The Association of Investment Companies publishes a list of 'Dividend heroes' - investment trusts with 20+ years of consecutive dividend increases. Several are core ISA staples for UK income investors.

Key takeaways

  • AIC dividend heroes have 20+ year records of rising payouts.
  • Investment trusts can smooth dividends using Revenue reserves - a structural advantage.
  • Many UK income trusts hold large-cap dividend payers.
  • Discount/premium fluctuations affect entry price.
  • ISA wrapper shelters dividends and gains.

What makes a dividend hero

Investment trusts are closed-ended companies, allowing them to retain revenue in reserve and release it in lean years - rare in open-ended funds.

Names UK investors discuss

City of London Investment Trust, Bankers, Alliance Witan, JPMorgan Claverhouse, Murray Income and BMO Capital & Income often feature. Live data on the AIC.

Costs and discounts

Ongoing charges and current discount to NAV should always be checked before buying.

What this means for UK investors

Dividend-hero trusts can be a backbone for tax-free ISA income, particularly when bought at attractive discounts.

Risks to watch

  • Discount widening.
  • Revenue reserves not infinite.
  • Sector concentration in UK income.
  • Currency exposure on overseas income trusts.