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Investment companies have an income advantage which is particularly important during difficult times like these when dividends are under pressure.

Unlike open-ended funds, investment companies don’t have to pay out all the income they receive from their portfolios each year.  They can save up to 15% and tuck it into a revenue reserve.  This means they can hold back some of the income they receive in good years and use it to boost dividends when businesses may be cutting theirs.

This structural benefit has enabled many investment companies to pay consistently rising dividends through both good and bad years for decades, a record that’s unrivalled by open-ended funds.

It’s important to remember that dividends are never guaranteed and so your income from investment companies, like your capital, can fall as well as rise.  It’s the responsibility of investment companies’ independent boards of directors to decide on a dividend strategy that is in the best interests of shareholders.


Dividend heroes

The AIC dividend heroes are the investment companies that have consistently increased their dividends for 20 or more years in a row.

Company AIC sector Number of consecutive years dividend increased
City of London Investment Trust UK Equity Income 54
Bankers Investment Trust Global 53
Alliance Trust Global 53
Caledonia Investments Flexible Investment 52
BMO Global Smaller Companies Global Smaller Companies 50
F&C Investment Trust Global 49
Brunner Investment Trust Global 48
JPMorgan Claverhouse Investment Trust UK Equity Income 47
Murray Income UK Equity Income 47
Witan Investment Trust Global 45
Scottish American Global Equity Income 40
Merchants Trust UK Equity Income 38
Scottish Mortgage Investment Trust Global 38
Scottish Investment Trust Global 36
Value & Income UK Equity Income 33
BMO Capital & Income UK Equity Income 26
Schroder Income Growth UK Equity Income 25
Invesco Income Growth UK Equity Income 23


The next generation of dividend heroes

The next generation of dividend heroes are those that have increased their dividends for 10 or more years in a row but fewer than 20.

Company AIC sector Number of consecutive years dividend increased
Aberdeen Standard Equity Income UK Equity Income 19
BlackRock Smaller Companies UK Smaller Companies 17
Henderson Smaller Companies UK Smaller Companies 17
Athelney UK Smaller Companies 16
BlackRock Throgmorton Trust UK Smaller Companies 16
Artemis Alpha Trust UK All Companies 16
Murray International Global Equity Income 15
Baillie Gifford China Growth Country Specialist: Asia Pacific - ex Japan 15
BlackRock Greater Europe Europe 15
HICL Infrastructure Infrastructure 13
Schroder Oriental Income Asia Pacific Income 13
Henderson European Focus Europe 12
CQS New City High Yield Debt - Loans and Bonds 12
Henderson Far East Income Asia Pacific Income 12
International Public Partnerships Infrastructure 11
Aberdeen Asian Income Asia Pacific Income 11
Fidelity Special Values UK All Companies 11
Tetragon Financial Group Flexible Investment 10
Law Debenture Corporation UK Equity Income 10
Lowland UK Equity Income 10
Schroder UK Mid Cap UK All Companies 10

Source: AIC/Morningstar. Correct as at 18 November 2020.