Investment trusts uniquely have decade’s long records of ever increasing dividends


#1

Originally published at: http://whichinvestmenttrust.com/investment-trusts-uniquely-have-decades-long-records-of-ever-increasing-dividends/
Through wars, financial crisis, three day weeks, miner’s strike, Falklands war, you name, a group of investment trusts have been increasing their dividend each year and every year for almost five decades – but how do they do it? and why can’t open ended-funds do the same? There are thirty six investment trusts, with records…


#2

Be careful of the word ‘guaranteed’. Whilst some infrastructure assets might have government or quasi-government departments as tenants, there might be break clauses in the contracts which would allow them to sticks and move elsewhere, so the income stream might finish earlier than might be expected.

But whatever the case with the above, what is not guaranteed - not even by any government of any country - is the income from an infrastructure IT.

Also might help to clarify that the 85% distribution level is the minimum required in law rather than ‘only 85%’. Apart from REITs, where the minimum is 90% of rental income.


#3

Accepted @arkwelder, my point was that some infrastructure projects with long term contracts and RPI increases have similar characteristics to Gilts.

Thanks, Dice


#4

It is quite an extraordinary long time - 49 years the City of London trust has been increasing its dividend, the Bankers, Caledonia, Alliance Trust.

Alliance trust have come in for a lot of criticism but I bet that even in their case if you’d invested there the dividend would have beaten the profit you would have got from putting your money in a British building society. I wasn’t born in the UK, but my boyfriend’s Mum always talks about putting her money in the building society because she knows it’s save but it’s not terribly safe from inflation I tell her.


#5

I showed this article to my Mother, and although her English isn’t amazing, she understood it enough (with some help from me) and turned around to me an said: “why have you not told me about this before, are you hiding the best places for me to invest my money, it will only diminish your inheritance you know” - I killed myself laughing, she was serious too.

I think the returns highlighted here are quite amazing and something most British people aren’t aware of in my experience.


#6

A point that is often missed is how appropriate investments like these are for pensioners drawing an income.

The compromise, and for some a compromise too far, is the overall yield on some of these trusts is pretty low at 2% or so but you should be able to aim for a blended 3-3.5% yield taking a mix of capital risk.

If you’re investing for income in your retirement, your primary concern should be accessing a level of income that meets your needs and the security of that income, this is where investment trusts shine, though you do need to do your homework on the affordability of the dividend these trusts and others pay.


#7

Alliance Trust divi would have beaten inflation @paulo according to the graphs they put out when they were attempting to fend off the Elliott Hedge fund.

Your boyfriend’s Mum would be wise to listen to you when it comes to her long term savings - you should show her this article.