More than three quarters (96) of equity investment trusts with a yield in excess of 1% have enough cash in their revenue reserves to pay at least one year's dividend to shareholders, according to Morningstar/AIC data, despite the fact many companies are cancelling or suspending dividends amid the coronavirus crisis.
Of those, 24 have enough in reserve to pay more than two years' worth of dividends.
The outbreak of Covid-19 has forced many firms to scrap, cut or defer dividends in order to preserve balance sheets and weather the unprecedented hit to economic activity.
Analysis by Peel Hunt showed FTSE 350 and AIM 100 companies had cancelled £11.8bn in dividends, with a further £13.6bn still at risk.
While open-ended funds are required to return all income generated to unitholders every year, investment trusts can save surplus income received in good years to call upon when times are tougher.
As Investec analyst Alan Brierley declared, "the rainy day has now arrived".
Many equity-focused offerings have multiple years' worth of dividend payments in reserve. The £430m Asia Dragon, run by Standard Life Aberdeen's Adrian Lim, is six times covered, with the £91m Majedie Investments, which yields 6.8%, over four times.
Of the 24 trusts with more than two years in reserve, just five yield more than 4%. Conversely, of the 30 trusts with less than one year in reserve, only five yield less than 4%.
Many investment trusts have a long-term track record of being able to pay out dividends consistently.
According to the AIC's list of dividend heroes, 21 trusts have managed to increase their dividends for 20 consecutive years or more, while a further 25 made their way onto the 'next generation dividend heroes' list, meaning they have increased their dividends for between ten and 20 successive years.