Heritage Dividend Portfolio
An actively managed portfolio service designed for attractive income distribution as well as long-term capital growth from a portfolio of equity investment trusts and passive bond funds.
Investors have differing needs and requirements from their money. Many seek capital growth over time in order to improve wealth and opportunities. Others, having built wealth, now seek income. Income seeking investors often turn to dividends as an inflation beating form of regular return. It is common for major corporations to issue attractive dividends to their shareholders that rise in value each year.
One great incentive to an investor to purchase and maintain their shareholding is an attractive dividend. It is common for a Board of Directors to go to great lengths to protect the level of their dividend and it is expected by their shareholders. However, in times of great financial difficulty such as during the great financial crisis of 2008 and now with the Coronavirus crisis, many listed firms were forced to significantly slash dividend payments. In the case of UK banks the government insisted that the dividend be held back.
The reduction or suspension of a dividend payment will have an impact on both direct shareholders and holders of open-ended investment company (OEIC) income funds that invest in that stock. If dividends are cut or stopped, the ability of OEICs to maintain dividend payments in the future will be jeopardised as they have to distribute whatever income they receive. They have no means to store income for ‘a rainy day’.
Investment trusts have the ability to smooth their dividends by saving money in reserves during periods of prosperity which are available for use to make up any shortfall in income during difficult years. This makes investment trust dividends a more reliable source of income for investors. Investment trusts therefore have the additional benefit of dividend cover.
Reduced Fees
Lower management costs than open-ended investment companies.
Excellent Returns
Superior long-term performance and more varied sources of income.
Reliable Income
Long-term history of rising dividends.
Key Objectives
- Superior long-term performance and returns
- Greater diversification and range of holdings
- Global equity strategies
- A source of reliable income
- Lower management costs than open-ended investment companies
Cautious Dividend
The Heritage Dividend Cautious Portfolio is an active income distribution strategy. It is aimed at medium to long-term investors who are seeking a natural income of over 3% and growth from a diversified portfolio of equity investment trusts and passive bond funds.
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Balanced Dividend
The Heritage Dividend Balanced Portfolio is an active income distribution strategy. It is aimed at medium to long-term investors who are seeking a natural dividend income of over 3.5% from a balanced portfolio of equity investment trusts and passive bond funds.
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Performance Report
Here are the FE Analytics reports that compare the relative performance over the past five years and the respective technical ratios for each of the two Heritage Dividend Portfolios against one another. These reports are updated monthly.
Performance ReportReliable source of income
Some outstanding examples of long-term consistent growth in dividends can be seen within the Investment Trust sector. For example City of London Investment Trust, Bankers Investment Trust and Alliance Trust have raised their dividends for 53 years in a row, while a further 18 also qualify as Association of Investment Companies (AIC) ‘dividend heroes' because they have raised their dividends for 20 or more years in a row. These include Caledonia Investments, which has raised its dividends for 52 years in a row. Seven trusts have increased their dividends for 40 or more years in a row and five have done this for more than 30 consecutive years.
Dividends are never guaranteed but many investors will be relying on their investment income to pay bills or for the weekly shop. The structure of investment trusts is a huge advantage when dividends in general are under pressure.
The virtues of investment trusts are characterised by lower fees, increased diversification and significantly higher investment returns over the longer term
Prof Mike Buckle
Investment Manager