Investment trusts: top investments for income


Updated on 16 March 2015 | 0 Comments

Looking for income from your investments? One of these 'Dividend Heroes' may be worth a look.

The vast majority of investments held in stocks and shares ISAs are either shares or unit trusts, according to Government statistics. But it could pay to consider putting other forms of investments in your ISA too.

If you are looking for income then an investment trust is well worth considering. An investment trust is basically a company (they are also known as investment companies) that invests in other companies and assets. You own shares in the investment trust, just as you would for any firm quoted on the London Stock Exchange, which is where it really differs from unit trusts. You can get a full run down of how they work in our Beginner's guide to investment trusts.

And investing in one is a smart move if you are looking for income from your investments. Research from the Association of Investment Companies (AIC) has found that 21% of its members that have been in existence for more than 10 years have raised their dividends for at least 10 years in a row.

A whopping 50% of the AIC’s UK Equity Income sector has raised dividends for 10 consecutive years, while 29% of the UK Smaller Companies sector and 27% of the Global sector have also managed over a decade of dividend growth.

Here’s a list of the AIC’s ‘Dividend Heroes’ – the Investment Companies that have increased their dividend for at least 10 consecutive years.

Investment company

AIC Sector

Dividend Increases

Schroder Income Growth

UK Equity Income

19 years

Invesco Income Growth

UK Equity Income

17 years

Threadneedle UK Select Trust

UK All Companies

17 years

F&C Capital & Income

UK Equity Income

17 years

Northern Investors Company*

Private Equity

17 years

Aurora

UK All Companies

16 years

Perpetual Income & Growth

UK All Companies

15 years

Standard Life Equity Income

UK Equity Income

14 years

BlackRock Smaller Companies

UK Smaller Companies

11 years

BlackRock Throgmorton Trust

UK Smaller Companies

11 years

TR European Growth

UK Equity Income

11 years

Henderson Smaller Companies

UK Smaller Companies

11 years

Henderson EuroTrust

Europe

11 years

Establishment Investment Trust

Global

11 years

Athelney

UK Smaller Companies

11 years

Aberdeen New Dawn

Asia Pacific - Excluding Japan

10 years

Witan Pacific

Asia Pacific - Excluding Japan

10 years

Artemis Alpha Trust

UK All Companies

10 years

*This company is in the process of realising its assets

The AIC has also released a list of investment companies that have been raising their dividend for over 20 years.

Investment Company

AIC Sector

Dividend Increases

City of London Investment Trust

UK Equity Income

48 years

Bankers Investment Trust

Global

48 years

Alliance Trust

Global

48 years

Caledonia Investments

Global

47 years

Foreign & Colonial Investment Trust

Global

44 years

F&C Global Smaller Companies

Global

44 years

Brunner Investment Trust

Global

43 years

JPMorgan Claverhouse Investment Trust

UK Equity Income

42 years

Murray Income

UK Equity Income

41 years

Witan Investment Trust

Global

40 years

Scottish American

Global Equity Income

41 years

Merchants Trust

UK Equity Income

35 years

Scottish Mortgage Investment Trust

Global

32 years

Scottish Investment Trust

Global

31 years

Temple Bar

UK Equity Income

31 years

Value & Income

UK Equity Income

27 years

Invest in a 'dividend champion' via a Stocks & Shares ISA

The appeal of investment trusts

[SPOTLIGHT]Income isn’t the only reason to think about including investment trusts in your ISA.

“A major benefit of investment trusts is that they are usually quite cheap and so you can gain access to your chosen investment at relatively low cost,” says Patrick Connolly, a certified financial planner at Chase de Vere. “Also, many investment trusts engage in gearing. This is where they borrow extra money to invest and so this gives an added boost to returns if the underlying investments perform well.”

But it's worth noting that gearing can also magnify losses so investment trusts can prove more risky than unit trusts.

Invest in a 'dividend champion' via a stocks & shares ISA

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