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10 investment trust dividend heroes
by David Campbell on Mar 13, 2013 at 13:06
Recent payouts increases from some of Britain’s oldest, largest, and best known investment companies continue a trend that in some cases dates back to the 1960s.
One of three trusts to occupy a joint first in the Assoication of Investment Companies' (AIC's) top ten trusts which have consistently grown their dividend over a number of years. The City of London investment trust currently yields 4.52%, following 46 years of rising dividends.
Earnings per share in the fund rose by 2.2% in the second half of 2012, with a capital return of 9.6% over the second half juiced by gearing of 9%. The trust trades at a premium of 0.1%.
The Scottish retail champion has received its fair share of stick from both professional investors and the press over its investment performance, but you can’t fault a 46 year record of dividend gains.
Alliance Trust currently yields 2.61%, increasing its dividend 7.1% in 2012 on a 12.1% capital gain, following (another) major overhaul of its investment strategy. Here’s hoping they got it right this time.
The third fund with a record of unbroken dividend gains dating back to when the Beatles were still a going concern, Alex Crooke’s trust grew its dividend 9.4% in 2012, currently yielding 2.81%.
Gross revenue rose 13.4% on 2011, with underlying investment income up 11.9%. Over the last three years the trust has offered a capital return of 33.84% versus the FTSE World return of 31.16%.
The venerable family-dominated, private-equity heavy Caledonia comes up just short of the leading three with a 45 year track record of dividend gains, currently yielding 2.42%.
The income component of the portfolio currently yields around 5%, a 10% gain over the first half of 2012, although a strategic overhaul of the fund over the last two years means this is largely uncovered.
The world’s oldest investment trust upped its dividend 20% in 2012, the 42nd consecutive year of rising income, and has scheduled a 5.9% increase in its first dividend of the year, currently yielding 2.6%.
Manager Jeremy Tigue was sharing the proceeds of a strong year for the trust, with its portfolio up 13.3% over the full year. The 2012 dividend was uncovered however, at 8.5p versus 7p revenue, with Tigue hoping to return to cover by 2016 following the expiry of a debenture costing 0.9p per share.
F&C’s slightly younger sister fund, F&C Global Smaller Companies, matches its dividend track record with a 2012 gain of 22.7% the 42nd year of consecutive gains taking it to a yield of 3.26%.
Partially this increase was the trust’s stated aim of reducing the wide margin between its interim and annual payments, so the strong gains may not be replicated in the full-year.
The global generalist upped its dividend 3.9% in 2012, its 41st year of increases, with a per-share payout of 13.3p well covered by earnings of 13.34p, and equivalent to a yield of 2.75%.
The portfolio is split broadly 50/50 between UK and overseas assets, excluding the 12% of the fund held in gilts as a partial offset against the portfolio gearing.
The trust opted to move from the AIC UK Growth to a Growth & Income classification last year to better reflect its level of income, which in its 40th year of gains increased 3.3% last year to 18.85p per share, a current yield of 3.68%.
Performance has also partially turned around after several disappointing years, with the combination of factors bringing this discount back in sharply, although it still stands at 8.5%.
A potential role model for Alliance Trust as it seeks to attract a wider audience, Witan has become more responsive to markets in recent years without sacrificing its dividend, increasing its interim dividend 9% in the first half of 2012 to 6p, equivalent to a yield of 2.23%, marking 38 years of gains.
Chief executive Andrew Bell has a broad hit rate of two out of three good years since taking over in 2010, with a sophomore year of strong performance followed by a disappointing 2011, bouncing back somewhat last year.
The trust covered its dividend for the first time since 2009 last year, with earnings per share of up 9.7% to 10.2p in a healthy year for equity income, outstripping a dividend increase of 3% to 9.8p.
That marked the 33rd year of gains and took the yield to 3.91%.