Looking for reliable investment income? Try these dividend heroes

Chris Salih 29/03/2021 in Income investing

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 trustNumber of consecutive years dividend increasedYield (%) 
City of London545.1%*
BMO Global Smaller Companies501.1%*
Murray Income474.1%*
Scottish Mortgage380.3%*
Schroder Income Growth254.3%*
Murray International164.5%**
Schroder Oriental Income133.7%**
Fidelity Special Values112.2%**
TR Property103.6%**

*Source: AIC, 12 March 2021
**Source: AIC, 19 March 2021

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.