Small-cap investors lead the pack of new dividend heroes

Small-cap investors lead the pack of new dividend heroes

Proactive Investors - 2023 has seen three new UK firms join the esteemed list of dividend heroes, companies that have increased their annual dividends for 20 consecutive years, the Association of Investment Companies (AIC) has declared.

The new entrants are Henderson Smaller Companies (LON:HSL), Athelney Trust (LON:ATTR), and BlackRock (NYSE:BLK) Smaller Companies.

Henderson Smaller Companies marked its 20th consecutive year of dividend increases with a final dividend that brought the yearly total 26p a share, an 8.3% increase on last year.

Athelney Trust and BlackRock Smaller Companies joined the list earlier this year.

The AIC's list of dividend heroes now includes 20 investment companies. Nine of these have increased their dividends for 50 or more consecutive years, with JPMorgan (NYSE:JPM) Claverhouse and Murray Income Trust both reaching the 50-year milestone this year.

Investment companies can hold back up to 15% of the income they receive in any given year for distribution in future years, allowing them to smooth dividends over time.

Annabel Brodie-Smith, communications director of the AIC, congratulated the new entrants, noting that all three are in the UK smaller companies segment. "Smaller companies are often associated with growth rather than income, but these three investment companies show that they can also provide consistently growing dividends," she said.

Neil Hermon, portfolio manager of Henderson Smaller Companies Investment Trust, said the company's strategy of targeting profitable, growing, cash-generative, dividend-paying companies has enabled it to grow dividends to shareholders every year for the last 20 years at a compound rate of 21.8% per year.

Roland Arnold, manager of BlackRock Smaller Companies, said dividends are a by-product of a successful growth strategy, while Dr Manny Pohl, Managing Director of Athelney Trust, said the company's inclusion in the AIC dividend hero list was a result of consistently applying its investment philosophy.

The full list of dividend heroes includes long-standing members such as City of London Investment Trust (LON:CTY), which has increased dividends for 57 consecutive years, and Bankers Investment Trust (LON:BNKR) and Alliance Trust (LON:ATST), both with a 56-year streak.

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