Majority of AIC dividend heroes deliver ahead of inflation over five years

17 out of 18 AIC dividend heroes beat CPI

Kathleen Gallagher
clock • 1 min read
Alasdair McKinnon's Scottish Investment Trust saw the highest rate of dividend growth over the past five years – at 13.2%
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Alasdair McKinnon's Scottish Investment Trust saw the highest rate of dividend growth over the past five years – at 13.2%

All but one of the investment trusts that have increased their dividends for 20 years or more have done so at a rate well ahead of inflation over the past five years, according to figures from the Association of Investment Companies (AIC).

The AIC compared the annualised rate of CPI in the five years to April 2021 to the growth in dividends over the past five years for its 18 dividend hero investment companies.

The annualised rate of CPI in the five years to April 2021 was 1.8%.

UK inflation more than doubles in April amid lockdown easing

The Scottish Investment Trust, managed by Alasdair McKinnon, has seen the highest rate of dividend growth over the past five years at 13.2%. BMO Global Smaller Companies also hit double digits at 12%.

"Inflation has not been at the top of investors' worry list for a long time," said Annabel Brodie-Smith, Communications Director of the AIC.  

"But with economies reopening quickly from the pandemic and a perception that central banks may be softening on keeping prices in check, it is easy to see why investors are becoming more concerned," she said.

Six trusts achieve dividend increases for 50 or more consecutive years

However, these figures are not an indication of performance. The Scottish Investment Trust's share price has underperformed the Global AIC sector across one, three, five and ten years, according to figures from the AIC.

AIC figures also show BMO Global Smaller Companies has outperformed the Global Smaller Companies AIC sector in one year, but underperformed across three, five and ten years.

Growth in dividends is similiarly strong for investment companies which have grown dividends for ten or more consecutive years but fewer than 20 years; 92% of the group have delivered five-year dividend growth ahead of the CPI.

Equity income trusts are also delivering with 100% of Asia Pacific Equity Income, 86% of Global Equity Income and 82% of UK Equity Income investment companies producing dividends higher than CPI on a five-year annualised basis, according to the AIC. 

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