20 over 20
Henderson Smaller Companies joins the dividend heroes
There are now 20 investment companies that are dividend heroes, having increased their annual dividends for 20 years in a row.
On 3 August, Henderson Smaller Companies announced its final dividend, bringing total dividends for the year to 26.0p a share, an 8.3% increase on last year. This was the company’s 20th consecutive year of dividend increases.
Other new joiners to the dividend heroes club this year are Athelney Trust, which became a dividend hero in February, and BlackRock Smaller Companies, which joined the list in May.
The full list of dividend heroes, compiled by the Association of Investment Companies (AIC), can be found at theaic.co.uk. Nine of the 20 dividend heroes have increased their dividends for 50 or more consecutive years, including JPMorgan Claverhouse and Murray Income Trust, which both reached the 50-year milestone this year.
Investment companies are able to hold back up to 15% of the income they receive in any given year and hold it in a revenue reserve for distribution in future years. This enables investment companies to smooth dividends through time.
"Congratulations to the three investment companies that have achieved dividend hero status this year. It’s a real achievement to consistently increase dividend payments to shareholders for 20 years or more."
Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Congratulations to the three investment companies that have achieved dividend hero status this year. It’s a real achievement to consistently increase dividend payments to shareholders for 20 years or more.
“It’s interesting to see that all three new entrants to the dividend heroes list this year are in the UK Smaller Companies sector. Smaller companies are often associated with growth rather than income, but these three investment companies show that they can also provide consistently growing dividends.
“It’s important to remember that dividends are never guaranteed, and if you’re in doubt about whether investment companies are suitable for you, you should speak to an independent financial adviser.”
Comments from the new dividend heroes can be found below.
Neil Hermon, Portfolio Manager of Henderson Smaller Companies Investment Trust, said: “At Henderson Smaller Companies Investment Trust, our investment style is to target profitable, growing, cash generative, dividend paying companies. This strategy has seen the income generated by the trust grow significantly, enabling us to grow dividends to our shareholders every year for the last 20 years and at a compound rate of 21.8% per year.
“We believe dividends are an important component of total return, both in our portfolio but also to our shareholders. We believe that our investment approach can generate good long-term capital returns for shareholders whilst also providing a growing income stream from dividends.”
Roland Arnold, Manager of BlackRock Smaller Companies, said: “Whilst it is not the strategy of the trust to specifically target high yielding companies, our focus on businesses that generate a high return on capital typically results in high levels of cash flow generation. We encourage management teams to invest this surplus cash in high return projects, which also provides the opportunity for a sustained dividend that grows in line with the companies themselves. So while dividends are a welcome return to our investors, we see them as a by-product of a successful growth strategy.”
“Athelney Trust is very proud to be included in the AIC dividend hero list of companies that have achieved the milestone of increasing dividends for 20 consecutive years.”
Dr Manny Pohl, Managing Director of Athelney Trust, said: “Athelney Trust is very proud to be included in the AIC dividend hero list of companies that have achieved the milestone of increasing dividends for 20 consecutive years. This has been achieved by consistently applying to stock selection our investment philosophy, which is built on the belief that the economics of a business drives long-term investment returns and that investing in high quality growing businesses that can generate predictable, above average economic returns will produce superior investment performance over the long term. Quality small and mid cap growth stocks have proven to be highly lucrative in providing not only a price return to Athelney but an increasing dividend stream over time.”
For an up to date list of dividend heroes, see theaic.co.uk.
