There are now 20 investment trusts holding ‘Dividend Hero’ status after growing their payouts to shareholders for at least 20 years in a row, the Association of Investment Companies has announced.
Henderson Smaller Companies was added to list after it announced its final dividend last Thursday, taking the total for the year to 26p a share. This is an 8.3% increase on last year and marked the trust’s 20th consecutive year of dividend increases.
Neil Hermon, portfolio manager of Henderson Smaller Companies Investment Trust, said: “Our investment style is to target profitable, growing, cash-generative, dividend-paying companies. This strategy has seen the income generated by the trust grow significantly, enabling us to grow dividends to our shareholders every year for the last 20 years and at a compound rate of 21.8% per year.
“We believe dividends are an important component of total return, both in our portfolio but also to our shareholders. We believe that our investment approach can generate good long-term capital returns for shareholders whilst also providing a growing income stream from dividends.”
Other recent newly minted Dividend Heroes include BlackRock Smaller Companies, which joined the list in May.
Roland Arnold, manager of BlackRock Smaller Companies, said: “Whilst it is not the strategy of the trust to specifically target high yielding companies, our focus on businesses that generate a high return on capital typically results in high levels of cash flow generation. We encourage management teams to invest this surplus cash in high return projects, which also provides the opportunity for a sustained dividend that grows in line with the companies themselves. So while dividends are a welcome return to our investors, we see them as a by-product of a successful growth strategy.”
At the list’s previous update earlier this year, there were 18 Dividend Heroes. That time around, Athelney Trust had just been awarded Dividend Hero status after crossing the 20-year dividend increase threshold.
Source: AIC
AIC communications director Annabel Brodie-Smith said: “Congratulations to the three investment companies that have achieved Dividend Hero status this year. It’s a real achievement to consistently increase dividend payments to shareholders for 20 years or more.
“It’s interesting to see that all three new entrants to the dividend heroes list this year are in the UK Smaller Companies sector. Smaller companies are often associated with growth rather than income, but these three investment companies show that they can also provide consistently growing dividends.”