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Investment company dividend heroes

12 March 2019

20 investment companies have increased their dividends for 20+ consecutive years.

The Association of Investment Companies (AIC) today has published its list of dividend heroes, the investment companies which have increased their dividends for 20 or more years consecutively.

There are 20 dividend hero investment companies and of these four have increased their dividends for more than 50 years in a row, using their ability to reserve up to 15% of their income to smooth dividend payments in good times and bad.

City of London, Bankers and Alliance lead the way having increased their dividends for a staggering 52 consecutive years. Following closely behind is Caledonia which has raised dividends for 51 years in a row.

So far in 2019 eight dividend heroes have announced another year of increases. Today F&C Investment Trust reached its 48th year of rises, joining BMO Global Smaller Companies which also boasts 48 years. JPMorgan Claverhouse achieved its 46th consecutive increase last week. At the beginning of March, Alliance Trust and Scottish American announced their 52nd and 39th year respectively. In February, Brunner, Witan and Temple Bar achieved their 47th, 44th and 35th increases respectively and Bankers announced its 52nd annual increase in January. A full list of dividend heroes is available in the table below.

Full dividend information on each investment company is available on the AIC’s website: www.theaic.co.uk. The website shows each investment company’s revenue reserve. This is the income which has been retained by an investment company which can be used to support dividends in more difficult years. The website also shows each investment company’s dividend cover. This shows how many years the current revenue reserve can pay the investment company’s last full financial year of dividends.

Job Curtis, Fund Manager of City of London 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. With a 4.3% historic dividend yield, as measured by the FTSE All Share Index, UK equities remain attractive for those seeking income. In general, dividend increases from UK companies were satisfactory during the recent corporate results season.”

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies, said: “Investment companies have unique benefits when it comes to delivering a dependable and growing dividend to investors. They can retain up to 15% of the income they receive each year, meaning they can squirrel away income in good years to boost dividends in leaner ones. This has enabled the 20 dividend heroes to achieve their enviable records of dividend growth, raising dividends for more than 20 years. With interest rates still low, the ability of investment companies to pay dependable and rising dividends is as important as ever.”

The AIC’s dividend hero investment companies

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

2.50

Scottish American

Global Equity Income

39

3.10

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

Source: AIC/Morningstar

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Notes

  1. 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 358 members and the industry has total assets of approximately £184 billion.
  2. 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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Media enquiries

Annabel Brodie-Smith
Communications Director
Tel: 020 7282 5580
annabel.brodie-smith@theaic.co.uk
@annabelbrodies
@aicpress

Elmley de la Cour
Communications Manager
Tel: 020 7282 5583
elmley.delacour@theaic.co.uk
@aicpress

William Sanderson
Communications Executive
Tel: 020 7282 5584
william.sanderson@theaic.co.uk
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