
Looking for reliable investment income? Try these dividend heroes
After what has been a torrid year for income investors, with UK dividends falling 41%, some good news finally: six investment trusts have now raised their dividends for the past 50 consecutive years or more and the next generation of ‘dividend heroes’ continues to grow.
The Association of Investment Companies (AIC) has published its latest list of dividend heroes – investment companies that have consistently increased their dividends for 20 years or more in a row.
City of London is top of the rankings, with 54 years of dividend increases. BMO Global Smaller Companies is also among the top six, having raised its dividend for 50 years.
Other dividend heroes include newly Elite Rated Murray Income (47 years of increases), Scottish Mortgage (38 years) and Schroder Income Growth (25 years).
Sue Noffke, who has been running Schroder Income Growth for the past decade, explained more about how she used the revenue reserve in 2020 – but has plenty left should it be needed again – in this podcast recorded in March 2021:
At a time when resilient income streams have never been more important for investors, recent research from the AIC found that 85% of equity income-paying investment companies increased or maintained their dividends in 2020 compared to 23% of income-paying open-ended funds.
Annabel Brodie-Smith, communications director for the AIC, commented: “Against the challenging backdrop of 2020 it’s encouraging to see that investment companies’ structural benefits came to the fore and delivered for investors. Investment companies’ ability to save up to 15% of their income each year to boost pay-outs in difficult years is a huge income advantage. It has helped the dividend heroes achieve their remarkable track records of consistent dividend growth., with four stretching as far back as the 1960s.”
Find out more about revenue reserves in this short video:
Next generation of dividend heroes
Waiting in the wings are the next generation of dividend heroes – those investment companies that have raised their dividends of each of the past 10 or more years. Among the 23 names are five Elite Rated offerings.
Murray International has increased its dividend for the past 16 years, Schroder Oriental Income for the past 13 years and Fidelity Special Values and Lowland both for 11 years.
TR Property is a new joiner this year having recently notched up a decade of increases.
Elite Rated dividend heroes and next generation dividend heroes:
Investment trust | Number of consecutive years dividend increased | Yield (%) |
City of London | 54 | 5.1%* |
BMO Global Smaller Companies | 50 | 1.1%* |
Murray Income | 47 | 4.1%* |
Scottish Mortgage | 38 | 0.3%* |
Schroder Income Growth | 25 | 4.3%* |
Murray International | 16 | 4.5%** |
Schroder Oriental Income | 13 | 3.7%** |
Fidelity Special Values | 11 | 2.2%** |
Lowland | 11 | 4.8%** |
TR Property | 10 | 3.6%** |
*Source: AIC, 12 March 2021
**Source: AIC, 19 March 2021