'Next generation' investment trust dividend heroes revealed

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

Two UK equity income trusts appear at the top of the list with Perpetual Income & Growth and Standard Life Equity Income in first and second spot respectively.

Smaller companies investment strategies also make an appearance. BlackRock's Smaller Companies and Throgmorton trusts, claim 14 years of dividend growth, while Athelney boasts 15 years worth.

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.

- Nearly one in two investment trusts pay quarterly dividends

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.

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

CompanySectorNumber of consecutive years dividend increases
   
Perpetual Income & GrowthUK Equity Income18
Standard Life Equity IncomeUK Equity Income17
TR European GrowthEuropean Smaller Companies15
AthelneyUK Smaller Companies15
BlackRock Throgmorton TrustUK Smaller Companies14
BlackRock Smaller CompaniesUK Smaller Companies14
Establishment Investment TrustGlobal14
Henderson Smaller CompaniesUK Smaller Companies14
Artemis Alpha TrustUK All Companies13
Aberdeen New DawnAsia Pacific - Inc Japan13
Witan PacificAsia Pacific - Inc Japan13
Henderson EuroTrustEurope13
Murray InternationalGlobal Equity Income13
EdinburghUK Equity Income12
BlackRock Greater EuropeEurope12
Schroder Oriental IncomeAsia Pacific - Ex Japan11
Henderson European FocusEurope11
HICL InfrastructureInfrastructure10
Standard Life UK Smaller CompaniesUK Smaller Companies10
Henderson Far East IncomeAsia Pacific - Ex Japan10
MedicXProperty Specalist10

Source: AIC and Morningstar.

- This article was first published in March 2017 and has subsequently been updated in March 2018.

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