23 Mar 2012 | 14:59
Kyle Caldwell
Article from Investment Week
Follow @K_S_Caldwell Categories: Investment | Investment Trusts Topics: Uk income
Investors snapping up shares in UK-listed companies have never had it so good, with dividends payouts last year hitting an all-time high of £67.8bn.
But when it comes to income payouts, who fares better, unit trust and OEICs or investment trusts?
Data from independent financial adviser Dennehy Weller & Co (DWC) earlier this year revealed 34% of UK equity income funds cut payouts in 2011.
Leigh Harrison and Richard Colwell's £240m Threadneedle's UK Equity Alpha Income fund reduced payouts the most, cutting its dividend by 12.7% to pay out 0.967p in dividends per unit.
On average, the sector increased payouts by 4.82%, with ten of the 101 funds managing to grow payouts by more than 10%.
However, in stark contrast, data from the Association of Investment Companies (AIC) shows all 19 investment companies in the UK Growth & Income sector increased payouts last year.
In fact, since the credit crunch, only one trust, Finsbury Growth & Income, has failed to either increase or maintain its dividend payout in any given year.
According to the AIC, 46% of UK Growth & Income sector portfolios raised dividends each year for 20 years or more.
A spokesperson for the AIC attributed the superior dividend performance to the structural advantage the sector boasts over its open-ended peers, as a trust can store 15% of its annual income as revenue reserves.
"The investment company sector has a long and proud history of delivering returns for shareholders, and what many shareholders are increasingly looking for is a reliable dividend in unreliable times," said the AIC.
"Investment companies have been aware of the importance of yield for years and the sector's dividend track record is unparalleled."
Dividend payouts from AIC UK Growth & Income sector (in pence)
Source: AIC
Article from Investment Week
