The City of London Investment Trust (CLIT) is one of the UK’s oldest and well-known investment trusts. It is known for giving steady income and long-term growth in money. Job Curtis has been managing it since 1991 and it has become very popular especially with people who want to focus on earning income. This article will explain the trust, how it has done and why it is still a favourite choice for UK investors.
Introduction to City of London Investment Trust
The City of London Investment Trust started in 1860 and has become one of the biggest and most trusted UK investment trusts. It aims to give both income and money growth by investing in UK stocks. The trust is for people who want steady income from dividends and growth over time which makes it a good choice for those looking for regular income.
Investment Strategy
The trust mainly invests in big, well-known UK companies listed on the London Stock Exchange such as Unilever, Diageo and HSBC. It spreads its investments across different business areas to make sure it covers a wide part of the UK economy. The trust aims to give steady returns by investing in companies that pay dividends which tend to be more stable when the market is unpredictable.
The City of London Investment Trust is compared to the FTSE All-Share Index which shows how all the companies on the main market of the London Stock Exchange are doing.
Performance and Dividend Record
One of the main reasons people like the City of London Investment Trust is because of its amazing dividend record. The trust has increased its dividend for 57 years in a row making it one of the Dividend Heroes. This shows its strong promise to keep paying more to shareholders even when the market is tough, which is why it is popular with income-focused investors.
In 2023, the trust gave a total return of 1.4% and the current dividend yield is about 5%. Even with inflation and an uncertain economy, the trust has kept its strong dividend policy.
Asset Size and Key Holdings
As of August 2024, the trust manages assets worth approximately £2.33 billion, positioning it as one of the larger UK-focused investment trusts. The top holdings include blue-chip companies such as:
- Unilever
- Diageo
- HSBC
- British American Tobacco
- Shell
These companies are known for their robust business models and consistent dividend payouts which align with the trust’s strategy of generating stable income for its investors.
Investor Benefits
One of the main benefits of investing in the City of London Investment Trust is its steady dividend payments even when the economy is not doing well. With a dividend yield of about 5%, it offers a good income for investors who want a reliable return. The trust also has the potential for long-term growth making it attractive to those who want both income and the chance for their money to grow over time.
Another benefit is that it is less risky compared to other stock investments. This is because it focuses on big, well-known companies that pay dividends and usually do well in both good and bad markets.
Ongoing Charges and Costs
The City of London Investment Trust has a low ongoing charge of 0.37% which makes it affordable for long-term investors. Low fees are important especially for income-focused investors because high fees can reduce returns over time. The trust’s low cost compared to other similar investments makes it even more attractive.
Risk Factors
Even though the City of London Investment Trust is known for being reliable, there are still risks to think about. Like any stock investment the value of the trust’s shares can go up and down with changes in the market.
Also while the trust has a long history of increasing dividends it’s important to remember that dividends are not guaranteed. Economic problems like inflation or recessions could affect the companies in the trust making it harder for them to pay dividends which could reduce the payouts to shareholders.
Suitability for Investors
The trust is a great choice for income-focused investors who want regular dividend payments and those who are interested in growing their money over time. It’s perfect for investors who want to invest in UK stocks, especially big well-known companies with a good history of paying dividends.
The City of London Investment Trust can be included in ISAs and pensions which gives UK investors tax-efficient options for investing.
Recent Developments and Future Outlook
The trust is still one of the most popular UK income funds attracting many investors who want regular income. Even though its performance has been modest in recent years experts believe it will keep providing steady dividends because it invests in strong, well-known companies.
The trust’s future depends on how well the UK economy does and how strong its key investments remain. With inflation high and the economy uncertain, the trust’s focus on generating income and staying stable could help it get through short-term market ups and downs.
