These dividend heroes have delivered again.
Want a rising income? Look no further than Britain's investment trust sector, where a spate of recent results has seen dividend levels increased yet again.
Foreign & Colonial Investment Trust, for instance, has announced that it will be increasing its dividend for the 41st year in a row. Impressive, yes. But it's a record beaten by Alliance Trust, which announced last week that it has raised its dividend for the 45th year in a row -- a record equalled by City of London Investment Trust and Bankers Investment Trust.
Brunner, meanwhile, recently racked up 40 years of annual dividend increases, while Witan has announced its 37th year of annual dividend increases. Temple Bar, for its part, has delivered 28 years of rising dividends.
What's more, notes investment trust trade body the Association of Investment Companies, these increases come at a time when equity income funds in the open-ended space have cut dividends. According to research from Dennehy Weller & Co, a third of UK equity income funds in the open-ended sector reduced their dividends last year.
Doing the business
No wonder, then, that investment trusts are popular picks here on the Fool. Simply put, they are companies that buy stakes in other companies -- thereby offering the twin lures of active investment management and diversification.
What's more, many have been around for years. Among the very largest trusts, the youngest, Monks, dates back to 1929. The oldest, Foreign & Colonial, dates back to 1868. Alliance Trust, another stalwart, dates from 1888, while Scottish Mortgage goes back to 1909.
Better still, the management cost of an investment trust is a lot lower than in a comparable open‑ended investment fund, where you're paying a typical annual charge of 1.25‑1.75%.
Overall, eight investment trusts have raised their dividends each year for over 40 years, with another two approaching their 40th anniversary of annual dividend increases. And some seven investment companies are well into their third decade of raising dividends.
"The investment company 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," says Annabel Brodie‑Smith, the AIC'S communications director.
And while future dividend increases can never be guaranteed, she explains, 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', and means that many investment trusts are able to continue to pay and boost dividends when times get tough," she says.
So exactly which investment trusts have been delivering rising dividends for decades? Here's a complete list, together with the respective tickers.
Remember -- you can buy investment trusts though your broker, as you would any other share, but some trusts offer cheap or even commission-free monthly purchase plans, too.
|Investment trust||Years of|
|City of London Investment Trust (LSE: CTY)||45|
|Alliance Trust (LSE: ATST)||45|
|Bankers Investment Trust (LSE: BNKR)||45|
|Caledonia Investments (LSE: CLDN)||44|
|Albany Investment Trust (LSE: ABNY)||42|
|Foreign & Colonial Investment Trust (LSE: FRCL)||41|
|F&C Global Smaller Companies (LSE: FCS)||40|
|Brunner Investment Trust (LSE: BUT)||40|
|JPMorgan Claverhouse Investment Trust (LSE: JCH)||39|
|Witan Investment Trust (LSE: WTAN)||37|
|Scottish Mortgage Investment Trust (LSE: SMT)||29|
|Merchants Trust (LSE: MRCH)||29|
|Murray Income Trust (LSE: MUT)||28|
|Scottish Investment Trust (LSE: SIT)||28|
|Temple Bar (LSE: TMPL)||28|
|Value & Income Trust (LSE: VIN)||24|
|Scottish American (LSE: SCAM)||24|
> Malcolm owns shares in Scottish Mortgage.
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