Mark Barnett-managed investment trust Perpetual Income & Growth (PLI) has become the latest addition to the Association of Investment Companies’ (AIC) closely followed cohort of so-called ‘dividend heroes’, a list published by the investment trust industry trade body that reveals those investment companies that have upped their dividends each year for 20 years or more.
READ MORE ABOUT PERPETUAL INCOME & GROWTH HERE
While the list helps investors to spot products with a dividend growth track record, as Shares explains here, it doesn’t tell you the level of growth and what it would be in ‘real terms’ when adjusting for inflation.
DIVIDEND HEROES’ NEW RECRUIT
With its latest dividend declaration (23 May), the Invesco-managed Perpetual Income & Growth attained its 20th year of consecutive dividend increases. Having achieved this milestone, there are now 21 investment trusts that have hiked the dividend each year for two decades or more.
Click here to view the list, which is headed up by City of London Investment Trust (CTY), Bankers Investment Trust (BNKR), Alliance Trust (ATST) and Caledonia Investments (CLDN), a quartet with more than half a century of consecutive dividend increases under their belts.
The concept of dividend heroes has really taken off in recent years with qualifying investment trusts eager to hold on to their position within the AIC’s index.
It can be seen a valuable marketing tool, which is why investment trusts do their upmost to stay in the index. The risk is that investors may only get a small increase in the dividend. After all, a trust would only need 0.01% annual dividend growth to stay classified as a dividend hero once they’ve qualified for the 20-year growth stretch.
BARNETT’S CORE PRINCIPLES
Invesco star fund manager Barnett has managed the trust for past 20 years and insists this long-term success is ‘a result of the trust’s core principles, namely the construction of a high conviction portfolio, an active approach to stock selection and the pursuit of businesses that can be bought and held for the long term.’
Perpetual Income & Growth is invested in the likes of oil major BP (BP.), British American Tobacco (BATS), cash generative retailer Next (NXT) as well as the UK’s dominant grocer Tesco (TSCO).
‘As portfolio manager I continue to pursue companies that can grow their dividend payments ahead of inflation, consistent with Perpetual Income & Growth Investment Trust’s objective of achieving capital growth and real growth in dividends over the medium to longer term,’ adds Barnett.
Annabel Brodie-Smith, the AIC’s Communications Director, says: ‘It’s a great achievement that 21 investment companies have now increased their dividends for 20 or more consecutive years. Investment companies have the unique ability to “smooth” dividends, which means they can tuck away up to 15% of the income they receive each year and use this to boost dividends in leaner times.’
