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How have the investment trust dividend heroes performed?

Company payouts are recovering so it is a good time to assess the prospects of dividend-paying investment trusts
How have the investment trust dividend heroes performed?
  • Company payouts are recovering so it is a good time to assess the prospects of dividend-orientated trusts
  • When choosing an income trust it is important to check how its total returns compare with those of its peers
  • Trusts that consistently increase their dividends every year are not necessarily high-income funds

Investment trusts have done extremely well in terms of protecting income investors in the past year, but even they have limits. Link Group's latest Investment Trust Dividend Snapshot reported that total payouts from equity trusts had fallen in the first half of 2021 – the first decline in a decade.

While trusts including Troy Income & Growth (TIGT), Edinburgh Investment (EDIN) and Temple Bar (TMPL) have all announced dividend cuts, others have held the line. The Association of Investment Companies (AIC) says that total trust dividends actually rose by 11 per cent year on year in the first half of 2021, once alternative asset classes were accounted for, and equity trusts broadly shielded investors from the pain of pandemic-era dividend cuts. Analysts at broker Stifel note that although the three names mentioned above cut their payouts, 18 other trusts in the AIC UK Equity Income sector have either maintained or increased their dividend in the first six months of this year. They argue that a handful of cuts have skewed the overall figures.

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