Twenty investment trusts have increased their dividend payment every year for two decades, according to the Association of Investment Companies (AIC). Ten of these so-called “dividend heroes” have gone a step further, stretching this track record to half a century or more.
The three trusts which top the list are the City of London Investment Trust (LON:CTY), the Bankers Investment Trust (LON:BNKRL) and Alliance Witan (LON:ALW). All three have increased their dividend for 58 consecutive years.
The newest addition to the league table with 20 years of growing dividends is the Murray International Trust (LON:MYI), which invests in global stock market opportunities.
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Two of the trusts on the list are also constituents in MoneyWeek’s investment trust portfolio – a model we set up over a decade ago to help readers build a global, long-term, “all-weather” set of investments.
Investment trusts have a unique structure which allows them to hold back up to 15% of their income each year in a dividend reserve. This can then be used in years when companies pay lower dividends than expected.
This feature can make trusts particularly attractive to income-focused investors. In periods like the coronavirus pandemic, when swathes of companies cut or paused their dividends, trusts were able to fall back on these reserves to deliver a smooth income stream.
“Our dividend heroes have shown remarkable resilience whilst continuing to raise their payouts during recent and historic high inflationary periods in the 1970s, the recession of the 1990s, the global financial crisis in 2008 and the pandemic,” said Annabel Brodie-Smith, communications director at the AIC.
“Whilst dividends are never guaranteed, investment trusts’ dividend hero track records are exceptional,” she added.
|
Investment trust |
AIC sector |
Number of consecutive years dividend increased |
Dividend yield (%) |
5-year annualised dividend growth rate (%) |
|
City of London Investment Trust |
UK Equity Income |
58 |
4.72 |
2.06 |
|
Bankers Investment Trust |
Global |
58 |
2.42 |
5.16 |
|
Alliance Witan |
Global |
58 |
2.29 |
13.85 |
|
Caledonia Investments |
Flexible Investment |
57 |
1.88 |
3.49 |
|
The Global Smaller Companies Trust |
Global Smaller Companies |
54 |
1.85 |
11.24 |
|
F&C Investment Trust |
Global |
54 |
1.35 |
5.97 |
|
Brunner Investment Trust |
Global |
53 |
1.87 |
3.52 |
|
JPMorgan Claverhouse |
UK Equity Income |
52 |
4.87 |
4.07 |
|
Murray Income Trust |
UK Equity Income |
51 |
4.68 |
2.52 |
|
Scottish American |
Global Equity Income |
51 |
3.00 |
4.61 |
|
Merchants Trust |
UK Equity Income |
42 |
5.41 |
1.78 |
|
Scottish Mortgage Investment Trust |
Global |
42 |
0.45 |
6.26 |
|
Value and Indexed Property Income |
Property – UK Commercial |
37 |
7.31 |
2.27 |
|
CT UK Capital & Income |
UK Equity Income |
31 |
4.05 |
1.86 |
|
Schroder Income Growth Fund |
UK Equity Income |
29 |
4.90 |
2.75 |
|
Aberdeen Equity Income Trust |
UK Equity Income |
24 |
7.20 |
2.24 |
|
Athelney Trust |
UK Smaller Companies |
22 |
5.60 |
1.26 |
|
BlackRock Smaller Companies |
UK Smaller Companies |
21 |
3.72 |
6.13 |
|
Henderson Smaller Companies |
UK Smaller Companies |
21 |
3.50 |
3.26 |
|
Murray International Trust |
Global Equity Income |
20 |
4.47 |
1.98 |
Source: AIC / Morningstar. Data as of 13 March 2025.
Yield, growth and total return – other factors to consider
While the consistency of dividend payments is important and highlights good governance, it is just one part of the puzzle and should be considered in the round. Investors should also look at dividend yield, dividend growth rate and total returns.
The same goes for all factors. For example, sometimes a high dividend yield can indicate that a large amount of income is being paid out. Other times, it can appear artificially inflated as a result of a falling share price. This is because dividend yield is calculated by dividing a trust’s annual dividend by its current share price.
Some markets also offer higher income potential than others – but the trade-off might be that there are fewer growth opportunities. For example, mature large-cap companies tend to pay higher dividends than their small and mid-cap counterparts which are often more focused on reinvesting their profits in growth projects.
Should you invest in investment trusts?
Despite the strong income opportunities on offer, some investors have been turning away from investment trusts in recent years. Investment platform Interactive Investor reports that trusts saw their average weighting in investor portfolios fall from 22% to 18% between January 2020 and December 2024.
The shift can partly be explained by investors’ increased appetite for cheap passive trackers over actively-managed products, according to Sam Benstead, an investment expert at the platform. The average allocation to exchange-traded funds (ETFs) doubled from 5% to 10% over the same period.
Investors may also feel that ETFs offer them some of the structural advantages they previously sought from trusts. Both are traded on exchanges, for example, and can be bought or sold at any time during trading hours.
That said, investment trusts offer some unique advantages compared to ETFs and mutual funds that investors should be careful not to overlook. Their ability to build up dividend reserves is just one example. Others include:
1. Ability to trade at a discount or premium
As investment trusts trade on an exchange, their share price can differ to the value of their underlying assets (known as net asset value). This is a key difference to mutual funds. Sometimes they trade at a discount and other times they trade at a premium. This can create opportunities for investors to bag a bargain, profiting from a narrowing of the discount as well as underlying investment performance.
“Sometimes discounts are there for a good reason, but sometimes discounts open up because of specific market dynamics and, if you believe that the investments in the fund will perform well in the future, this can present an opportunity to acquire a share in quality assets at an attractive price,” said Victoria Hasler, head of fund research at investment platform Hargreaves Lansdown.
2. Closed-ended structure
Investment trusts issue a fixed number of shares at launch, unlike regular mutual funds which create and cancel shares when new investors want to enter the fund. This can be an advantage because, in an open-ended mutual fund, a fund manager may be forced to sell assets at a loss to meet redemptions. For this reason, trusts can be a particularly useful structure when investing in illiquid assets (like property or infrastructure).
3. Ability to use gearing
Investment trusts are permitted to borrow to invest. This can boost their performance in a rising market, but can also amplify losses in a falling market.
4. Independent board of directors
Trusts have an independent board of directors whose job is to look out for shareholder interests. As part of this role, they monitor performance and hold the fund manager accountable. This generally helps to promote good governance.
