Dividend heroes

The Association of Investment Companies (AIC) has published its latest list of 20 dividend heroes, investment trusts which have consistently increased their annual dividends for at least 20 years in a row.

Half of the 20 dividend heroes have increased their dividends for 50 or more consecutive years. Leading the charge are City of London Investment Trust, Bankers Investment Trust and Alliance Trust with 57 years of dividend rises, followed by Caledonia Investments (56 years), The Global Smaller Companies Trust (53), F&C Investment Trust (53), Brunner Investment Trust (52) and JPMorgan Claverhouse (51). The most recent additions to the half-century club are Murray Income Trust (50) and Scottish American (50). 

F&C Investment Trust declared its final dividend on Friday, taking annual dividends for the year to 14.7p per share, 8.9% higher than the previous year, and confirming its 53rd consecutive year of dividend increases. 

Five dividend heroes have increased their dividends each year for 30 to 49 years and a further five have raised their dividends for 20 to 29 years in a row. The newest additions to the prestigious dividend hero list are BlackRock Smaller Companies and Henderson Smaller Companies, each with 20 uninterrupted years of dividend increases. A full table of all 20 dividend heroes is shown below.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Despite a tricky few years for the dividend heroes, ten investment trusts now have at least half a century of consecutive annual dividend increases. They have continued to raise their payouts through the high inflation of the 1970s, recession of the 1990s, the global financial crisis in 2008 and the pandemic – showing their remarkable resilience.

“There are an impressive 20 dividend hero investment trusts in total that have increased their dividends every year for more than 20 years. Investment trusts have strong track records of dividend growth because they can hold back up to 15% of the income they receive each year. This allows them to hold more income in reserve when times are good to pay out in leaner years, providing a smoother flow of dividends to investors. Whilst dividends are never guaranteed, investment trusts’ dividend track records demonstrate their durability.”

Comments from some of the managers of the dividend hero investment trusts can be found below the table.

Investment trust dividend heroes

Source: theaic.co.uk / Morningstar. Correct at 08/03/24. 

Paul Niven, Fund Manager of F&C Investment Trust, said: “The dividend was raised by 8.9% over the year to 14.7p per share, exceeding year-end UK inflation which stood at 4.0% at the end of December.

“It remains the ambition of the board to deliver rises in dividend which exceed inflation over the long term and, indeed, this latest rise in our dividend ensures that shareholders will receive a dividend increase which has exceeded inflation over one, three, five and ten years.

“Over the past ten years to the end of December 2023, our shareholder total return was 203%, while our dividends rose by 63.3%, both well ahead of UK inflation, which was 32.8% over the equivalent period.”

Alex Crooke, Fund Manager of Bankers Investment Trust, said: “To maintain dividend growth, Bankers Investment Trust ensures that its portfolio is diversified by both geography and sector to safeguard against geopolitical or industry risks. Growth can only be supported by growing cash flow from the corporates that we invest in.”

Charles Luke, Investment Manager of Murray Income Trust, said: “We believe in the simple philosophy that for a portfolio company to grow its dividends over the long term it needs to grow its earnings, and to our mind, high quality companies are best placed to do this. The Murray Income portfolio is jam-packed with high-quality companies exposed to long-term structural growth drivers, such as digital transformation, emerging global wealth, the energy transition and ageing populations, that we believe should provide a tailwind for earnings, and therefore dividends, for years to come.”

Mat Masters, Chief Executive Officer of Caledonia Investments, said: “Caledonia’s investment strategy is characterised by long-term thinking. Our structure, strategy and backing enable us to think in decades rather than years. Our aims are to pay dividends that keep ahead of inflation over the long term and achieve the same with our shareholders’ capital. To do this, our investment strategy needs to have a similarly long-term approach. We have a diversified portfolio of assets, across public companies, private capital and funds, to collectively provide consistent income streams and deliver excellent returns. This enables us to select the best opportunities and not be beholden to one market. 

“Our strategy has delivered 56 years of consistent dividend growth – a track record we are very proud of – reflecting our ability to drive growth by taking advantage of our long time horizon and prudently manage risk across our three investment pools.”

James Dow, Investment Manager of Scottish and American Investment Company (SAINTS), said: “SAINTS’ strategy for maintaining and growing its dividend is to invest in companies which themselves grow their earnings, cash flows and dividends. This focus on long-term growth has been a large part of SAINTS’ own dividend record. It has also been helpful to use the advantages of the investment company structure, including the use of reserves to smooth dividend progression, and prudent gearing to supplement revenues.”

Outlook for global and UK equity income investing

James Dow, Investment Manager of Scottish and American Investment Company (SAINTS), said: “There are huge benefits both to growth and diversification from seeking the best opportunities around the world, as SAINTS has been doing for over 150 years.”

Alex Crooke, Fund Manager of Bankers Investment Trust, said: “Corporate profits have historically grown quicker than underlying inflation, underpinning a growing stream of dividend income that also has grown in real terms.”

Paul Niven, Fund Manager of F&C Investment Trust, said: “We remain optimistic on the prospects for our holdings over the longer term. It is our belief equities can provide a rising income stream in nominal and real terms as well as the prospect of capital growth.”

Charles Luke, Investment Manager of Murray Income Trust, said: “The UK is currently an attractive opportunity for income investors because it provides access to companies with appealing long-term growth opportunities at valuations that are attractive on a relative and absolute basis, both in terms of earnings and dividend yields. In effect, investors are earning global income at a knock-down price. Furthermore, the discounts to net asset value that are currently available in companies such as Murray Income make this opportunity doubly appealing.”

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Notes to editors

1. The Association of Investment Companies (AIC) represents a broad range of investment trusts and VCTs, collectively known as investment companies. The AIC’s vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 334 members and the industry has total assets of approximately £272 billion.
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