Recent dividend announcements from some of Britain’s oldest, largest, and best known investment companies confirm that the investment company sector is the undisputed ‘dividend hero’ of the collective investment world.
Alliance Trust today announced its 46th annual dividend increase in a row putting it alongside City of London Investment Trust which has a 46 year history of consecutive dividend increases.
Alliance Trust is the latest of several investment companies to recently announce yet another consecutive annual dividend increase. Only last week, Foreign & Colonial announced its 42nd annual dividend increase, whilst Witan recently announced its 38th annual dividend increase in a row. Similar announcements have recently come from JPMorgan Claverhouse (40 years), Brunner (41 years) and Temple Bar (29 years).
The Association of Investment Companies (AIC) has published a list of member investment companies with the longest dividend track records (see below). Over ten years, 29 member investment companies have increased their dividends consecutively for the last ten years.
Annabel Brodie-Smith, Communications Director, Association of Investment Companies (AIC) said: “With interest rates at record lows, investors need to put their money to work in order to achieve any kind of yield. So it is encouraging to see that investment company investors are being rewarded for taking on the additional risk that comes with equity investment, with so many of Britain’s oldest, largest and well-known investment companies announcing dividend increases year after year.
“Investment companies have a structural advantage over other types of collective investment because they are able to squirrel away some 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 companies are able to continue to pay and boost dividends through both the good times and the bad.”