City of London Investment Trust reaches 60-year dividend milestone under veteran manager Job Curtis
The City of London Investment Trust has achieved an unprecedented milestone in British investment history, marking its 60th consecutive year of dividend increases. The £3 billion fund, managed by Janus Henderson, stands alone as the only UK investment trust to reach this landmark.
Fund manager Job Curtis, who has overseen the portfolio since taking the reins in 1991, attributes the success to disciplined investing in UK-listed companies whilst avoiding the temptations of speculative technology trends. Curtis joined Henderson in 1992 following its acquisition of Touche Remnant, where he had served as an investment manager since 1987. He holds an MA in philosophy, politics and economics from Oxford University and brings over 40 years of financial industry experience to his role.
The trust's dividend growth streak began in 1966, the year England won the World Cup. An investor who placed £1,000 in the fund at that time and reinvested dividends would now hold £1.3 million. By comparison, the same sum invested in the wider UK stock market would have grown to £700,000. Those who took dividend income rather than reinvesting would have received nearly £56,000 over six decades, compared with just £3,900 of interest from a traditional savings account.
The trust's historical roots extend even further. Originally established as the City of London Brewery Company Limited in 1861, the organisation transformed its focus entirely in 1968 when it sold its remaining brewery operations to concentrate exclusively on securities investment.
Navigating market crises with revenue reserves
The fund has maintained its dividend growth through numerous economic upheavals, including the oil shocks of the 1970s, the 1987 market crash, the dotcom collapse in 2000, the 2008 financial crisis, and most recently the Covid-19 pandemic. This achievement is particularly remarkable given the scale of dividend cuts witnessed during the coronavirus crisis.
In 2020, nearly 500 UK-listed companies cancelled, cut or suspended dividend payments. Specifically, 51 FTSE 100 companies, 115 FTSE 250 companies and 149 AIM-listed companies took action on dividends as the pandemic ravaged businesses. UK dividend payments fell by more than half in the second quarter of 2020 compared to the previous year, following record payouts of £110.5 billion in 2019 after three consecutive years of growth.
The trust weathered this storm by drawing approximately 21 per cent of its 2020 dividend from revenue reserves. Investment trusts possess a structural advantage over open-ended funds: they are permitted to retain up to 15 per cent of annual income in reserves, being required to distribute only a minimum of 85 per cent to shareholders. This mechanism allows them to build buffers during prosperous years and draw upon them during downturns.
Curtis defended the practice of maintaining consistent dividend growth.
A consistently rising dividend is good discipline rather than creating a risk of weakening the fund. The trick is to have companies that pay out decently but are also investing enough for the future, because you want future profit growth too. We smooth out the ups and downs.
UK focus amid AI speculation
Curtis maintains more than 90 per cent of the portfolio in UK shares, bucking the trend of international investors who have favoured high-risk US technology stocks. He remains deliberately cautious about artificial intelligence investments.
I don't really invest in AI. It's horses for courses. There are plenty of tech funds for that sort of exposure. I just can't predict an AI bust but people are right to be wary of the scale of spending. It's truly astonishing. The US hyperscalers are spending collectively over $600 billion this year alone, and there's a real question about the returns on that.
He added:
It could be safer to invest in companies that will benefit from the productivity gains and cost savings, such as the banks. We did own Microsoft a few years ago and we made around ten times our money. It is a great company, but we felt that for our investors we could recycle the money into cheaper UK shares.
The trust's top ten holdings include banks HSBC, Lloyds and NatWest, fund manager M&G, oil giants BP and Shell, supermarket Tesco, consumer goods firm Unilever and tobacco group BAT. Curtis has recently increased positions in data analytics company RELX and credit rating agency Experian, both of which have suffered share price declines due to AI-related concerns.
We've held RELX for many years and it's done really well over the long term, though it's had a tough 12 months. I think some of the concern is overdone. After the share price fall we bought more.
The portfolio emphasises conservative principles, focusing on companies with strong cash generation whilst avoiding highly indebted firms. Curtis highlighted that banks are particularly prominent in current holdings:
I think it's a good period for them. We believe in diversification, not concentration. Our biggest single area is financials.
Recognition and future plans
The trust's achievement has earned it recognition on the Association of Investment Companies' Dividend Heroes list, which honours investment trusts that have increased dividends for 20 or more consecutive years. City of London holds the longest record in the UK investment trust sector, placing it among an elite group of dividend aristocrats. In the UK, such companies are typically defined as those maintaining at least 20-25 consecutive years of dividend increases, though Britain lacks an official index equivalent to the United States.
The fund has delivered a share price total return of 24.5 per cent over one year and 92 per cent over five years. It is a constituent of the FTSE 250 Index.
Trust chairman Sir Laurie Magnus praised the milestone:
The dividend was increased, for the 60th consecutive year. This continues City of London's unique leadership in delivering the longest record of consecutive annual dividend increases in the investment trust sector. It has been achieved by investing predominantly in the UK stock market and by harnessing the benefits of the investment trust structure including the facility to use revenue reserves and to raise low-cost long-term debt.
He added:
It has also been achieved through the exemplary custodianship of the fund management team, led by Job Curtis, who has consistently steered the portfolio through unpredictable market challenges over a tenure of 35 years with skill, humility and commitment. The board is determined to maintain this leadership position over the years ahead.
Curtis, now 65, has no plans to retire, to the relief of the trust's thousands of private investors who have benefited from his steady hand through successive market cycles spanning more than three decades.