Investing in the investors could prove beneficial for some, with some firms offering the prospect of dividend increases for 2009.
Investment companies have consistently offered rising dividends over recent years, industry data released today suggests.
The report, compiled by the Association of Investment Companies (AIC), shows that one in five firms that have kept records for the past ten years have offered an unbroken series of dividend increases. Moreover, 24 percent of those whose records stretch back over 20 years have also invariably raised dividends.
These increases have been made possible by the firms' building up reserves in good years in order to dole out to investors in the form of dividends in leaner years. Known as "smoothing dividends", this practice is likely to prove attractive in the present financial climate - which has caused significant volatility on the markets.
Commenting on the findings, AIC communications director Annabel Brodie-Smith said that the sector was offering investors an "enviable track record" for dividend increases - and that this is "particularly relevant at a time when interest rates are falling and yield is much harder to come by".
When asked about their own dividend prospects for 2009, experts at investment companies polled by the AIC seemed upbeat, despite the market turbulence.
Jonathan Cartwright, finance director of Caledonia Investments, said that his firm "expect[s] to maintain a progressive dividend policy". Peter Ewins, manager of F&C Global Smaller Companies, added: "We feel [our] targeting of businesses offering progressive growth in dividends is preferable to buying stocks that may immediately offer a high yield but with limited growth prospects."
