The Definitive Dividend Hero
20 investment companies made it onto the AIC’s list of Dividend Heroes this year, two more than 12 months ago. But based on number of years of growth, level of dividend yield and 5-yr dividend growth rate, which comes out top?
By Frank Buhagiar
Degrees of Heroism
Quick refresh of the ranking process. Heroes are something of a mixed bag. Some trusts have notched up 50 plus years of dividend growth but have relatively small yields. Then there are those that boast higher yields but have shorter track records of consecutive annual dividend growth. There are also those trusts that have relatively small yields but above average dividend growth rates. Begs the question, which is more valuable – longevity, level of payout, or growth rate?
For the purposes of this exercise, equal weightings are attached to the three right-hand columns on the AIC list – ‘Number of consecutive years dividend increased’; ‘Dividend yield (%)’; and ‘5-year annualised dividend growth rate (%)’.
In terms of the scoring system itself: the higher the number of years of consecutive dividend increases, dividend yield and 5-year annualised dividend growth rate, the higher the trust scores. The trusts are ranked based on their relative standing in each of the three columns with the highest ranking ascribed 20 points (20 trusts in the pool). For example, the two newbies, BlackRock Smaller Companies and Henderson Smaller Companies receive the lowest points in the longevity category as they have ‘only’ increased their payouts for 20 consecutive years. City of London, Bankers and Alliance have the longest track records and so collect the full 20 points on offer.
The trust with the highest score wins the day and we have the ‘Hero of Heroes’.
The Scores
The table below includes the AIC’s original list with the results of the scoring system in brackets:
| Investment Trust | AIC Sector | Number of Consecutive Years Dividend Increased | Dividend Yield (%) | 5-year Annualised Dividend Growth Rate (%) |
|---|---|---|---|---|
| City of London | UK Equity Income | 57 (20) | 5.12 (14) | 2.58 (6) |
| Bankers | Global | 57 (20) | 2.31 (7) | 5.36 (15) |
| Alliance | Global | 57 (20) | 2.10 (6) | 13.20 (20) |
| Caledonia Investments | Flexible Investment | 56 (17) | 2.06 (5) | 3.41 (8) |
| The Global Smaller Companies | Global Smaller Cos. | 53 (16) | 1.50 (3) | 9.82 (19) |
| F&C Investment Trust | Global | 53 (16) | 1.50 (3) | 5.97 (17) |
| Brunner | Global | 52 (14) | 1.78 (4) | 4.58 (12) |
| JPMorgan Claverhouse | UK Equity Income | 51 (13) | 5.18 (15) | 4.64 (13) |
| Murray Income | UK Equity Income | 50 (12) | 4.57 (13) | 2.43 (4) |
| Scottish American | Global Equity Inc | 50 (12) | 2.83 (9) | 4.16 (10) |
| Witan | Global | 49 (10) | 2.48 (8) | 5.14 (14) |
| Merchants | UK Equity Income | 41 (9) | 5.24 (17) | 2.16 (3) |
| Scottish Mortgage | Global | 41 (9) | 0.52 (1) | 5.96 (16) |
| Value and Indexed Property Inc | Property – UK Com | 36 (7) | 7.13 (19) | 2.50 (5) |
| CT UK Capital & Income | UK Equity Income | 30 (6) | 3.90 (12) | 2.10 (2) |
| Schroder Income Growth | UK Equity Income | 28 (5) | 5.21 (16) | 3.18 (7) |
| abrdn Equity Income | UK Equity Income | 23 (4) | 8.42 (20) | 3.50 (9) |
| Athelney Trust | UK Smaller Cos. | 21 (3) | 5.37 (18) | 1.49 (1) |
| BlackRock Smaller Companies | UK Smaller Cos. | 20 (2) | 2.95 (10) | 9.00 (18) |
| Henderson Smaller Companies | UK Smaller Cos. | 20 (2) | 3.29 (11) | 4.36 (11) |
The Final Table
With scores totted up:
| Investment Trust | Number of Consecutive Years Dividend Increased | Dividend Yield (%) | 5-year Annualised Dividend Growth Rate (%) | Overall Score |
|---|---|---|---|---|
| City of London | 20 | 14 | 6 | 40 |
| Bankers | 20 | 7 | 15 | 42 |
| Alliance | 20 | 6 | 20 | 46 |
| Caledonia Investments | 17 | 5 | 8 | 30 |
| The Global Smaller Companies | 16 | 3 | 19 | 38 |
| F&C Investment Trust | 16 | 3 | 17 | 36 |
| Brunner | 14 | 4 | 12 | 30 |
| JPMorgan Claverhouse | 13 | 15 | 13 | 41 |
| Murray Income | 12 | 13 | 4 | 29 |
| Scottish American | 12 | 9 | 10 | 31 |
| Witan | 10 | 8 | 14 | 32 |
| Merchants | 9 | 17 | 3 | 29 |
| Scottish Mortgage | 9 | 1 | 16 | 26 |
| Value and Indexed Property Inc | 7 | 19 | 5 | 31 |
| CT UK Capital & Income | 6 | 12 | 2 | 20 |
| Schroder Income Growth | 5 | 16 | 7 | 28 |
| abrdn Equity Income | 4 | 20 | 9 | 33 |
| Athelney Trust | 3 | 18 | 1 | 22 |
| BlackRock Smaller Companies | 1 | 10 | 18 | 29 |
| Henderson Smaller Companies | 1 | 11 | 11 | 23 |
A Quick Reordering
And we have a final table of heroes ranked in terms of heroism with last year’s scores/rankings in brackets:
| Investment trust | Score | Ranking | ||
|---|---|---|---|---|
| Alliance | 46 (43) | 1 (1) | ||
| Bankers | 42 (35) | 2 (4) | ||
| JPMorgan Claverhouse | 41 (39) | 3 (2) | ||
| City of London | 40 (38) | 4 (3) | ||
| The Global Smaller Companies | 38 (33) | 5 (6) | ||
| F&C Investment Trust | 36 (29) | 6 (9) | ||
| abrdn Equity Income | 33 (35) | 7 (5) | ||
| Witan | 32 (32) | 8 (8) | ||
| Scottish American | 31 (29) | 9 (10) | ||
| Value and Indexed Property Inc | 31 (27) | 10 (12) | ||
| Caledonia Investments | 30 (27) | 11 (11) | ||
| Brunner | 30 (32) | 12 (7) | ||
| Murray Income | 29 (23) | 13 (14) | ||
| Merchants | 29 (24) | 14 (13) | ||
| BlackRock Smaller Companies | 29 (-) | 15 (-) | ||
| Schroder Income Growth | 28 (22) | 16 (15) | ||
| Scottish Mortgage | 26 (17) | 17 (18) | ||
| Henderson Smaller Companies | 23 (-) | 18 (-) | ||
| Athelney Trust | 22 (17) | 19 (16) | ||
| CT UK Capital & Income | 20 (17) | 20 (17) |
The Definitive Dividend Hero
For the second year in a row, Alliancesits atop of the tree. Bankers jumps two places to second from fourth last year. JPMorgan Claverhouse and City of London both drop one place to third and fourth respectively. Mention in dispatches goes to Scottish Mortgage for the largest points increase – 17 to 26. Ditto for biggest climb up the rankings, F&C Investment Trust from ninth to sixth. And for strongest newcomer BlackRock Smaller Companies in 15th place.
Of course, all the funds that make it on to the AIC’s list are heroes. Sadly, only one can be the winner and that’s Alliance, whom we sat down with for an update earlier this month.
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