Investors searching for investment trusts that offer the prospect of consistent dividend growth can choose from an 21-strong list that has been put together by the Association of Investment Companies (AIC).
The AIC's so-called 'Next Generation of Dividend Heroes' list comprises 18 trusts that have increased their dividends each year for 10 years or more, with an upper limit of 20 years. The trade body has also revealed the trusts with records of dividend increases that span 20 years and more.
DIVIDEND RESERVES GIVE TRUSTS THE EDGE
Overall eight out of the 21 trusts hail from the UK equity income sector or the UK smaller companies sector. This highlights the advantages associated with backing a closed-ended income-focused investment company, which can draw on a 'reserve' account to bolster income during challenging markets. A total of 15 per cent of income generated by the trust can be stored each year.
Unit trusts, which are open-ended funds, are not able to offer this function and as a result virtually all of the UK equity income open-ended funds cut their dividends during the financial crisis. Investment trusts, on the other hand, simply drawn on their 'rainy day' reserves during the crisis to either maintain or grow their dividends.
A list of 20 investment trusts that have increased their dividends for at least 20 years can be found here.
Next generation dividend heroes
|Company||Sector||Number of consecutive years dividend increases|
|Perpetual Income & Growth||UK Equity Income||18|
|Standard Life Equity Income||UK Equity Income||17|
|TR European Growth||European Smaller Companies||15|
|Athelney||UK Smaller Companies||15|
|BlackRock Throgmorton Trust||UK Smaller Companies||14|
|BlackRock Smaller Companies||UK Smaller Companies||14|
|Establishment Investment Trust||Global||14|
|Henderson Smaller Companies||UK Smaller Companies||14|
|Artemis Alpha Trust||UK All Companies||13|
|Aberdeen New Dawn||Asia Pacific - Inc Japan||13|
|Witan Pacific||Asia Pacific - Inc Japan||13|
|Murray International||Global Equity Income||13|
|Edinburgh||UK Equity Income||12|
|BlackRock Greater Europe||Europe||12|
|Schroder Oriental Income||Asia Pacific - Ex Japan||11|
|Henderson European Focus||Europe||11|
|Standard Life UK Smaller Companies||UK Smaller Companies||10|
|Henderson Far East Income||Asia Pacific - Ex Japan||10|
Source: AIC and Morningstar.
- This article was first published in March 2017 and has subsequently been updated in March 2018.
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