Dividend heroes: 20 trusts that keep raising the payout
Four trusts have raised dividends 50 years in a row. Here's who makes the dividend hero league table.
20th March 2019 10:05
by Kyle Caldwell from interactive investor
Four investment trusts have a record of over 50 consecutive years of dividend growth. We reveal which trusts make the dividend hero league table.
One of main advantages in an investment trust's armoury over open-ended funds is the dividend reserves, which allows companies to set aside 15% of their annual income for tougher times. Unit trusts or OEICS do not have this luxury, which is why investment trusts have more impressive dividend track records, with 10 companies boasting a record of over 40 years of dividend growth.
The most recent list of investment trust 'Dividend Heroes' published annually (12 March 2019) by the Association of Investment Companies (AIC) shows that four trusts have achieved the feat of increasing dividends for over 50 years.
City of London (LSE:CTY), Bankers (LSE:BNKR) and Alliance Trust (LSE:ATST) are the top three dividend growers: all have increased their payouts to shareholders for 52 consecutive years. They are closely followed by Caledonia Investments (LSE:CLDN) in fourth place, with 51 years of dividend growth.
But it is worth noting that a focus on sustainable dividend growth does not necessarily equate to a particularly high yield. BMO Global Smaller Companies (LSE:BGSC), which is in fifth place in the table with 48 years of dividend growth, only yields 1.2%, for example.
Trusts' dividend reserves are treated as 'rainy day' funds, allowing investment trust boards to top up the amount of income generated by the underlying assets in years when there has been a shortfall.
The financial crisis was a case in point, as during this time scores of UK-listed companies moved to either cut or suspend their dividends. The vast majority of UK equity income investment trusts, though, were able to weather the storm by dipping into their reserves in order to maintain or even increase payouts. On the whole, open-ended funds with an income remit cut their dividends during that time.
Information on the amount of money held in an investment trust’s revenue reserve account can be obtained through the Association of Investment Companies website: www.theaic.co.uk.
| Company | Sector | Number of consecutive years dividend increased |
|---|---|---|
| City of London | UK equity income | 52 |
| Bankers | Global | 52 |
| Alliance Trust | Global | 52 |
| Caledonia Investments | Global | 51 |
| BMO Global Smaller Companies | Global | 48 |
| Foreign & Colonial | Global | 48 |
| Brunner | Global | 47 |
| JPMorgan Claverhouse | UK equity income | 46 |
| Murray Income | UK equity income | 45 |
| Witan | Global | 44 |
| Scottish American | Global equity income | 39 |
| Merchants Trust | UK equity income | 36 |
| Scottish Mortgage | Global | 36 |
| Scottish IT | Global | 35 |
| Temple Bar | UK equity income | 35 |
| Value & Income | UK equity income | 31 |
| BMO Capital Income | UK equity income | 24 |
| British & American | UK equity income | 23 |
| Schroder Income Growth | UK equity income | 23 |
| Invesco Income Growth | UK equity income | 21 |
Source: AIC using Morningstar
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.
This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.
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.
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.