The 2026 line-up of ‘next generation’ trust dividend heroes

As reported last week, 20 investment trusts have delivered at least 20 consecutive dividend increases.

However, the latest data from the Association of Investment Companies (AIC) shows that waiting in the wings to become dividend heroes are 30 trusts that have increased their dividends for 10 or more consecutive years, but fewer than 20 years. More than half of these “next generation” trusts yield more than 4%.

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There are two new entrants to this year’s list: Utilico Emerging Markets (LSE:UEM) and Foresight Environmental Infrastructure (LSE:FGEN).

Dropping off the list versus a year ago are Chelverton UK Dividend Trust (LSE:SDV), Henderson International Income and BBGI Global Infrastructure. The latter two trusts were subject to takeovers, with Henderson International Income merging into JPMorgan Global Growth & Income.

Among the next generation of dividend heroes is Diverse Income Trust (LSE:DIVI), which is proposing to turn into an open-ended fund. Under the open-ended fund structure, it will be tougher for Diverse Income to achieve a consistent dividend track record, as funds do not have revenue reserves and all the income generated each year is returned to shareholders. Therefore, during lean periods, a year-on-year dividend cut is pretty much inevitable for funds when less income is generated by the underlying investments.

Income-paying investment trusts have a particular attraction for investors who want a regular cash flow, because they don’t have to distribute all the income generated by their assets every year. Investment trusts can hold back up to 15% each year, which means they can build up a “rainy day” reserve to bolster dividend payouts in leaner years.

There are a number of high-yielding options among the next generation of dividend heroes, but care needs to be taken, as high yields can signal a potential value trap.

Moreover, while high yields offer investors the prospect of higher income today, there are no guarantees that this will result in market-beating returns from a total return perspective – when both capital and income are combined. In addition, dividend growth may be higher for trusts with lower yields today.

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Having explained those caveats, the highest-yielding next generation dividend heroes are Foresight Solar (LSE:FSFL), Foresight Environmental Infrastructure and Henderson Far East Income (LSE:HFEL), with respective yields of 12.7%, 10.9% and 10%.

Also bear in mind that those with low yields have a much greater growth focus. In those instances, most of the overall total return will come from growth rather than income generation.

Schroder Oriental Income (LSE:SOI) and BlackRock Greater Europe (LSE:BRGE) lead the list, both having increased their annual dividends for 19 consecutive years. They are closely followed by CQS New City High Yield (LSE:NCYF) and Henderson Far East Income, which both have an unbroken record of 18 years of dividend increases. Two investment companies that have 17 years of dividend increases are International Public Partnerships (LSE:INPP) and Aberdeen Asian Income Fund (LSE:AAIF).

The next generation dividend heroes with the fastest five-year dividend growth per annum are Fidelity China Special Situations (LSE:FCSS), CT Private Equity Trust (LSE:CTPE) and Invesco Global Equity Income Trust (LSE:IGET).

How the revenue reserve actually works

It’s easy to get the impression that the revenue reserve is somehow “ring-fenced”, but that’s not the case. In reality, it amounts to little more than an accounting tactic, an entry in the books to show retained revenue. That money is part of the trust’s net asset value (NAV) and is invested in the same way as the rest of the portfolio. If some of it is needed to top up dividend distributions, then the manager has to sell holdings or dip into the cash element and the NAV is affected. 

Of course, even for those investment trusts with healthy income reserves, there’s no guarantee that dividends will be maintained or increased.  

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The next generation of dividend heroes

Source: theaic.co.uk/Morningstar. Data at 19 March 2026.