The Elite Rated dividend heroes of 2024

The Association of Investment Companies (AIC) published the latest list of 20 dividend heroes last month — investment trusts which have consistently increased their annual dividends for at least 20 years in a row.

Half of the 20 dividend heroes have increased their dividends for 50 or more consecutive years, including Elite Rated City of London Investment Trust, with 57 years of dividend rises and The Global Smaller Companies Trust with 53 years. Murray Income Trust is the most recent addition to the half-century club with 50 years of rises. 

A further five dividend heroes have increased their dividends each year for 30 to 49 years and a further five have raised their dividends for 20 to 29 years in a row.

Annabel Brodie-Smith, Communications Director of the AIC, said: “Despite a tricky few years for the dividend heroes, ten investment trusts now have at least half a century of consecutive annual dividend increases. 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 are an impressive 20 dividend hero investment trusts in total that have increased their dividends every year for more than 20 years. Investment trusts have strong track records of dividend growth because they can hold back up to 15% of the income they receive each year. This allows them to hold more income in reserve when times are good to pay out in leaner years, providing a smoother flow of dividends to investors. Whilst dividends are never guaranteed, investment trusts’ dividend track records demonstrate their durability.”

Elite Rated dividend heroes*

Charles Luke, Investment Manager of Murray Income Trust, commented: “We believe in the simple philosophy that for a portfolio company to grow its dividends over the long term it needs to grow its earnings, and to our mind, high quality companies are best placed to do this. The Murray Income portfolio is jam-packed with high-quality companies exposed to long-term structural growth drivers, such as digital transformation, emerging global wealth, the energy transition and ageing populations, that we believe should provide a tailwind for earnings, and therefore dividends, for years to come.”

Charles tells us more about the importance of focusing on quality companies on the Investing the go podcast. 

The “next generation” of dividend heroes

The AIC’s list of the next generation of dividend heroes also had eight newcomers last month. The next generation are the 33 investment trusts that have increased their dividends for 10 or more consecutive years but less than 20.

Elite Rated next generation dividend heroes**

Read more about record dividends.

Why are dividends so important for investors?

The importance of dividends can work in two ways. In the short term it can be used to pay for monthly bills amid the increasing pressures of the cost of living crisis – with inflation reaching multi-decade highs in 2023.

Longer term, the role of compounding interest is possibly the most important concept people can learn about when it comes to their finances. Investments that generate an income can work even harder for you. By using the income to buy more shares, bonds or units, your pot grows bigger, and you earn interest on that interest again.

For example, take an investment of £1,000 in the FTSE All Share between 1 January 2012 and 28 September 2022. Based on share price changes alone, that £1,000 investment would have produced a notional return of £1,337 before fees. When dividends are included, the return rises to £1,969 before fees – an increase of 47%***.

Learn more about compounding dividends.

*Source: AIC, 12 March 2024

**Source: AIC, 19 March 2024