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 per cent of their annual income for a rainy day. 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 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 Investment Trust, Bankers Investment Trust and Alliance Trust are the top three dividend growers: all have increased their payouts to shareholders for 51 consecutive years. They are closely followed by Caledonia Investments in fourth place, with 50 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. F&C Global Smaller Companies, which is in fifth place in the table with 47 years of dividend growth, only yields 0.97 per cent, for example.
|Company||Sector||Number of consecutive years dividend increased|
|City of London||UK equity income||51|
|F&C Global Smaller Companies||Global||47|
|Foreign & Colonial||Global||47|
|JPMorgan Claverhouse||UK equity income||45|
|Murray Income||UK equity income||44|
|Scottish American||Global equity income||38|
|Merchants Trust||UK equity income||35|
|Temple Bar||UK equity income||34|
|Value & Income||UK equity income||30|
|F&C Capital Income||UK equity income||24|
|British & American||UK equity income||22|
|Schroder Income Growth||UK equity income||22|
|Invesco Income Growth||UK equity income||20|
|Source: AIC using Morningstar|
- This article was first published in March 2016, but has been updated in March 2018.
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