More than just income – income with growth
Reliable income doesn’t have to mean standing still. Explore how investment trusts can help your portfolio grow over time.
5 minute read
If you’re aiming for income today and growth tomorrow, you’re thinking like a long-term investor. Whether you’re planning for retirement, topping up a pension, or simply trying to make your money work harder, steady income is often the foundation of a long-term strategy. But income doesn’t have to mean ‘flat’, and this is where investment trusts can really shine.
Income that’s built to last
Investment trusts have long been used by investors who want more than just payouts – they want reliability, discipline, and the chance for those payouts to grow.
Many investment trusts don’t just aim to deliver income – they aim to grow it year after year. All our income focused investment trusts have long track records in growing their dividends, most even during rough patches like the 2008 financial crisis and the more recent Covid-19 pandemic.
How it works: Smoothing the ride
Here’s one of the key features that sets investment trusts apart: they can hold back income in good years and use it to support dividend in tougher ones. That’s not something open-ended funds can do – they’re required to pay out everything they receive each year.
This “smoothing” mechanism helps investment trusts keep dividends steady – and often growing – even when markets wobble. It’s not magic, it’s just smart structuring backed by a long-term mindset and disciplined management.
Growth by design
That structure, and careful stock selection, has helped create what the Association of Investment Companies (AIC) calls “Dividend Heroes” – a group of investment trusts that have increased their dividends for 20 years or more.
The City of London Investment Trust (CTY) tops the list with 59 years of uninterrupted dividend growth. And while the annual increases might seem modest, they’ve added up over time, often outpacing inflation.
Our other income focused investment trusts – The City of London Investment Trust (CTY), Henderson Far East Income (HFEL), Henderson High Income (HHI), Lowland Investment Company (LWI), and The North American Income Trust (NAIT) – are building similar track records. Henderson High Income (HHI), for example, has raised its dividend for ten years in a row, growing payouts at a compound rate of approximately 2% a year. These “Next Generation Dividend Heroes” have increased their dividends for at least ten years, but less than 20, making them rising stars among investment trusts.
Even more powerful in a tax wrapper
Wrap these income-generating investment trusts inside an Individual Savings Account (ISA), a Self-Invested Personal Pension (SIPP), or Junior ISA, and the benefits can compound even further.
- In an ISA dividend income and gains are tax-free – great for retirees or anyone looking to boost their income without triggering extra tax.
- In a Junior ISA, you’re setting up the next generation with long-term compounding machine.
- And in a SIPP, you get upfront tax-relief, making it one of the most efficient long-term wrappers available.
Click here to explore ISA, SIPP and JISA basics with Janus Henderson Investment Trusts
Click here to find out more about our range of income focused investment trusts
Dividend
A variable discretionary payment made by a company to its shareholders.
Individual Savings Account (ISA)
An Individual Savings Account is a UK government-backed savings account that allows you to save or invest money without paying any tax on the interest, returns, or profits you make. Each tax year, you receive a personal ISA allowance, a set amount of money you can contribute to your ISA, keeping more of your earnings.
Inflation
The rate at which the prices of goods and services are rising in an economy. The consumer price index (CPI) and retail price index (RPI) are two common measures; the opposite of deflation.
Investment trust
An investment trust is a form of investment fund, specifically a publicly-traded, collective-investment scheme that invests its shareholders’ money in the shares of other companies.
Junior ISA
A Junior ISA (JISA) is a tax-free savings and investment account for children under 18, allowing parents and guardians to save money for their child’s future.
Open-ended fund
An open-end fund is an investment vehicle that creates and redeems shares based on investor demand, pooling money into a diversified portfolio without a fixed share limit.
Portfolio
A grouping of financial assets such as equities, bonds, commodities, properties, or cash. Also often called a ‘fund’.
Self-invested personal pension (SIPP)
A Self-Invested Personal Pension, or SIPP, is a defined-contribution retirement plan offered to taxpayers in the United Kingdom.
Important information
Not for onward distribution. Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions. Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.
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