by Kyle Caldwell from interactive investor, 27 June 2023:
Research for interactive investor examined whether 19 investment trusts have beaten inflation over the past five years in terms of dividend growth, share price and net asset value (NAV) returns.
The minimum aim of every investor should be to ensure that over the long term the returns they receive from their investments are above and beyond the rate of inflation.
There’s plenty of debate over whether inflation will cool in the coming months given that core inflation continues to surprise on the upside. As far as investors are concerned, staying ahead of price rises has become more difficult than usual.
In the face of high inflation, there’s plenty of appeal in sizing up ‘dividend hero’ investment trusts in the hope that boards will continue to increase income payments to maintain their reliable dividend records.
In total, there are 19 investment trusts with dividend hero status, having raised payouts for at least 20 consecutive years. Of those 19, eight have increased their dividends for 50 or more consecutive years.
Such consistency is highly prized by investors, with many of the dividend heroes regularly featuring in our monthly most-bought investment trust league tables..
However, there’s a couple of drawbacks for investors buying the dividend heroes for income generation. In some cases, the dividend yields are low – with some below 2%. In addition, at times there’s been instances of dividend increases being meagre to simply keep the hero status.
With this in mind, we asked investment trust analyst QuotedData to crunch some numbers to find out how the 19 dividend heroes fared over the past five years versus inflation, factoring in dividend growth, the net asset value (NAV) performance, and the overall shareholder total return.
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