City of London Investment Trust Achieves 60 Consecutive Years of Dividend Increases

The City of London investment trust has marked a historic milestone by increasing its annual dividend for the 60th consecutive year, a record unmatched in the investment trust sector. Fund manager Job Curtis, who has overseen the £3 billion portfolio for 35 years, has navigated various market cycles, including the dot-com bust, the 2008 financial crisis, and the recent pandemic, to maintain this streak.

Curtis's strategy largely eschews investment in artificial intelligence, a sector he notes involves substantial spending with uncertain returns. Instead, the trust focuses on UK-listed companies, particularly those poised to benefit from productivity gains and cost savings. Financials, including banks like HSBC, Lloyds, and NatWest, form a significant portion of the trust's top holdings, alongside companies in life insurance, consumer staples, tobacco, and oil.

"We believe in diversification, not concentration," Curtis stated, emphasizing the trust's approach. This philosophy has led to investments in companies such as BP, Shell, Tesco, Unilever, and British American Tobacco.

The trust's dividend record began in 1966. Hypothetically, a £1,000 investment made by Paul McCartney in 1966, with dividends reinvested, would have grown to £1.3 million by now. This figure significantly outperforms a similar investment in the wider UK stock market, which would have yielded approximately £700,000, and a bank savings account, which would have provided about £3,900 in interest over the same period.

Curtis explained that the trust utilizes its structure to manage dividend payouts. By holding back up to 50 percent of income in good years and placing it into revenue reserves, the trust can sustain payouts during leaner times. This approach allowed the City of London trust to avoid cutting its dividend in 2020, a year marked by significant dividend reductions across the market due to the COVID-19 pandemic, by drawing down approximately 21 percent from reserves.

More recently, the trust has increased its stake in data analytics company RELX and credit rating agency Experian, companies that have faced market pressure amid AI concerns. Curtis believes some of the apprehension surrounding these businesses may be overstated and has also re-entered positions in companies like Rightmove. The trust prioritizes companies with strong cash generation and avoids those with high levels of debt.

Trust chairman Sir Laurie Magnus commended Curtis's leadership and the trust's unique position in delivering consistent dividend growth. He attributed this success to the predominant investment in the UK stock market, the strategic use of revenue reserves and debt, and the fund management team's adept navigation of market challenges over Curtis's 35-year tenure.