Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Revealed: the UK equity income funds which have topped the charts
Finding reliable dividend income in the UK equity market remains tricky despite the resumption of dividends by companies emerging from the pandemic and repairing their balance sheets.
In this feature Shares puts the spotlight on some of the best performing UK equity income funds and investment trusts which have also displayed consistency over many years.
Topping the trust universe is the Law Debenture Corporation (LWDB) which has performed consistently well over five years and ranks highly over the last decade, besting peers and the
FTSE All-Share total return index.
The open-ended funds universe is topped by the Allianz UK Listed Equity Income Fund (FUND:B82ZGC2) which has delivered an impressive five-year return, almost double the return of the index.
All the figures in this article are total return which includes share price gain/loss and dividends.
A 40-YEAR TRACK RECORD
The £1 billion Law Debenture trust is managed by Janus Henderson’s James Henderson and Laura Foll. The trust aims to deliver long-term capital growth in real terms and provide a steadily increasing income.
Impressively, the trust has maintained or grown its dividend consecutively over the last 40 years and the trailing 12-month dividend yield is 3.3%.
The managers are bottom-up stock pickers who spend most their time meeting company managements and conducting detailed analysis of long-term growth prospects.
They are patient investors looking to identify companies with great long-term prospects, but which are trading below fair value due to temporary problems or have just fallen out of favour.
The portfolio is typically diversified across around 140 different names, two thirds of which are large cap FTSE 100 names and the rest mid-cap and small caps.
Around 77% of the portfolio is invested in UK stocks with 7% in the US and the rest spread across Europe and Asia. There is a cyclical bias to the portfolio with around 70% of the portfolio exposed to sectors such as financial services, industrials and basic materials.
Because the portfolio is so diversified the top 10 holdings only represent around 20% of the assets. Pharmaceutical giant GlaxoSmithKline (GSK) is the biggest position at 2.8%, followed by oil majors Shell (SHEL) and BP (BP.), and bank HSBC (HSBC).
The trust has an ongoing charge of 0.57%.
BENEFITING FROM EXPERIENCE
The Allianz UK Listed Equity Income Fund has £237 million of assets and is managed by Simon Gergel and Richard Knight. The fund has a trailing dividend yield of 3.5% and income is paid semi-annually.
The fund has been managed with a consistent value-driven approach for many years and benefits from a team which have decades of investment experience gained across multiple investment cycles.
The fund’s objective is to generate a greater return than the FTSE-All Share index over a rolling five-year period while delivering an income yield above that of the index.
The portfolio is diversified across 57 holdings and the top 10 represent around 29% of the portfolio. As might be expected from a value-focused approach, the portfolio is weighted towards
cyclical and interest rate sensitive areas of the market and underweight consumer defensives, healthcare and utilities.
The fund has an ongoing charge of 0.57% a year.