Foresight Environmental Infrastructure, Diverse Income and Utilico Emerging Markets have entered the Association of Investment Companies’ (AIC) next generation of dividend heroes list, the trade body announced on Monday.
The list comprises the investment trusts that have increased their payouts each year for between 10 and 20 years.
In total, 30 investment companies are on the list, including Schroder Oriental Income and BlackRock Greater Europe, which are now one year away from gaining the full ‘Dividend Hero’ status, which requires trusts to have upped dividends for two decades or more.
Foresight Environmental Infrastructure and Utilico Emerging Markets both entered the list after raising their payouts for 10 years.
The former is a Guernsey-listed £458m trust centred around investing in private infrastructure assets that deliver stable returns, as well as long-term, predictable income and that have opportunities for growth. They must also support the drive towards decarbonisation and sustainable resource management.
Charlie Wright, co-lead investment manager of Foresight Environmental Infrastructure, said the trust offers investors access to a diversified portfolio of “otherwise hard-to-reach” private environmental infrastructure assets.
The trust has a dividend yield of 10.93% and has increased its payments by 3.21% annualised over the past five years.
“Since launch, the trust’s board has consistently prioritised delivering a steady and growing income for shareholders. The dividend remains a key attraction for our investors, particularly retail shareholders, and we are on track to deliver our 11th consecutive year of dividend growth, with a target dividend of 7.96p per share and projected dividend cover for the current year of between 1.2 and 1.3x.”
Utilico Emerging Markets, meanwhile, invests in infrastructure and utility stocks in the emerging markets. It has a dividend yield of 3.5% and has upped its dividend by an average of 3.79% each year over the past five years.
Co-manager Jacqueline Broers, said listed infrastructure and utility companies are “crucial to the growth and development of many emerging markets”.
“These companies generate stable, growing cashflows, often underpinned by regulatory frameworks, which support our ability to pay consistently growing dividends.”
The third entrant to the list this year is Diverse Income Trust, which jumps in with 13 years of dividend increases. It had previously been left off the list due to a 0.5p dividend paid in 2015.
Special dividends are not included in the calculations for dividend heroes, but this additional payment was not labelled as a special one-off payment.
As a result, in prior years it has been included in the trust’s underlying dividend data, meaning its 2016 payout was lower than its 2015 figure. After consultation, the AIC decided that it was a special dividend and so has removed it from the calculations this year, giving the trust 13 years of increases.
In total, the list has the same number of trusts as last year, with three companies removed. BBGI Global Infrastructure (previously 10 years of increases) was bought by private equity and delisted, while Henderson International Income (11 years) was merged with JPMorgan Global Growth & Income.
Chelverton UK Dividend Trust has also dropped off the list as it has made three interim payments of 2.5p per share during its current financial year, down from 3.25p in the previous 12 months.
| The next generation of dividend heroes | |||
| Investment trust | AIC sector | Number of consecutive years dividends increased | Dividend yield |
| Schroder Oriental Income | Asia Pacific Equity Income | 19 | 3.28% |
| BlackRock Greater Europe | Europe | 19 | 1.35% |
| CQS New City High Yield Fund | Debt - Loans & Bonds | 18 | 9.15% |
| Henderson Far East Income | Asia Pacific Equity Income | 18 | 9.98% |
| International Public Partnerships | Infrastructure | 17 | 6.75% |
| Aberdeen Asian Income Fund | Asia Pacific Equity Income | 17 | 5.88% |
| Fidelity Special Values | UK All Companies | 16 | 2.34% |
| Lowland | UK Equity Income | 16 | 4.13% |
| Law Debenture Corporation | UK Equity Income | 16 | 3.30% |
| Invesco Global Equity Income Trust | Global Equity Income | 15 | 3.90% |
| TR Property | Property Securities | 15 | 5.08% |
| Aberforth Smaller Companies | UK Smaller Companies | 15 | 3.15% |
| Fidelity European | Europe | 15 | 2.54% |
| North American Income Trust | North America | 14 | 3.08% |
| Dunedin Income Growth | UK Equity Income | 14 | 6.61% |
| CT Global Managed Portfolio Income | Flexible Investment | 14 | 6.15% |
| Fidelity China Special Situations | China / Greater China | 14 | 2.74% |
| Diverse Income Trust | UK Equity Income | 13 | 4.09% |
| CT Private Equity Trust | Private Equity | 13 | 5.88% |
| Henderson High Income | UK Equity & Bond Income | 13 | 5.83% |
| Mid Wynd International | Global | 13 | 1.18% |
| CT UK High Income Trust | UK Equity Income | 12 | 5.17% |
| Mercantile Investment Trust | UK All Companies | 12 | 3.21% |
| ICG Enterprise Trust | Private Equity | 12 | 2.87% |
| Canadian General Investments | North America | 12 | 2.27% |
| RIT Capital Partners | Flexible Investment | 12 | 2.00% |
| Patria Private Equity Trust | Private Equity | 11 | 3.23% |
| Foresight Solar Fund | Renewable Energy Infrastructure | 11 | 12.70% |
| Utilico Emerging Markets Trust | Global Emerging Markets | 10 | 3.50% |
| Foresight Environmental Infrastructure | Renewable Energy Infrastructure | 10 | 10.93% |
Source: AIC, Morningstar
Annabel Brodie-Smith, communications director of the AIC, said: “Half of these next generation trusts yield more than the Bank of England’s base rate of 3.75%.”
“The list is testament to the many advantages investment trusts offer for income seekers. They are able to smooth dividends over time because they can hold back income from their portfolio and use this to boost dividends in leaner years.
“Investment trusts can also pay income out of their capital profits if they choose, and their structure is particularly suitable for high yielding but hard-to-sell assets such as infrastructure and property.”