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Experienced Investor

Are you invested with a dividend hero?

Cherry Reynard
Written By:
Cherry Reynard

Four ‘heroic’ investment trusts have been increasing their annual payouts to shareholders each year for more than 50 years.

City of London, Bankers and Alliance have raised their dividends for 52 consecutive years. Following closely behind is Caledonia, which has raised its dividends for 51 years in a row.

There are another 20 dividend ‘hero’ investment companies that have increased their dividends for more than 20 years, listed below:

Company AIC sector Number of consecutive years dividend increased Dividend yield at 28/02/19 (%)
City of London UK Equity Income 52 4.53
Bankers Global 52 2.33
Alliance Trust Global 52 1.83
Caledonia Flexible Investment 51 1.95
BMO Global Smaller Companies Global 48 1.15
F&C Investment Trust Global 48 1.63
Brunner Global 47 2.44
JPMorgan Claverhouse UK Equity Income 46 3.92
Murray Income UK Equity Income 45 4.38
Witan Global 44 2.5
Scottish American Global Equity Income 39 3.1
Merchants UK Equity Income 36 5.41
Scottish Mortgage Global 36 0.62
Scottish Investment Trust Global 35 2.67
Temple Bar UK Equity Income 35 3.38
Value and Income UK Equity Income 31 4.54
BMO Capital & Income UK Equity Income 25 3.68
British & American UK Equity Income 23 18.14
Schroder Income Growth UK Equity Income 23 4.31
Invesco Income Growth UK Equity Income 21 4.38

A growing dividend should be important to investors relying on their investments to provide an income. It means that their income grows ahead of inflation year on year, unlike with a fixed income investment where the income remains the same.

Job Curtis, fund manager on the City of London trust, which has the longest record of consecutive dividend increases, said: “At the core of City of London’s portfolio are companies that can consistently grow their profits and dividends. I also like a relatively diversified portfolio across companies and sectors to benefit from different stages of the economic cycle and to reduce risk. Even the very largest companies can have sudden severe problems, such as when BP had to stop paying a dividend after the Macondo oil disaster in 2010.

“City of London could not have achieved the 52 years of continuous dividend growth without being an investment trust. In the good years for dividends, we retain some earnings to add to our revenue reserves. During periods of dividend cuts, we can draw down our revenue reserve to continue increasing our dividend. In the 27 years that I have been City of London’s fund manager, we have used the revenue reserves seven times. The investment trust structure undoubtedly has significant advantages in providing investors with consistent growth in income.”