AIC Dividend Heroes (current and next generation)

[Julian]

I was just reading Aberdeen Asian Income Fund's latest report and they mentioned that they have just been included in The Association of Investment Companies' list of the "next generation of dividend heroes". For the AIC a dividend hero is an IT that has increased its dividend for 20+ consecutive years and the "next generation" appears to be ones that are, in AIC's words, "knocking on the door" i.e. in the 10-20 year range.

Anyway, I did some Googling and found the 12th March 2019 AIC press releases for the latest 2019 list of "dividend heroes" and the 18th March 2019 press release with the 2019 list of "next generation of dividend heroes". Here are the links if anyone is interested (the tables conveniently include 2018/2019 yields and number of years of consecutive growth for each IT)...

Dividend heroes - https://www.theaic.co.uk/aic/news/press ... end-heroes

Next generation of dividend heroes - https://www.theaic.co.uk/aic/news/press ... end-heroes

I offer these lists without commentary except that I am a fan and hold many, and also I note the seemingly anomalous 18.14% yield on British & American which is listed as having 23 years of consecutive dividend growth hence an income hero. Looking at the data (https://www.stockopedia.com/share-price ... dividends/) that does amazingly appear to be correct! More digging required there which I haven't had time to do yet.

I am gradually drifting my income strategy(*) from directly held HYP shares towards income ITs because I want to see fewer backward steps in my income (e.g. BP gulf of Mexico events, Pearson cuts, etc) but rather see more of a monotonic increase in income so these lists are pretty much my hunting ground I think.

- Julian

(*) I have a separate growth strategy where I hold passive tracker funds and, as appropriate, top-slice capital to get extra annual income if required.

[Arborbridge]

It is a happy huntiong ground, and I see a number of trusts there which I own. One must be circumspect about the pure number of years as some years the increase might have been a very small percentage, just to keep in the list. I believe this happened in the case of CTY. Still, I'm not knocking the idea! Anything which can help us preserve our standard of living, is a good thing.

Arb.

[88V8]

Thankyou for this.
I too am somewhat tempted by a trend away from the usual individual suspects.

As you say, a degree of digging might be advisable.
Until it died last year, there was a Dividend Champions site that focused on individual companies.
It included Interserve and Carillion, iirc they had good divi cover and 20-25 years of growth.
The past is not a guide etc etc, and Woodford has shown us what can happen to a successful manager when he has a rush of blood to the head and decides to go off and do his own thing.

V8

[77ss]

I...
Dividend heroes - https://www.theaic.co.uk/aic/news/press ... end-heroes

Next generation of dividend heroes - https://www.theaic.co.uk/aic/news/press ... end-heroes

...

Useful links - thanks.

I am currently engaged in my annual 'sell to use CGT allowance/liberate cash for ISA & SIPP' planning, and as I am gradually increasing my holdings of ITs as well, it was particularly timely.

I note the strong inverse correlation between current yield and the 5 yr total return (for the 'dividend heros' - the correlation is much weaker for the 'next generation').

I shall probably add Schroder Oriental Income to my collection. I was thinking about this one anyway, but a few extra comparisons are welcome.

[Steveam]

Yes, many thanks. I’m thinking of adding Aberdeen Asian Income Fund and would welcome comments on this.

Best wishes,

Steve

[richfool]

Yes, many thanks. I’m thinking of adding Aberdeen Asian Income Fund and would welcome comments on this.

Best wishes,

Steve

Steve, I have held AAIF for a number of years and it has produced a good income stream. It currently yields 4.26% paid quarterly. Currently at a discount of 6.4%.

It's capital performance dropped off a bit for a few years, though noting that is fairly cautious in its choice of investments and it has less exposure to China than a number of its peers (e.g. HFEL). I understand the managers made some changes to strategy last year to try and improve the capital performance which seem to be working.

https://www.hl.co.uk/shares/shares-sear ... npv-shares

https://citywire.co.uk/funds_insider/in ... undID=2716

[Julian]

I'm glad people found it useful. Thanks for the thank-you-s folks.

