A lacklustre 2021 failed to break Lindsell Train Investment Trust’s (LTIT) dividend streak, with its 10th annual payout securing the trust a spot on the Association of Investment Companies’ list of next-generation dividend heroes.
LTIT is one of four debutants on the list of next-gen investment companies that have increased dividends for at least 10 years in a row.
Once companies hit the 20-year mark, they are promoted to the AIC’s list of dividend heroes, which was reported last week by Portfolio Adviser.
Not targeting dividend growth
Nick Train, manager of LTIT, said the team was “delighted “to have been identified as a next generation dividend hero, but said “the trust’s policy is to pay annual dividends consistent with retaining the maximum permitted earnings, in accordance with investment trust regulations”.
“So, we are not specifically targeting rising dividends,” he added. “But we have been fortunate to see the companies in which the trust invests, and particularly the holding in the private company Lindsell Train Limited, reward us with strong dividend growth over this period.
“Of course, there is no guarantee that this will continue into the future.”
The credit given to Lindsell Train Limited stands in stark contrast to comments made by co-manager Michael Lindsell in November.
Having dropped its controversial gilts benchmark in April 2021 in favour of the MSCI World Index, LTIT saw its NAV rise just 0.7% in the eight months to November compared with its benchmark’s 16.1%.
Lindsell blamed the underperformance on the 47% weighting in Lindsell Train Limited, which had seen funds under management fall after a year and a half of disappointing performance. That weighting has since dropped to 45%.
According to its February 2022 factsheet, LTIT’s delivered a NAV return of 3.8% in 2021 against the benchmark’s 22.9%. Its shares were down 9.7%.
Year-to-date, it has extended its losses further, with shares plunging over 17%, more than double the benchmark drop of 6.8%.
See also: Lindsell Train bagged £14.5m of performance fees with gilt benchmark
Never a guarantee
In addition to LTIT, Dunedin Income Growth, Fidelity China Special Situations and North American Income marked their first appearances on the AIC’s next generation dividend heroes list.
The full list can be seen below.
Annabel Brodie-Smith, communications director of the AIC, said: “Investment companies’ structural advantages have contributed to their strong and consistent income record in difficult market conditions. The ability to hold back up to 15% of the income they receive each year to boost income for shareholders in tougher times really delivers for investors.
“These income benefits helped four investment companies join the next generation of dividend heroes this year as they continued to pay out rising dividends to shareholders.
“In volatile markets it’s always reassuring to see the impressive track records of the dividend heroes and next generation of dividend heroes. However, it’s important to remember that dividends are never guaranteed.”
|Company||AIC sector||Consecutive years dividend increased||Dividend yield (%)||5-year annualised dividend growth rate (%)|
|Athelney||UK Smaller Companies||19||4.42||2.01|
|BlackRock Smaller Companies||UK Smaller Companies||18||2.02||13.73|
|Henderson Smaller Companies||UK Smaller Companies||18||2.36||9.63|
|Artemis Alpha Trust||UK All Companies||17||1.56||6.33|
|Murray International||Global Equity Income||16||4.53||2.98|
|Henderson Far East Income||Asia Pacific Equity Income||15||8.30||3.19|
|BlackRock Greater Europe||Europe||15||1.22||3.52|
|Schroder Oriental Income||Asia Pacific Equity Income||15||4.01||4.32|
|CQS New City High Yield||Debt – Loans and Bonds||13||8.37||0.50|
|Abrdn Asian Income||Asia Pacific Equity Income||13||4.40||1.66|
|International Public Partnerships||Infrastructure||12||4.65||2.67|
|Fidelity Special Values||UK All Companies||12||2.31||12.51|
|Lowland||UK Equity Income||12||4.78||6.01|
|Law Debenture Corporation||UK Equity Income||12||3.64||11.67|
|Chelverton UK Dividend||UK Equity Income||11||6.20||5.92|
|Henderson Opportunities||UK All Companies||11||2.27||7.68|
|Invesco Select Global Equity Income||Global Equity Income||11||3.32||3.42|
|TR Property||Property Securities||11||3.03||11.20|
|JPMorgan Elect Managed Income||UK Equity Income||11||4.75||4.02|
|Aberforth Smaller Companies||UK Smaller Companies||11||2.67||5.18|
|BMO Managed Portfolio Income||Flexible Investment||10||4.71||3.58|
|Dunedin Income Growth||UK Equity Income||10||4.43||2.34|
|Fidelity China Special Situations||China / Greater China||10||1.85||21.06|
|North American Income||North America||10||3.63||8.67|