UK equity income trust City of London (LON:CTY) kept pace with the FTSE All-Share in the year to June 2026, delivering a net asset value (NAV) total return of 21.9%. That was bang in line with the benchmark. However, performance was ahead of the 13.7% generated by the Association of Investment Companies’ (AIC) UK Equity Income sector.
City of London is arguably the best-known of the AIC’s ‘dividend heroes’. These are investment trusts that have consistently increased their dividends for 20 or more years in a row.
Alongside solid results, the trust announced a landmark 60th consecutive annual increase in the dividend. City of London’s formidable record of unbroken increases in the shareholder reward is the longest of any investment trust.
It has been achieved by investing predominantly in the UK stock market. And by harnessing the benefits of the investment trust structure. These include the facility to use revenue reserves and to raise low-cost long-term debt.
Dividends and diversification
Managed by Janus Henderson’s Job Curtis alongside David Smith, City of London is the UK Equity Income sector’s biggest trust by market cap and total assets.
The fund is popular with investors for its record-setting annual dividend increases and competitive dividend yield.
| Total return – year to June | 2026 | 2025 |
| NAV per share | 21.9% | 16.8% |
| Share price | 21% | 21.8% |
| FTSE All-Share Index | 21.9% | 11.2% |
| AIC UK Equity Income Sector | 13.7% | 12.6% |
Source: City of London Investment Trust, annual report
Another bull point is the diversification it provides, with 77 holdings at last count. This popularity is reflected in the rating, with City of London’s shares consistently trading close to NAV.
Puts and takes
Last year’s biggest stock contributors to relative performance were not holding London Stock Exchange (LON:LSEG) or Experian (LON:EXPN), being underweight 3i Group (LON:III), and a position in IG Group (LON:IGG).
City of London’s portfolio also benefited from the proposed takeovers of Beazley (LON:BEZ), Schroders (LON:SDR), Tate & Lyle (LON:TASTE) and Segro (LON:SGRO).
The top stock detractors were not holding Rolls Royce (LON:RR), being underweight HSBC (LON:HSBA) and AstraZeneca (LON:AZN), and the position in RELX (LON:REL).
60 years and counting
City of London’s dividend was increased, for the 60th consecutive year, by 4% and was fully covered by earnings per share.
Curtis said: ‘By reaching this milestone we celebrate not only 60 years of consecutive annual dividend increases, but also the resilience of the UK market and indeed the benefits afforded to us by the investment trust structure.
‘Our investment approach prioritises patience, valuation discipline and long-term thinking, all of which has allowed us to navigate the varied market conditions of the past six decades.’
Meet the new joiner
According to the AIC, there are now 21 dividend hero trusts with at least two decades of unbroken dividend growth under their belts.
The newest joiner is BlackRock Greater Europe (LON:BRGE), which became a dividend hero in May and is the first hero from the Europe sector.
We are admirers of City of London, which delivered solid annual results against a challenging backdrop for equity markets. Curtis and Smith continued to find opportunities amid last year’s volatility. In addition, returns were boosted by the continued appetite for UK companies from overseas buyers.
As an investment trust, City of London has the ability to draw on revenue reserves when needed in trickier times. This has allowed the trust to deliver an impressive 60 years of uninterrupted dividend growth.
Annabel Brodie-Smith, director of the AIC, said: ‘Congratulations to The City of London Investment Trust on achieving a record 60 years of dividend rises. This investment trust’s inspiring diamond jubilee highlights the remarkable resilience of the dividend hero investment trusts. They have continued to raise dividends during high inflationary periods in the 1970s, the recession of the 1990s, the global financial crisis in 2008 and the pandemic.’
