85% of income-paying investment companies increased or maintained dividends in 2020

New data highlights investment companies’ income resilience in the face of COVID-19.

AIC Pastilles RGB

More than four-fifths (85%) of equity income-paying investment companies increased or maintained their dividends in 2020 despite the impact of the pandemic, new data from the Association of Investment Companies (AIC) can reveal.

Out of 129 equity investment companies yielding more than 1%,182 (64%) increased their dividends to shareholders in 2020 with 28 (22%) maintaining the same pay-out as in 2019.2

In contrast, out of 700 open-ended funds yielding over 1%, 159 (23%) increased their dividends in 2020 and none held dividends at the same level as 2019.3

Investment companies’ income resilience was even stronger in the equity income sectors. The following percentages show the proportion of the sector that increased or maintained dividends in 2020:

  • Asia Pacific Income – 100%
  • Global Equity Income – 100%
  • UK Equity Income – 91%4

In comparison, in the IA Global Equity Income sector, 24% of open-ended funds increased or held their dividends, and in the IA UK Equity Income sector, only 4% of open-ended funds increased or held their dividends. (There is no IA equivalent to the Asia Pacific Income sector.)

UK dividends fell 41% in 2020 in response to the COVID-19 crisis, and dividends globally were 12% lower in 2020 than 2019, according to Janus Henderson’s Global Dividend Index. 5

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “The fact that so many equity investment companies were able to increase or maintain dividends during such a devastating year highlights the power of investment companies’ income advantages. Many investment companies made use of their revenue reserves, a structural benefit unique to investment companies, which enables them to save up to 15% of the income they receive each year. Investment companies can draw on these reserves to boost pay-outs during difficult times like last year.

“As many investors rely on their investment income to pay for the gas bill or the weekly shop, it’s reassuring to see investment companies are delivering when it really matters. However, it’s important for investors to remember that dividends are never guaranteed. It’s up to an investment company’s board to set a dividend strategy which is in the best interests of their shareholders.”

Equity income-paying investment companies increasing or maintaining dividends in 2020

AIC sector

Number of investment companies

Number of investment companies yielding over 1%

Dividend increased

Dividend increased (%)

Dividend held

Dividend held (%)

Asia Pacific

7

5

2

40.0%

3

60.0%

Asia Pacific Income

4

4

4

100.0%

0

0.0%

Asia Pacific Smaller Companies

3

3

1

33.3%

1

33.3%

Country Specialist: Asia Pacific - ex Japan

11

5

3

60.0%

1

20.0%

Country Specialist: Europe - ex UK

1

1

1

100.0%

0

0.0%

Europe

8

7

3

42.9%

0

0.0%

European Smaller Companies

4

2

0

0.0%

2

100.0%

Flexible Investment

18

9

4

44.4%

3

33.3%

Global

15

13

11

84.6%

2

15.4%

Global Emerging Markets

13

9

3

33.3%

3

33.3%

Global Equity Income

7

7

6

85.7%

1

14.3%

Global High Income

1

1

0

0.0%

0

0.0%

Global Smaller Companies

5

1

1

100.0%

0

0.0%

Japan

6

3

3

100.0%

0

0.0%

Japanese Smaller Companies

4

1

1

100.0%

0

0.0%

Latin America

2

2

0

0.0%

1

50.0%

North America

6

4

1

25.0%

3

75.0%

North American Smaller Companies

2

0

0

0.0%

0

0.0%

UK All Companies

12

12

6

50.0%

4

33.3%

UK Equity & Bond Income

2

2

2

100.0%

0

0.0%

UK Equity Income

23

23

19

82.6%

2

8.7%

UK Smaller Companies

23

15

11

73.3%

2

13.3%

Total

177

129

82

63.6%

28

21.7%

Source: AIC/Morningstar. “Dividend increased” = number/percentage of investment companies among those yielding at least 1% that increased their dividend in 2020. “Dividend held” = number/percentage of investment companies among those yielding at least 1% that held their dividend in 2020.

For more information on investment companies’ income benefits read the AIC’s income guide Looking for a little bit more or visit Income Finder, a suite of
resources to help income-seeking investors research investment companies

-ENDS-

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Notes to editors

  1. Data relates to investment companies in equity sectors with a 12-month rolling yield of more than 1% at 31 December 2019.
  2. Dividend data compares the total pence per share (or traded currency if different) in the 2020 calendar year with 2019 based on pay dates. Excludes special dividends.
  3. Fund data is for primary share classes of open-ended funds with a 12-month rolling yield of more than 1% at 31 December 2019. Excludes feeder funds.
  4. Asia Pacific Income investment companies – 100% increased. Global Equity Income – 86% increased, 14% maintained. UK Equity Income – 83% increased, 9% maintained.
  5. Source: Janus Henderson Global Dividend Index, February 2021. Percentages are headline dividends which include special dividends.
  6. All investment company and open-ended fund data is source: AIC/Morningstar.
  7. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 360 members and the industry has total assets of approximately £234 billion.
  8. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise.  You may not get back the full amount invested and, in some cases, nothing at all.
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