Data published by the UK Association of Investment Companies (AIC) suggest that listed closed ended funds (investment companies) in the UK equity income sector have offered an annual dividend growth of some 4.82% over the past 20 years.
The return is based on an investment of £100,000 made in the average sector constituent on 28 February 1995. This would have generated an average annual income of £3,842 by February 1996, rising to £9,344 by February 2015, the Association said.
This reflected dividend growth some 2% ahead of inflation, defined as retail price inflation annualised over the period at a rate of 2.84%.
“Over 20 years investors would have received £130,071 of income from this portfolio,” the Association said.
The capital value of the original investment meanwhile would have grown to some £260,259. This figure is some 38% higher than the last time the calculation was run in August 2014. The Association said it highlighted “just what a difference a few months can make and how perilous trying to time the market can be.”