The Definitive Dividend Hero
20 investment companies made it onto the AIC’s list of 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
Back in Q1 2024, the Association of Investment Companies (AIC) published its latest list of Dividend Heroes – those investment companies that have increased their annual payouts for at least 20 consecutive years. No mean feat considering the last two decades have seen a pandemic, a financial crash and a European sovereign debt crisis. While all funds on the list are to be commended, to continue to qualify as a Dividend Hero and maintain a track record of 20 plus years of growth, a trust, in theory, only has to raise its payout by the smallest of margins. And then again, if a Hero’s dividend yield is relatively small, how valuable is it to investors looking for income to help tackle the cost-of-living squeeze? We thought we’d repeat the exercise we carried out last year and look to identify which fund is the definitive Dividend Hero.
The Heroes
First, the AIC’s latest list of Dividend Heroes:
| 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 | 5.12 | 2.58 |
| Bankers | Global | 57 | 2.31 | 5.36 |
| Alliance | Global | 57 | 2.10 | 13.20 |
| Caledonia Investments | Flexible Investment | 56 | 2.06 | 3.41 |
| The Global Smaller Companies | Global Smaller Cos. | 53 | 1.50 | 9.82 |
| F&C Investment Trust | Global | 53 | 1.50 | 5.97 |
| Brunner | Global | 52 | 1.78 | 4.58 |
| JPMorgan Claverhouse | UK Equity Income | 51 | 5.18 | 4.64 |
| Murray Income | UK Equity Income | 50 | 4.57 | 2.43 |
| Scottish American | Global Equity Inc | 50 | 2.83 | 4.16 |
| Witan | Global | 49 | 2.48 | 5.14 |
| Merchants | UK Equity Income | 41 | 5.24 | 2.16 |
| Scottish Mortgage | Global | 41 | 0.52 | 5.96 |
| Value and Indexed Property Inc | Property – UK Com | 36 | 7.13 | 2.50 |
| CT UK Capital & Income | UK Equity Income | 30 | 3.90 | 2.10 |
| Schroder Income Growth | UK Equity Income | 28 | 5.21 | 3.18 |
| abrdn Equity Income | UK Equity Income | 23 | 8.42 | 3.50 |
| Athelney Trust | UK Smaller Cos. | 21 | 5.37 | 1.49 |
| BlackRock Smaller Companies | UK Smaller Cos. | 20 | 2.95 | 9.00 |
| Henderson Smaller Companies | UK Smaller Cos. | 20 | 3.29 | 4.36 |
Source: theaic.co.uk / Morningstar. Correct at 08/03/24.
A Couple of Observations
The list has grown. Twelve months ago, 18 funds made it onto the list. Fast forward a year and the complement of Heroes now stands at 20, courtesy of new entries BlackRock Smaller Companies and Henderson Smaller Companies.
With seven names, the UK equity income sector is the largest contributor to the list and half of the Heroes have now raised their dividends each year for half a century or more.
We have our heroes. Now, to rank them.
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