The City of London investment trust has increased its dividend for the 60th year in a row, making it the first investment company to consistently raise its payouts for six decades.
In the trust’s full-year results to the end of June 2026, it announced the dividend would increase by 4% to 22.15p per share, up from 21.3p last year.
The dividend increase continues a longstanding tradition for the longest-reigning ‘Dividend Hero’, a moniker given by the Association of Investment Companies (AIC) for trusts that have increased payouts for 20 years or more.
Over the past 60 years, a £1,000 investment in the trust made in 1966 would be worth £1.3m today, the firm said. If taken as income, an investor would have generated £55,900 of cumulative dividend income over the past 60 years, compared with £37,300 from the FTSE All-Share Index and £3,900 from cash held on deposit.
Today’s 22.15p is more than 100x higher than six decades ago and is fully covered by earnings per share.
Laurie Magnus, chair of the trust, said City of London has achieved such consistency by investing in the UK stock market and by “harnessing the benefits of the investment trust structure including the facility to use revenue reserves and to raise low-cost long-term debt”.
In the year to the end of June, revenue reserves increased by £3.6m to £52.3m, around 10.2p per share – or 46% of the current dividend.
Annabel Brodie-Smith, director of the AIC, said the trust has continued to raise dividends during high inflationary periods in the 1970s, the recession of the 1990s, the global financial crisis in 2008 and the pandemic.
“Investment trusts can achieve these impressive long records of dividend growth because they can smooth their flow of dividends,” she said.
“A trust can retain up to 15% of the income it receives each year, and this reserve of income can be used to boost dividends when markets are difficult. Dividends are never guaranteed, but these long records of resilient dividend growth are much appreciated by income investors.”
Elsewhere in the full-year results, the company announced it had made a net asset value (NAV) total return of 21.9% for the year to the end of June.
The biggest detractor to performance was not owning Rolls Royce, said fund manager Job Curtis and deputy David Smith, who noted that the share price continued to perform well but is ineligible for the trust due to its low dividend.
In terms of portfolio holdings, banking group HSBC and pharmaceutical giant detracted. Despite being large positions, they are underweights relative to the index.
Avoiding the London Stock Exchange Group (LSEG) and Experian was the biggest and third-largest contributor to relative performance, while IG was the portfolio’s top holding.
Four new stocks were added to the trust: Big Yellow Group, the UK’s largest self-storage operator; alternative asset management firm ICG; television content producer ITV; and online real estate marketplace Rightmove.
The managers said: “The portfolio is designed to continue growing the dividend and provide a competitive total return, including capital appreciation. It has a tilt towards stocks with above-average dividend yield, but some lower-yielding stocks are included in the mix.
“The portfolio is diversified by geography and sector, in contrast to many global portfolios which are dominated by technology shares. We believe the companies in the portfolio continue to offer good value given our view of the prospects for earnings and dividend growth and compared with equivalents overseas.”