Why only Investment Trusts ?

CTY has an unmatched record of delivering consecutive years of dividend growth, now having reached 57 years. This is the longest continuous period of any investment trust and means CTY is top of the AIC’s ‘Dividend Heroes’ list. This is not to say that underlying earnings have increased each and every year.

Investment trusts have the ability to retain up to 15% of each year’s income in reserve and use this reserve in future years to smooth dividends if revenues subsequently fall. One such year was 2020, with many portfolio holdings cutting or passing on dividend payments in the face of the economic shock brought on by the COVID-19 pandemic. CTY was able to continue to pay an ever-increased level of dividends through the crisis, allowing earnings to catch back up again with the dividend by 2022 when the dividend was once again covered. CTY’s dividend was marginally covered in 2023. Total revenues over the first half of the current financial year, which ends in June 2024 were up, but earnings per share only increased marginally thanks to the short-term dilutive effect of share issuance so far this year. We understand that income generation is in any event biased towards the second half of CTY’s financial year, when many of the big income stocks pay their final dividends. The board has stated that it is confident that it will be able to continue to increase the annual dividend this year.