The investment company dividend heroes

Six investment companies raise dividends for 50+ consecutive years.

AIC Dividend Hero Logo 2COL RGB

The Association of Investment Companies (AIC) has published the latest list of its 19 dividend heroes, the investment companies which have consistently increased their dividends for 20 or more years in a row. Following 2020, where UK dividends fell 41% in response to the pandemic1, resilient income has never been more important.

Six dividend hero investment companies have now increased dividends for 50 or more consecutive years. City of London, Bankers and Alliance Trust lead the way with 54 years of consecutive increases. Caledonia Investments (52), BMO Global Smaller Companies (50), and F&C Investment Trust (50) follow with F&C Investment Trust announcing its 50th annual increase last week.

A further five investment companies have increased dividends for more than 40 consecutive years and another four have raised dividends for more than 30 consecutive years.

So far in 2021, seven dividend hero investment companies have announced another year of dividend increases. In addition to F&C Investment Trust this month (10 March), Alliance Trust announced its 54th increase on 4 March. In February Witan (46), Scottish American (47) and Brunner (49) announced further increases and JPMorgan Claverhouse (48) and Bankers (54) increased their dividends in January.

Scottish American was promoted from 41 to 47 years of annual dividend increases following additional historic dividend data being verified from previous annual reports.

Recent research from the AIC found that 85% of equity income-paying investment companies increased or maintained their dividends in 2020 compared to 23% of income-paying open-ended funds.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Against the challenging backdrop of 2020 it’s encouraging to see that investment companies’ structural benefits came to the fore and delivered for investors. Investment companies’ ability to save up to 15% of their income each year to boost payouts in difficult years is a huge income advantage. It has helped the dividend heroes achieve their remarkable track records of consistent dividend growth, with four stretching as far back as the 1960s.

“But this impressive income resilience isn’t just limited to the dividend heroes. Investment companies’ structural benefits helped 85% of equity income-paying investment companies increase or maintain their dividends in 2020 during the pandemic, compared to 23% of their open-ended counterparts. Despite investment companies’ impressive record, it’s important investors remember that dividends are never guaranteed.”

Craig Baker, Chairman of the Alliance Trust Investment Committee and Global Chief Investment Officer of Willis Towers Watson, said: “Being a global investment trust, with global diversification across eight stock pickers, Alliance Trust has delivered resilient total returns through a period of unprecedented volatility. Despite a challenging backdrop for generating income caused by COVID, we have been able to increase our own dividends year-on-year since the 1960s, with an increase last year of 3%, making this our 54th consecutive annual increase and maintaining the AIC dividend hero status.

“The Alliance Trust portfolio comprises the ‘best ideas’ of our stock pickers, selected based on their attractive fundamentals and prospects, which drive company valuations over the long term. Allocating to a single manager’s concentrated portfolio can be a bumpy ride. Individually, the return paths of each of our stock pickers can be quite volatile and differ significantly from one another. However, blending their stock selections into a portfolio that we risk-manage in terms of style, sector and country exposures, and which is diversified across several complementary strategies, leads to a much smoother return path for investors.

“Unlike open-ended funds, investment trusts are able retain 15% of annual income for revenue reserves. This gives investment trusts the ability to bolster returns on rainy days. Alliance Trust has one of the largest revenue reserves of any investment trust, totalling £99.2m which equates to over two years of dividend cover. And if shareholders and the court approve plans to convert the company’s £645.3m merger reserve into distributable reserves, we will have significant potential to support continued dividend growth for many years to come.”

Paul Niven, Manager of F&C Investment Trust, said: “We were delighted to announce that F&C Investment Trust raised its dividend for the 50th consecutive year for shareholders, in what was a challenging period for markets. Our aim is to deliver both capital and income growth over the long term; in years where income exceeds dividend payments, we are able to hold back some of that to draw on in future years, allowing us to smooth income through time for investors.”

Investment company dividend heroes at 15 March 2021

Investment company

AIC sector

Number of consecutive years dividend increased

Yield (%) at 12/03/2021

Share price total return
13/03/2020 to 12/03/2021 
(%)
1 year

Share price total return
13/03/2016 to 12/03/2021

(%)
5 years

Share price total return
13/03/2011 to 12/03/2021

(%)
10 years

Share price total return
13/03/2001 to 12/03/2021

(%)
20 years

Share price total return
01/03/1981 to 12/03/2021

(%)
40 years

City of London

UK Equity Income

54

5.1

25.3

29.9

103.4

269.5

9,383.4

Bankers

Global

54

2.0

38.3

116.6

243.9

508.0

17,934.0

Alliance Trust

Global

54

1.6

48.2

106.8

228.7

358.2

10,559.4

Caledonia Investments

Flexible Investment

52

2.3

1.5

34.5

98.5

422.5

17,313.6

BMO Global Smaller Companies

Global Smaller Companies

50

1.1

43.6

63.1

196.1

691.9

12,691.6

F&C Investment Trust

Global

50

1.5

39.7

102.6

218.2

381.8

10,744.3

Brunner

Global

49

2.3

32.1

91.9

184.8

239.1

6,873.9

JPMorgan Claverhouse

UK Equity Income

48

4.4

21.3

50.4

114.8

184.0

7,883.4

Murray Income

UK Equity Income

47

4.1

26.1

61.2

114.4

280.7

9,377.5

Scottish American

Global Equity Income

47

2.6

38.8

109.0

182.5

324.2

4,920.8

Witan

Global

46

2.4

40.7

73.8

187.5

308.5

8,633.5

Merchants

UK Equity Income

38

5.7

38.8

54.8

112.4

253.7

6,927.5

Scottish Mortgage

Global

38

0.3

124.7

388.5

820.2

1,908.6

40,775.9

Scottish Investment Trust

Global

37

3.2

18.3

43.5

93.3

180.2

4,419.9

Value and Indexed Property Income2

UK Equity Income

33

5.7

16.1

21.2

78.8

224.9

N/A

BMO Capital & Income

UK Equity Income

27

3.8

23.1

45.5

102.7

281.9

N/A

Schroder Income Growth

UK Equity Income

25

4.3

41.1

51.5

136.0

370.2

N/A

Invesco Income Growth

UK Equity Income

23

4.3

23.5

25.3

114.0

250.8

N/A

Aberdeen Standard Equity Income

UK Equity Income

20

6.2

23.4

0.7

77.6

188.1

N/A

Source: AIC/Morningstar. N/A is shown where the investment company is younger than the timeframe.

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 could pay the investment company’s last full financial year of dividends.

The AIC’s website also has Income Finder, a suite of tools and resources to help income-seeking investors research investment companies. Investors can build a virtual portfolio of income-paying investment companies, track dividend dates and see how much income they could have received over a year.

-ENDS-

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Notes to editors

  1. Source: Janus Henderson Global Dividend Index, February 2021. Percentage is headline dividends which includes special dividends.
  2. Value and Indexed Property Income will shortly move to the Property – UK Commercial sector.
  3. 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 361 members and the industry has total assets of approximately £237 billion.
  4. 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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