Meet the income stocks that have grown their returns for over 50 years in a row!

One well-known UK income share that has grown its dividend every year for more than half a century City of London Investment Trust (LSE: CTY). The trust has increased its payout every year since England last won the World Cup. We hope this year can bring good news for both sides again!

But while the City of London is well-known – its £2.8bn market capitalization derives from the area FTSE 250 index – its long-term record for common stock growth is no exception.

Investment Trust Banks again Alliance Witan they have been increasing their dividends annually for as long as the City of London has.

The number of other shares, from IF&C Investment Trust to Scottish American Investment Companythey raised their payout per share north of the century.

There is a common theme here

There are other active businesses with equally impressive histories. Industrial manufacturer The Spirax groupfor example, it has grown its earnings per share for more than half a century.

But what is immediately noticeable about the shares I mentioned above is that they are investment trusts, not operating companies.

Even the best-run company can suffer during times of economic downturn. That often leads them to reevaluate their spending priorities. Shares – which have not been confirmed by any share – may be terminated as a result.

In contrast, investment trusts are generally firms with few employees and no activities beyond managing the trust: they are mainly shareholders (or other assets).

That’s important in this context because it means they don’t face the immediate financial pressures that an operating company can during tough times, when customers cancel orders and suppliers suddenly hike prices.

No share is without risk

However, while I see that as an advantage, it does not mean that the investment trust will not be affected if the economy slows down.

Its shareholders may sell, reducing their share price. Income may suffer if the shares it owns reduce their payouts.

Currently, for example, the City of London’s 10 biggest holdings include HSBC, A shell, Natwest Group, Imperial Brands again BP. All cut or canceled their shares during the 2020 stock market crash.

Long term income opportunities

So, how has the City of London – like other competitors – managed to keep increasing its shares like clockwork?

That reflects the trust managers’ choice of where to invest. The trust is currently involved in around 80 different companies. That level of diversification could help it weather the storm even when some of its biggest stakes cut their dividends.

The stocks I mentioned above are all blue-chip FTSE 100 members and demonstrate the City of London’s strong focus on proven UK businesses. However, that is not limited to the main index. The City of London also owns shares in other FTSE 250 businesses such as ITV again Victrexcurrently yields 6.2% and 9.7%, respectively.

Such reliance on UK companies brings with it the risk that if the British market does poorly, the City of London’s income streams may decline. That is a risk to the dividend.

From a long-term perspective, I see it as a stock that investors should consider.