The future's highest-yielding investment trusts: next-generation dividend heroes?

The Association of Investment Companies' most recent list of next-generation dividend heroes is now available

We examine the trusts that were selected.

Are you looking for an investment trust that might be a future dividend hero? The Association of Investment Companies (AIC) has released an updated table of the next generation of dividend heroes, which are investment trusts that have raised their dividends for at least ten but not more than twenty years in a row.

The list is in line with the AIC's list of dividend heroes, which was released last week and includes investment trusts that have raised their dividends annually for 20 years or longer.

The next-generation list's trusts are in a good position to emerge as the dividend heroes of the future. These investment trusts may rank among the best funds to invest in due to their consistently rising dividend payments.

The AIC's director of communications, Annabel Brodie-Smith, stated, "Our next generation of dividend heroes is comprised of 30 investment trusts." The yield on more than four percent of these next-generation trusts is over half. They cover a broad range of industries, including debt, real estate, infrastructure, and stocks.

"a notable achievement over a turbulent time for markets," Brodie-Smith said, highlighting Patria Private Equity and Foresight Solar Fund as recent additions to the group commemorating their tenth consecutive year of rising dividends.

Among the mainstays are BlackRock Greater Europe (LON:BRGE) and Schroder Oriental Income (LON:SOI), both of which have raised their dividends for the past eighteen years.

For what reason do investment trusts need dividends?

The ability of the investment trust structure to set aside up to 15% of profits in any given year and use that reserve to continue paying dividends in years when their strategy may not have performed as well is one of its main benefits.

"The structure of investment trusts is especially appropriate for high yielding, difficult-to-sell assets like infrastructure and real estate, and they can also pay income out of their capital profits," says Brodie-Smith.

Dividend payments are therefore one of the main benefits that investors receive when purchasing investment trusts. An indication of a management team that is adept at carrying out the trust's long-term strategy and providing for investors is a steady, steadily rising dividend.

Additionally, it is a sign that the trust managers have chosen their stocks well. According to Richard Sennitt, manager of Schroder Oriental Income, "dividends tend to follow where earnings go."

"Although we seek to acquire stocks with a compelling income argument for inclusion in the portfolio, this does not imply that we only concentrate on the highest yielding names," he continued. Additionally, we search for names that could be profitable from a capital standpoint.

Dividend heroes of the next generation: the upstarts.

In the next generation of dividend heroes, Patria Private Equity (LON:PPET) and Foresight Solar Fund (LON:FSFL) are the two new members.

By investing directly in private businesses and through private equity funds, Patria provides exposure to the private equity market.

Senior investment director and lead fund manager Alan Gauld of Patria Private Equity Trust says, "But at an underlying company level, PPETs portfolio is well diversified and generates a consistent cash yield, usually around 20 percent of opening NAV per year."

According to Gault, "We are thrilled that Patria Private Equity Trust (PPET) has become one of the next generation of dividend heroes." The question of whether or not private equity trusts should focus only on capital growth has been up for debate in the past.

"Over the long run, though, the PPET board has continuously placed a high priority on giving shareholders their money back, which is essentially a continuous return of capital at NAV.

Twelve years ago, Foresight Solar went public to give investors access to solar farms and other renewable energy infrastructure.

"The sale of electricity to the grid will continue to generate consistent, dependable revenue from our operational portfolio," says Ross Driver, managing director of the Foresight Group and the lead fund manager for the Foresight Solar Fund. We are pleased to have raised our payout each year and to have paid out dividends on time. Our dividend has increased by 35% over that period of time.

Sunrise over a field of solar panels in an abstract aerial/drone view.

Large-scale energy infrastructure projects, especially solar farms, are accessible to investors through Foresight Solar.

"It's a wonderful acknowledgement of our dedication to be among the few trusts that have demonstrated such a strong track record of continuously providing for their shareholders," Driver continues.

The complete list of dividend heroes for the next generation.

The complete list of next-generation dividend heroes is available here.

Theaic Dot Co Dot UK/Morningstar is the source. As of March 20, 2025, data. It has been suggested that JPMorgan Global Growth and Income and Henderson International Income merge. A cash offer has been put forth for BBGI Global Infrastructure SdotA.