City of London raises dividend for the 60th year in a row

While the England men’s football team are still waiting, 60 years on, to add to their solitary World Cup triumph, shareholders in City of London (LSE:CTY) investment trust have enjoyed consistent dividend gains over this period.

Over the 60 years, City of London calculates that an investment of £1,000, with dividends reinvested, would have turned into £1.3 million today compared with £700,000 for the wider UK stock market. This shows both the power of compounding and the benefit of reinvesting dividends, which is a topic we discuss here.

• Invest with ii: Invest in Investment Trusts | Top UK Shares| Interactive investor Offers

The trust stretching its record to 60 years was widely expected, but confirmed in its full-year results today (to 30 June 2026), with its dividend upped by 4%.

The inflation-beating rise was fully covered by the amount of dividends paid by the underlying investments, but over the six-decade period the trust’s ability to draw on its revenue reserves (explained below) has been key in helping income flow smoothly in turbulent times.

The UK equity income trust, which has assets of £3 billion and predominately focuses on dependable dividend payers among FTSE 100 companies, generated a net asset value (NAV) total return of 21.9% over the 12-month period, the same as the FTSE All-Share Index total return. Its share price total return was slightly lower at 21%, reflecting a decline in its premium over the period, from 3.2% to 2.3%.

As well as income consistency, City of London has a market-beating yield, currently 4% versus around 3.4% for the FTSE All-.Share.

To help achieve this, fund manager Job Curtis (pictured), who is one of the longest-serving managers having been at the helm since 1991, tilts the portfolio towards stocks with above-average dividends. However, to avoid potential yield traps, Curtis focuses on firms with strong balance sheets and good cash generation in order to both pay dividends and position for future profits growth.

• Portfolio Dilemma: we tackle six investment problems
• Fund Focus: the minnow investment trusts to back

Four new stocks were added over the period: self-storage operator Big Yellow Group (LSE:BYG), alternative asset management firm ICG (LSE:ICG), ITV (LSE:ITV), and Rightmove (LSE:RMV).

Curtis said: “By reaching this milestone we celebrate not only 60 years of consecutive annual dividend increases, but also the resilience of the UK market and indeed the benefits afforded to us by the investment trust structure. Our investment approach prioritises patience, valuation discipline and long-term thinking, all of which has allowed us to navigate the varied market conditions of the past six decades.

“Most importantly, we focus on creating a portfolio of brilliant, dividend-paying businesses, of which there are many in the UK. Underpinning all of this is our ability, as an investment trust, to draw on revenue reserves when needed in trickier times, which has allowed us to deliver 60 years of uninterrupted dividend growth for our shareholders.”

The dividend edge that sets investment trusts apart

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.

There are 21 investment trusts which have increased their dividends for at least 20 years in a row. Close to matching City of London, with 59 years of consistent income, are Bankers Ord (LSE:BNKR), Alliance Witan Ord (LSE:ALW), and Caledonia Investments Ord (LSE:CLDN).

• The Great British Retirement Survey: key findings and retirement insights
• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis

While it is easy to get the impression that the revenue reserve is somehow “ring-fenced”, that is 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 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, the manager has to sell holdings or dip into the cash element and the NAV is affected.

Investment trust dividend heroes

Source: theaic.co.uk/Morningstar. Data to 11 September 2026.