by Faith Glasgow from interactive investor, 27th January 2025:
When it was introduced back in 2009, the Association of Investment Companies’ (AIC) Dividend Heroes concept was a stroke of marketing genius.
It highlighted the 19 investment trusts that had maintained or increased payouts to shareholders for more than 20 consecutive years, regardless of the ups and downs of the wider economy or the stock market. City of London led the pack (as it still does), with 42 years of increasing dividends..
In the 15 years since launch, dividend hero status has become a badge of honour and a valuable marketing tool for the 20 or so trusts that have made it into the premier league list (the AIC has also launched a “new generation” league of trusts with more than 10 years of dividend growth).
But it is important to understand clearly what the term tells us about the trusts in the table – and what it doesn’t.
As Andrew McHattie, publisher of the Investment Trust Newsletter, observes: “The idea of buying shares from a list of heroic trusts that have somehow battled through regularly stormy seas to continue growing dividends for shareholders is highly appealing – but scratch beneath the surface, and all is not so clear-cut.”
To that end we asked research consultancy QuotedData to crunch some dividend hero data for us (to 11 December 2024), and had a closer look at it. Each data point is the five-year annualised return. Over this period, inflation’s five-year annualised percentage figure is 4.51% – Consumer Price Index.
Read more here