:ATY) leads the next generation of dividend heroes having increased its dividend for 18 consecutive years. In joint second place, with 17 years of dividend hikes, are BlackRock Smaller Companies (LSE:BRSC) and Henderson Smaller Companies (LSE:HSL)

The consistency of a growing income stream year on year is one of the key advantages associated with income-focused investment trusts. Trusts can draw on a ‘dividend reserve’ account to bolster income during challenging markets. The reserves were tapped in 2020 when dividends dried up in response to the Covid-19 pandemic, with 85% of income-paying trusts (with yields above 1%) increasing or holding dividends in 2020

As reported last week, 19 trusts have raised dividends for at least 20 years. Six trusts have raised dividends for 50 year or more. City of London (LSE:CTY)Bankers (LSE:BNKR) and Alliance Trust (LSE:ATST) lead the way with 54 years of consecutive increases. Caledonia Investments (LSE:CLDN) has upped payouts for 52 years, followed by BMO Global Smaller Companies (LSE:BGSC) and F&C Investment Trust (LSE:FCIT), which have increased income each year to shareholders for 50 years.

The next generation of trust dividend heroes 

Investment company AIC sector No of consecutive years dividend increased Yield (%) at 19 March 2021
Athelney (LSE:ATY) UK Smaller Companies 18 4.8
BlackRock Smaller Companies (LSE:BRSC) UK Smaller Companies 17 1.9
Henderson Smaller Companies (LSE:HSL) UK Smaller Companies 17 2.1
Artemis Alpha Trust (LSE:ATS) UK All Companies 16 1.3
Murray International (LSE:MYI) Global Equity Income 16 4.5
Baillie Gifford China Growth (LSE:BGCG) China / Greater China 15 1.5
BlackRock Greater Europe (LSE:BRGE) Europe 14 1.1
HICL Infrastructure (LSE:HICL) Infrastructure 13 4.9
Schroder Oriental Income (LSE:SOI) Asia Pacific Equity Income 13 3.7
CQS New City High Yield (LSE:NCYF) Debt - Loans and Bonds 12 9.4
Henderson Far East Income (LSE:HFEL) Asia Pacific Equity Income 12 7.2
Aberdeen Asian Income (LSE:AAIF) Asia Pacific Equity Income 12 4.2
International Public Partnerships (LSE:INPP) Infrastructure 11 4.5
Fidelity Special Values (LSE:FSV) UK All Companies 11 2.2
Lowland (LSE:LWI) UK Equity Income 11 4.8
Law Debenture Corporation (LSE:LWDB) UK Equity Income 11 3.9
Chelverton UK Dividend (LSE:SDV) UK Equity Income 10 5.1
*Invesco Select Trust Global Equity Income (LSE:IVPG) Global Equity Income 10 3.4
JPMorgan Elect Managed Income (LSE:JPEI) UK Equity Income 10 4.8
Aberforth Smaller Companies (LSE:ASL) UK Smaller Companies 10 2.3
TR Property (LSE:TRY) Property Securities 10 3.6
Henderson Opportunities Trust (LSE:HOT) UK All Companies 10 2
Fidelity European Trust (LSE:FEV) Europe 10 2.4

Source: AIC/Morningstar. *Invesco Select Trust consists of four pools of assets. It is the Global Equity Income pool that has increased its dividend for 10 consecutive years.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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