‘Next generation’ investment trust dividend heroes revealed

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.

Nearly one in two investment trusts pay quarterly dividends

- Investment trusts that have increased their dividends for at least two decades

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

UK Smaller Companies 16
BlackRock Smaller Companies UK Smaller Companies 16
BlackRock Throgmorton Trust UK Smaller Companies 16
Henderson EuroTrust Europe 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. 


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