10 trusts with over 40 years of dividend growth

In the most recent list of investment trust "Dividend Heroes" published annually by the Association of Investment Companies (AIC), 10 investment trusts have a record of over 40 years of dividend growth.

City of London Investment Trust, Bankers Investment Trust and Alliance Trust are the top three dividend growers: all have been increasing their payout to shareholders for 49 consecutive years. They are closely followed by Caledonia Investments in fourth place, with 48 years of dividend growth.

February saw several announcements of dividend increases: Brunner Investment Trust announced its 44th year of increases and Witan Investment Trust achieved 41 years of growth. Final results are also due this month from Foreign & Colonial Investment Trust, who (if able to announce another dividend increase) will reach 45 years.

This year, City of London Investment Trust could become the first trust to reach 50 years of consecutive dividend increases.

Reassuring for investors

Nine out of the top 19 dividend heroes are in the AIC's global sector. A further nine trusts are part of the UK equity income sector. Scottish American is the only dividend hero housed in the global equity income sector.

But it is worth noting that a focus on sustainable dividend growth does not necessarily equate to a particularly high yield. F&C Global Smaller Companies, which is in fifth place in the table with 45 years of dividend growth, only yields 0.73%, for example.

In contrast, Schroder Income Growth, which takes the 19th spot in the table with 20 years of dividend growth, yields 4.22%.

Annabel Brodie-Smith, communications director at the AIC, says: "After a bumpy start to the year, with some well-known companies cutting their dividends, it's reassuring for investors that some investment companies have an unrivalled record of dividend increases.

"Many investment companies have been able to increase their dividends every year because they have the unique ability to squirrel away some of the income they receive each year for bad times ahead.

"This is known as dividend smoothing and is a particularly useful feature to boost dividend payments. So it's not surprising that some investors may want to consider investment companies for their ISAs or pensions."

Nine of the 19 trusts listed by the AIC rank among our sister magazine Money Observer's prestigious Rated Funds (indicated in table).

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.