Interactive Investor

Ninth investment trust to join the 50-year dividend club

3rd August 2023 09:41

by Kyle Caldwell from interactive investor

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There’s a new member in a small club of investment trusts that have notched up at least half a century of consecutive dividend increases.

Dividend hero trusts 600

The small club of investment trusts that have notched up at least half a century of consecutive dividend increases has a new member – Murray Income Trust (LSE:MUT).

The trust, which sits in the UK equity income sector, has achieved the feat of 50 years of income rises in its centenary year, having been founded in 1923.

In a stock market update yesterday (1 August), Murray Income declared a fourth interim dividend of 12.75p for its 30 June 2023 financial year end. This gives its shareholders a total dividend for the year of 37.5p, which represents a 4.2% year-on-year increase.

It is the ninth member in a group of investment trusts with at least half a century of consecutive dividend increases, joining: City of London (LSE:CTY), Bankers (LSE:BNKR), Alliance Trust (LSE:ATST), Caledonia Investments (LSE:CLDN)The Global Smaller Companies Trust (LSE:GSCT), F&C Investment Trust (LSE:FCIT), Brunner (LSE:BUT), and JPMorgan Claverhouse (LSE:JCH).

Charles Luke, fund manager of Murray Income, says that the UK has a rich dividend heritage, which sets it apart from other regions.

Luke said: “The UK has a long-established and well-developed dividend culture. While other countries may have improved their payouts to shareholders in recent years, few can match the track record of UK companies.

“The yield for the FTSE All-Share Index is currently 4.0%, which puts it significantly ahead of most major markets. The S&P 500, for example, yields just 1.5%.”

Murray Income has a yield of 4.2%. It aims to achieve a high and growing income with capital growth through investing predominately in UK dividend-paying shares. It can invest up to 20% in overseas stocks, an allowance that it utilises.

With investment trust dividend heroes, it is important to look under the bonnet as some of the yields are low, such as F&C and BMO Global Smaller Companies, and this duo have more of a growth than an income focus.

Give high inflation, there’s plenty of appeal in sizing up ‘dividend hero’ investment trusts in the hope that boards will continue to increase income payments to maintain their reliable dividend records.

Such consistency is highly prized by investors, with many dividend heroes regularly featuring in our monthly most-bought investment trusts' league tables, with July's ranking recently published.

Luke adds: “The UK market is often seen as old-fashioned, beholden to yesterday’s companies in mature, low-growth industries. This may be true of a good number of the UK’s largest companies but, taking a look lower down the market capitalisation scale, there is an increasing range of companies exposed to unstoppable global trends such as digitalisation, ageing populations, the energy transition and emerging global wealth.

“Given that 20% of its portfolio can be invested in overseas-listed companies, Murray Income ensures that it does not miss out on the attractive industries that are not normally available to UK-only investors.”

Released in March, the annual publications about investment trust dividend heroes (those with 20 years or more of dividend increases) and ‘next generation’ heroes (those that have raised payouts for between 10 and 20 years) can be found below:

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.

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