Find out which 25 investment trusts make the list of the next generation of dividend heroes, having increased their dividends each year for 10 to 20 years.
Investors searching for investment trusts that offer the prospect of consistent dividend growth – an even more attractive trait in the current uncertain environment for markets – can choose from a 25-strong list put together by the Association of Investment Companies (AIC).
The AIC's ‘Next Generation of Dividend Heroes’ list comprises 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 recently refreshed its list of investment trusts with records of dividend increases that span 20 years and more.
There are six new joiners for the list this year: Fidelity Special Values, Lowland Investment Company, Schroder UK Mid Cap, Law Debenture Corporation, Tetragon Financial Group and CQS New City High Yield. Each has each grown its dividends for the last 10 years in a row.
UK trusts are well represented, with a total of 12 hailing from the UK equity income, UK all companies or UK smaller companies sector. The latter two sectors contain trusts with more of an emphasis on growth than income generation – but as evidenced by the list, a number of boards of growth-focused trusts see the value in paying a dividend to shareholders.
These include Athelney, BlackRock Smaller Companies, BlackRock Throgmorton Trust and Henderson Smaller Companies, which have all notched up 16 years of dividend growth.
The consistency of a growing income stream year on year is one of the key advantages associated with closed-ended, income-focused investment trusts. Trusts can draw on a “reserve” account to bolster income during challenging markets. A total of 15% of income generated by the trust’s holdings can be stored each year.
Three trusts have reached the impressive milestone of 50 years of consecutive dividend increases. The trusts are: City of London, Bankers and Alliance Trust.
Next generation dividend heroes
|Company||AIC sector||Number of consecutive years of dividend increases|
|Aberdeen Standard Equity Income||UK Equity Income||19|
|TR European Growth||European Smaller Companies||17|
|Athelney||UK Smaller Companies||16|
|BlackRock Smaller Companies||UK Smaller Companies||16|
|BlackRock Throgmorton Trust||UK Smaller Companies||16|
|Henderson Smaller Companies||UK Smaller Companies||16|
|Artemis Alpha Trust||UK All Companies||15|
|Murray International||Global Equity Income||15|
|BlackRock Greater Europe||Europe||14|
|Edinburgh Investment||UK Equity Income||14|
|Witan Pacific||Asia Pacific - Including Japan||14|
|Henderson European Focus||Europe||12|
|Schroder Oriental Income||Asia Pacific - Excluding Japan||12|
|HICL Infrastructure||Sector Specialist: Infrastructure||12|
|Standard Life UK Smaller Companies||UK Smaller Companies||12|
|International Public Partnerships||Sector Specialist: Infrastructure||11|
|Henderson Far East Income||Asia Pacific Income||11|
|Aberdeen Asian Income Fund||Asia Pacific - Excluding Japan||11|
|CQS New City High Yield||Debt - Loans & Bonds||10|
|Fidelity Special Values||UK All Companies||10|
|Law Debenture Corporation||UK Equity Income||10|
|Lowland Investment Company||UK Equity Income||10|
|Schroder UK Mid Cap||UK All Companies||10|
|Tetragon Financial Group||Flexible Investment||10|
- Source: AIC and Morningstar, 23 March 2020.