The Association of Investment Companies (AIC) has recently launched a campaign to celebrate the strengths of Investment Trusts in this, the 150th anniversary year of the first trust being launched. Amongst the AllianzGI range, The Merchants Trust has the longest heritage and, having launched in 1889, it will celebrate its 130th anniversary next year. Merchants is one of 389 investment trusts in existence currently and total industry assets under management reached a record high of £174 billion at the end of December 20171.
As part of its campaign, the AIC will, once again, focus on the impressive dividend records of Investment Trusts in the coming months. An elite group of 15 investment trusts, which include both Merchants and Brunner, have increased their dividends for thirty years or more. Although past performance is no guide to the future, Merchants has paid a rising dividend for the last 35 years. Brunner, which launched in 1927, has an even longer record, with an impressive 46 consecutive years of dividend increases due to be confirmed imminently. Merchants belongs to the AIC’s UK Equity Income sector. This sector has delivered an inflation-busting 4.6% annual dividend growth and a doubling of capital value over 20 years1. The AIC has noted that 4.6% is considerably higher than the annualised Retail Prices Index inflation figure of 2.8% over the same 20-year timeframe.
Merchants has one of the highest dividend yields of its UK Equity Income peers – 5.0% at 31 January 20181. Both Merchants and Brunner (2.1% dividend yield) could be worth considering as a source of income, particularly with interest rates likely to remain low by historic standards.
The Merchants Trust has produced its own Investing for Income guide, which explores the different options for generating an income and explains the potential advantages of investment trusts. The guide is available here.
1Source for figures: Association of Investment Companies, 31.01.2018. Past performance is not a reliable indicator of future returns. You should not make any assumptions on the future on the basis of performance information.