For investors seeking income generation and the diversification that collective investments funds bring, the London Stock Exchange has over 50 investment trusts that have consistently increased their annual dividends for over a decade.
Two-thirds of these are the highly esteemed ‘dividend heroes’ with dividend growth records longer than 20 years, of which half are able to boast an unblemished 50-year record of constantly increasing shareholder returns.
This month the Association of Investment Companies (AIC) published its updated list of 20 dividend heroesm, plus another 33 investment companies that have increased dividends for more than 10 but not yet for two full decades.
City of London Investment Trust (LSE:CTY), Bankers Investment Trust PLC (LSE:BNKR) and Alliance Trust PLC (LSE:ATST) continue to extend their long records, with 57 years of dividend rises.
The most recent additions to the half-century club are Murray Income Trust plc (LSE:MUT) and Scottish American, both fresh from reaching their half century.
Witan Investment Trust, which this week announced plans to potentially drop its long-held multi-manager strategy, should be next to join that elite group, currently on 49 years.
It is one of five trusts with more than three decades of continued dividend hiking, a group that also includes FTSE 100 listed Scottish Mortgage Investment Trust PLC (LSE:SMT), one of the biggest investors in SpaceX and big-tech names, including Nvidia, Tesla and TikTok owner ByteDance.
One of the aspects of investment trusts that makes them particularly attractive to income seekers is their ability to smooth dividends over time, as all trusts can save up to 15% of income each year to be used to increase payments even if markets threaten to impact performance.
And even though many of these listed funds have seen their share prices and some portfolio companies come under pressure in the past couple of years, they were able to keep lifting their returns.
“Despite a tricky few years for the dividend heroes, ten investment trusts now have at least half a century of consecutive annual dividend increases,” said AIC director Annabel Brodie-Smith.
“They have continued to raise their payouts through the high inflation of the 1970s, recession of the 1990s, the global financial crisis in 2008 and the pandemic – showing their remarkable resilience.”
There is also a healthy next generation of 33 potential dividend heroes that have increased their dividends for between 10 and 19 consecutive years, with eight new investment trusts joining this list of rising stars.
Poised for promotion are the Artemis Alpha Trust and Murray International Trust, both having increased their annual dividends for 19 years in a row.
New joiners to this up-and-coming group are CT UK High Income Trust, Mercantile Investment Trust, ICG Enterprise Trust, Canadian General Investments, Henderson International Income Trust PLC, RIT Capital Partners, BBGI Global Infrastructure and Greencoat UK Wind PLC (LSE:UKW).
Brodie-Smith noted that the dividend smoothing abilities of trusts helped the contenders list expand this year.
“The eight trusts joining the list this year are from a range of sectors, from renewable energy to UK and global shares. Their ability to keep growing their dividends through challenging times is reassuring – though investors should remember that dividends are never guaranteed.”