Email of the day on UK listed investment trusts' history of dividend growth
Comment of the Day

March 31 2020

Commentary by Eoin Treacy

Email of the day on UK listed investment trusts' history of dividend growth

I was interested in your comments about companies which have a long record of paying dividends. It is maybe worth mentioning that a good number of UK registered investment trusts have long records of increasing dividends year by year. They tend to have reserves which can be used to bolster pay outs in years when dividend income comes under pressure. Regards from Scotland

Eoin Treacy's view

Thank you for your kind email and this reminder that Scotland has a long history of investments that concentrate on dividends. It took several hours today, but I was finally able to compile a reasonably complete list of UK listed investment trusts with admirable records of dividend increases. It turns out there is no easy way to compile the data so I did the grunt work of eyeballing the dividend histories of all 145 trusts with histories of dividend growth.

As far as I can see there are only two which have never cut their dividend in 31 years of history. Three have not cut their dividend in at least 28 years and three more have maintained that feat for more than 20 years.

Scottish American Investment Company PLC has never cut its dividend and invested in US dividend paying stocks. It has unwound about half of the massive decline posted in March over the last week and yields 3.4%

Merchants Trust Plc has also never cut its dividend and invests in UK companies. With a heavy energy weighting its rebound has been relatively muted so far but it is currently yielding 7.4%.

City of London Investment Trust yield 5.86% and has sustained its dividend for 28 years. The Trust invests in UK companies but appears to have smaller energy weighting than Merchants Trust.

Murray International Trust has sustained its dividend for 28 year and invests globally. It currently yields 6.13%.

TR Property Investment Trust is trading at a discount to NAV of 9.3% and invests in Pan European property. It currently yields 4.35%.

Witan Trust invests in global growth but with a focus on developed markets and has not cut its dividend in 21 years.

Henderson Smaller Companies Trust has not cut its dividend in 18 years and invests in UK listed smaller companies.

Here is a link to the spreadsheet. You will also see that H column some of the numbers have a ‘?’ next to them. That denotes they have cut the dividend once in their history but soon recovered.

We can see from the above examples that is quite possible to compile a globally diversified portfolio of investment trusts with solid histories of delivering sold dividends.

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