Investment companies increase dividends in falling markets
Global markets have been spooked by the coronavirus outbreak in recent weeks, but 21 investment companies have increased their dividends for more than two decades.
The Association of Investment Companies (AIC) has today published a list of its 21 “dividend heroes” which have consistently increased their dividends for 20 or more years.
Canada Investment Trust, Bankers Investment Trust and Alliance Trust lead the way with 53 years of consecutive rises, followed closely by Caledonia Investment with 52 years of increases.
So far this year, seven of AIC’s dividend heroes have announced a further year of increases. Today F&C Investment Trust increased its dividend 5.5 per cent, bringing the total dividend for the year to 11.6 pence per share. It is the firm’s 49th consecutive annual increase.
Last week, Witan Investment Trust announced its 45th consecutive year of annual increase, while Alliance Trust announced its 53rd earlier this month.
Annabel Brodie-Smith, Communications Director of the AIC said: “With the market turmoil of the past few weeks, it’s comforting to know that the 21 dividend heroes have been raising their dividends through thick and thin for decades.”
“Whilst there’s no guarantee, the fact investment companies can save up to 15% of their income each year has helped them to carry on raising dividends through such intense market downturns as the 1987 crash, the dot com bubble bursting and the financial crisis.”
“With the difficulties facing markets at the moment, the power of investment companies to deliver rising dividends is reassuring for investors.”
The key to their success is investment firms’ income advantage. Unlike open-ended funds, investment companies can hold back up to 15 per cent of the income they receive from their portfolio each and put it into a revenue reserve.
Alex Crooke, fund manager of the Bankers Investment Trust said: “We recognise the importance of delivering a reliable and growing income to shareholders and over recent years have built the revenue reserves to cope with the fluctuations of currencies or the need to prioritise asset allocation decisions towards lower yielding markets.”