Looking for an investment trust that could be a dividend hero of the future? The Association of Investment Companies (AIC) has published an updated table of the next generation of dividend heroes; investment trusts that have increased their dividends for ten or more consecutive years, but less than 20.
The trusts in the next-generation list are well-placed to become the dividend heroes of the future. Steadily increasing dividend payouts may also make these investment trusts some of the top funds to invest in .
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“There are 30 investment trusts that make up our next generation of dividend heroes,” said Annabel Brodie-Smith, communications director at the AIC. “Over half of these next generation trusts yield more than 4%. They cover a wide range of sectors from equities to debt, infrastructure and property.”
Brodie-Smith highlighted Patria Private Equity and Foresight Solar Fund as new entries to the club that are celebrating their tenth consecutive year of increasing dividends – “a notable achievement over a turbulent time for markets,” she remarked.
Stalwarts include Schroder Oriental Income (LON:SOI ) and BlackRock Greater Europe (LON:BRGE ), both of which have increased their dividends for 18 years straight.
Why are dividends important for investment trusts?
One of the key advantages of the investment trust structure is that they are able to reserve up to 15% of profits in any given year, and use this reserve to maintain dividend payouts in years where their strategy might have underperformed.
“Investment trusts can also pay income out of their capital profits and their structure is particularly suitable for high yielding hard-to-sell assets such as infrastructure and property,” says Brodie-Smith.
As such, dividend payments are one of the key advantages to investors of buying investment trusts. A consistent, steadily-increasing dividend is an indicator of a management team that understands their structure and is skilled at executing the trusts’ long term strategy and delivering for investors.
It’s also indicative of good stock selection on the part of the trusts’ managers. “Where earnings go dividends tend to follow,” says Richard Sennitt, Manager of Schroder Oriental Income.
“Whilst we look to own stocks that have a strong income rationale for going into the portfolio this does not mean that we purely focus on the highest yielding names,” he added. “We also look for names that have the potential for upside from a capital perspective.”
Next-generation dividend heroes: the newcomers
The two newcomers to the next-generation dividend hero club are Patria Private Equity (LON:PPET ) and Foresight Solar Fund (LON:FSFL ).
Patria offers private equity exposure both through private equity funds and by investing directly into private companies.
“However, at an underlying company level, PPET’s portfolio is well diversified and generates a consistent cash yield, usually around 20% of opening NAV per year,” says Alan Gauld, senior investment director and lead fund manager, Patria Private Equity Trust.
“We are delighted that Patria Private Equity Trust (PPET) has made it into the next generation of dividend heroes,” said Gault. “Historically, there has been a debate over whether private equity trusts should be purely about capital growth or not.
“However, the board of PPET has consistently prioritised returning cash to shareholders, effectively an ongoing return of capital at NAV, over the long term.”
Foresight Solar listed 12 years ago in order to offer investors exposure to renewable energy infrastructure, specifically solar farms.
“Our operational portfolio will continue to produce steady, reliable income from the sale of electricity to the grid,” says Ross Driver, managing director at foresight group and lead Fund manager for Foresight Solar Fund. “We’re proud to have made every dividend payment and to have increased our payout every year. In that time, our dividend has grown 35%.
Foresight Solar offers investors access to large-scale energy infrastructure projects, particularly solar farms.
(Image credit: Justin Paget via Getty Images)
“Being included in the select group of trusts that have such a positive track record of consistently delivering for their shareholders is great recognition of our commitment,” adds Driver.
Next-generation dividend heroes: the full list
Here’s the full list of next-generation dividend heroes:
Swipe to scroll horizontally
The next generation of investment trust dividend heroes
Investment trust
AIC sector
Years of consecutive dividend increases
Dividend yield (%)
5yr dividend growth p.a. %
Schroder Oriental Income
Asia Pacific Equity Income
18
4.31
3.51
BlackRock Greater Europe
Europe
18
1.16
3.65
CQS New City High Yield Fund
Debt – Loans and Bonds
17
8.81
0.22
Henderson Far East Income
Asia Pacific Equity Income
17
11.21
1.89
International Public Partnerships
Infrastructure
16
7.66
3.04
abrdn Asian Income Fund
Asia Pacific Equity Income
16
7.31
9.30
Fidelity Special Values
UK All Companies
15
2.88
10.66
Lowland Investment Company
UK Equity Income
15
4.85
1.55
Law Debenture Corporation
UK Equity Income
15
3.73
5.20
Invesco Global Equity Income Trust
Global Equity Income
14
3.82
1.27
TR Property Investment Trust
Property Securities
14
5.31
3.07
Chelverton UK Dividend Trust
UK Equity Income
14
9.15
7.03
Aberforth Smaller Companies
UK Smaller Companies
14
3.62
6.38
Fidelity European Trust
Europe
13
2.04
7.06
North American Income Trust
North America
13
3.55
6.60
Dunedin Income Growth
UK Equity Income
13
4.76
2.01
CT Global Managed Portfolio Income
Flexible Investment
13
6.70
4.46
Fidelity China Special Situations
China / Greater China
13
2.28
10.70
CT Private Equity Trust
Private Equity
12
6.04
14.26
Mid Wynd International
Global
12
1.08
6.53
Henderson High Income Trust
UK Equity & Bond Income
12
6.24
1.58
CT UK High Income Trust
UK Equity Income
11
5.85
2.20
Mercantile Investment Trust
UK All Companies
11
3.26
3.96
ICG Enterprise Trust
Private Equity
11
3.04
8.45
Canadian General Investments
North America
11
2.57
4.56
Henderson International Income*
Global Equity Income
11
4.19
6.23
BBGI Global Infrastructure S.A.**
Infrastructure
10
6.17
3.27
RIT Capital Partners
Flexible Investment
10
1.99
2.78
Patria Private Equity
Private Equity
10
3.18
5.59
Foresight Solar Fund
Renewable Energy Infrastructure
10
9.80
3.43
Source: theaic.co.uk / Morningstar. Data as at 20/03/2025. *A merger between Henderson International Income and JPMorgan Global Growth & Income has been proposed. **A cash offer for BBGI Global Infrastructure S.A has been proposed.
