45 Years of Dividend Growth

Income-seeking investors may want to take another look at investment trusts

Alanna Petroff 12 March, 2012 | 1:57PM
Facebook Twitter LinkedIn

A handful of dividend-paying investment trusts have been steadily increasing their dividend for the last 45 years, according to Morningstar data and the latest research from the Association of Investment Companies (AIC). City of London Investment Trust (CTY), Alliance Trust (ATST) and Bankers Investment Trust (BNKR) are three closed-end funds that have been able to consistently increase their dividends over the last 45 years, regardless of market peaks and troughs, according to Morningstar data. Caledonia Investments (CLDN) also has a solid track record, with 44 consecutive years of dividend boosts.

"The investment [trust] sector has a long and proud history of delivering returns for shareholders, and what many shareholders are increasingly looking for is a reliable dividend in unreliable times. Investment companies have been aware of the importance of yield for years and the sector’s dividend track record is unparalleled,"said Annabel Brodie-Smith, communications director at AIC, which is a trade organisation for UK-based investment trusts. "Of course dividend increases can never be guaranteed, but investment trusts have a structural advantage over other funds because they are able to squirrel away up to 15% of the income they receive each year into their revenue reserves to help boost dividends in more difficult years. This is known as 'dividend smoothing'."

Jackie Beard, director of closed-end fund research at Morningstar UK, says investment trusts continue to present an opportunity for income-seeking investors.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.