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Merchants Trust
This trust is the best-performing AIC Dividend Hero in the IT UK Equity Income sector over the short , medium and long term
Becoming one of the AIC ’ s Dividend Heroes is an impressive feat – to make it onto this list , a trust needs to raise its dividend for at least 20 years in a row . Yet this doesn ’ t mean every Dividend Hero is automatically suitable for income investors – the lowest yielder pays out 0.5 % a year , while the worst performer has failed to keep up with inflation over the medium term . Therefore , investors would be better off using the Dividend Heroes as a starting point , then looking at which trusts on the list offer a decent starting yield and have a strong track record of performance .
Merchants Trust ticks both boxes . It is the best-performing Dividend Hero in the IT UK Equity Income sector over the past one , three , five and 10 years , while it also offers a punchy starting yield of 4.6 %.
Simon Gergel , who has managed the trust since 2006 , said the trust ’ s consistent performance record could be partly attributed to his focus on factors that are within his control . “ We don ’ t spend a lot of time trying to predict where the economy is going to go ,” he explained . “ We ’ re much more focused on finding individual businesses that can deliver good returns , nice dividend income and , over time , hopefully some growth .” The FTSE 100 was one of the few major markets to finish 2022 in positive territory , but UK equities continue to trade at modest valuations , having been out of favour since the country voted to leave the EU in 2016 . Gergel is hopeful that last year ’ s strong performance and a more stable political environment could see foreign investors re-evaluate the UK , which will hopefully lead to a re-rating .
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