City of London Investment Trust - why it’s a dividend hero

Important information - the value of investments and the income from them can go down as well as up, so you may get back less than you invest.

^{Source: Yahoo Finance from 2.10.18 to 29.9.23 Basis: Share price in GBP. Excludes initial charge.}

^{Past performance is not a reliable indicator of future returns}
 

City of London is the largest trust within its peer group with net assets of £2bn and has a low ongoing charges ratio of 0.37%. Longstanding manager Job Curtis is positive on the outlook for the portfolio, which is well diversified with 85 different stocks.²

He says that holdings like BP and Shell will play an important part in the clean energy transition, while investments in consumer staples such as Unilever and Diageo benefit from a defensive, dependable return profile. The fund also owns HSBC and Lloyds that should continue to profit from the elevated net interest margin.

Curtis believes that the valuation of UK equities looks compelling compared to their equivalents overseas, possibly due to the low allocation from domestic, institutional investors. In particular, he thinks the dividend yield on London-listed stocks is attractive relative to the main alternatives.

City of London currently pays a highly competitive 5.3% with the income distributed every quarter. Please note this is not guaranteed. The dividends are fully covered by earnings and have now been increased for 57 consecutive years since 1966, helping the trust to maintain its number one position on the Association of Investment Companies’ dividend hero list.

The broker Numis views City as an attractive core holding for investors seeking income from UK equities. They say that Job Curtis, who has managed the fund since 1991, has a solid track record, with NAV total returns of 74% over the last 10 years compared to 69% for the FTSE All-Share benchmark.³ Past performance is not a reliable indicator of future returns.

More on the City of London Investment Trust.

Five-year performance table

Past performance is not a reliable indicator of future returns

Source: FE, as at 5.10.23 Basis: Total returns in GBP. Excludes initial charge.

Source:

¹ Investigate, 20.9.23. 

^2,3 Numis, 20.9.23.