We reveal our latest lineup of dividend heavyweights
The AIC has published the latest list of its 21 dividend heroes, the investment companies which have consistently increased their dividends for 20 or more years in a row. In these tough market conditions and with interest rates falling, the reliability of income streams is even more important.
Four dividend heroes have raised their dividends consistently for over half a century. City of London Investment Trust, Bankers Investment Trust and Alliance Trust lead the way with 53 years of consecutive rises. Caledonia Investments follows close behind with 52 years of increases.
A further seven heroes have increased their dividends for 40 or more years in a row and another five have done so for more than 30 consecutive years.
So far in 2020, eight dividend heroes have announced a further year of increases. In March, JPMorgan Claverhouse announced its 47th annual increase, F&C Investment Trust announced its 49th, Witan announced its 45th and Alliance Trust announced its 53rd. In February, Brunner Investment Trust (48th), Scottish American (40th) and Temple Bar (36th) announced increases and Bankers Investment Trust announced its 53rd annual increase in January.
Annabel Brodie-Smith, Communications Director of the AIC, said: “With the market turmoil of the past few weeks, it’s comforting to know that the 21 dividend heroes have been raising their dividends through thick and thin for decades. City of London, Bankers and Alliance have increased their dividends for an impressive 53 straight years. To put this in perspective, this means they have been increasing their dividends every year since the Beatles released Sgt. Pepper’s Lonely Hearts Club Band. Whilst there’s no guarantee, the fact investment companies can save up to 15% of their income each year has helped them to carry on raising dividends through such intense market downturns as the 1987 crash, the dot com bubble bursting and the financial crisis. With the difficulties facing markets at the moment, the power of investment companies to deliver rising dividends is reassuring for investors.”
Alex Crooke, Fund Manager of The Bankers Investment Trust, said: “Being a global investment trust and having revenue reserves are great advantages to maintain and continue the legacy of The Bankers Investment Trust’s 53 years of consecutive dividend growth. Our global reach means access to more areas of growth when certain sectors or countries stumble and the revenue reserve enables the trust to hold back some income in the strong years of corporate dividend growth to pay out in leaner ones. We recognise the importance of delivering a reliable and growing income to shareholders and over recent years have built the revenue reserves to cope with the fluctuations of currencies or the need to prioritise asset allocation decisions towards lower yielding markets.”
The key to the dividend heroes’ success is investment companies’ income advantage. Unlike open-ended funds, investment companies can hold back up to 15% of the income they receive from their portfolio each year and tuck it into a revenue reserve. This rainy-day pot means investment companies can save income in good years to boost dividends in leaner ones, enabling them to consistently raise dividends through thick and thin.
Source: AIC/Morningstar. Investment company dividend heroes at 2 April 2020
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.