...One must be circumspect about the pure number of years as some years the increase might have been a very small percentage, just to keep in the list. I believe this happened in the case of CTY. Still, I'm not knocking the idea! Anything which can help us preserve our standard of living, is a good thing.

Agreed, although sticking with CTY as an example in some years it has also announced inflation-busting increases e.g. this year where its divi has increased 5% over the previous year in an environment of 2.something% UK inflation I think ("think" re the UK inflation rate - the year-on-year CTY divi increase was stated in its latest report).

One piece of data that would be very nice if AIC could include it in the next set of tables would be two extra figures for each entry in the lists, one the total cumulative divi increase over the years of consecutive increases and the other being the UK RPI inflation rate over that same timespan. That way one could also judge the "quality" of the sustained period of rising divis, i.e. how aggressively they rose vs inflation. I might email AIC that suggestion. It shouldn't be a very difficult set of calculations to do. The total cumulative increase on each IT's dividend is trivial, the accompanying UK inflation rate for each ITs period of divi growth is slightly more tedious since the year-ranges involved will differ for most of the ITs so many different figures would need to be calculated but all the data is readily available.

...I am currently engaged in my annual 'sell to use CGT allowance/liberate cash for ISA & SIPP' planning, and as I am gradually increasing my holdings of ITs as well, it was particularly timely ...

Aaargghhhh. Now I'm annoyed . I got busy very with some other stuff and completely forgot to do my year-end CGT sell offs. I just left HMRC with a gift of a totally, utterly and completely untouched 2018/2019 CGT allowance.

I always top up my ISA & SIPP early in the tax year and have cash to do that already (I held a lot of cash during the last year due to concerns about market uncertainty) and once in my ISA and SIPP it will all be going to ITs on those 2 AIC lists, but CGT selloffs for an HYP-er really need to be done towards the end of the tax year in case something in one's HPY generates an unexpected CGT event (e.g. the Vodafone/Verizon stuff a while back generated a lot of potential CGT for me).

Oh well, tomorrow is another day (and another tax year), it's only lost opportunity not some material loss of what I currently have, and I will learn from my mistake. I've just put an annual recurring appointment in my Google calendar that will start bombarding me with email reminders from 4 weeks before 5th April each year so I don't think I can possibly forget again. It is still bl*#!y annoying though because using my CGT allowance to sell-off bits of my HYP to re-invest in income ITs (IITs) is core to my strategy of accelerating my drift from HYP to IITs beyond what I can achieve by simply re-investing new money into IITs rather than HYP shares.

- Julian

[Steveam]

Regarding the CGT issue: I don’t worry about when in the year I realise the gain as, if some unforeseen event creates a further gain, I’ve got plenty of shares showing a loss which could be used to deal with any super abundance of gain ...

Best wishes,

Steve

[77ss]

......
I always top up my ISA & SIPP early in the tax year and have cash to do that already (I held a lot of cash during the last year due to concerns about market uncertainty) and once in my ISA and SIPP it will all be going to ITs on those 2 AIC lists, but CGT selloffs for an HYP-er really need to be done towards the end of the tax year in case something in one's HPY generates an unexpected CGT event (e.g. the Vodafone/Verizon stuff a while back generated a lot of potential CGT for me).

....

I do both at the beginning of the tax year - selling enough to generate funds for my ISA/SIPP and utilising the bulk of my annual CGT allowance. It's become an annual reorganisation/clearout. Plan in March, act in April.

I understand your point about unexpected corporate actions, but like steveam I have some unsheltered losses which I could use if necessary.

[Arborbridge]

Thankyou for this.
I too am somewhat tempted by a trend away from the usual individual suspects.

As you say, a degree of digging might be advisable.
Until it died last year, there was a Dividend Champions site that focused on individual companies.
It included Interserve and Carillion, iirc they had good divi cover and 20-25 years of growth.
The past is not a guide etc etc, and Woodford has shown us what can happen to a successful manager when he has a rush of blood to the head and decides to go off and do his own thing.

V8

A good warning, but I don't think "rush of blood" would apply to Job Curtis and similar managers It's a good reason to stick with ITs which have a predictable "process" or perhaps "style" . Most of the ITs listed are probably of the steady sort, which is why it is a good list to start from.

Arb.