Hey savvy investors! Imagine an investment that has paid and increased its dividends every single year for 58 years, through market crashes, recessions, inflation spikes, and financial crises. Finding something like this is extremely rare, but there is one investment trust that has managed to do exactly that.
I’m talking about City of London Investment Trust or CTY, listed on the London Stock Exchange. It is one of the longest-running dividend payers in the deep UK market. It has never failed to increase its payout since 1966, making it a dividend powerhouse that has survived everything the market has thrown at it.
Now, I’m not just picking a random share from the market to introduce to you, my valued viewers. I’ve personally owned CTY for the past 5 years, and it remains one of my high-dividend core holdings that provides me with a stable and reliable income stream.
And here’s something that makes CTY even more attractive for Singapore investors. I’ve mentioned this a couple of times in my previous video, and you probably already know: UK-listed stocks, including CTY, have zero withholding tax on dividends. That means we receive the full payout, unlike US dividend stocks, which have a 30% withholding tax. Over the long term, this makes a huge difference, especially if you’re holding for retirement.
So in this video, I’ll go through how City of London Investment Trust has maintained its impressive dividend track record, how it is structured, what stocks it holds, and why it continues to be a strong income investment. I’ll also discuss the risks, and make sure you stay till the end when I assess whether CTY continues to deserve a place in my portfolio.
But first, let me remind you that this video is for informational purposes only and not financial advice. Always consult a licensed financial adviser to ensure your decisions align with your goals. And yes, I hold the trust in my portfolio, but remember, what works for me might not work for you.
Alright, let’s dive in!
What is the City of London Investment Trust?
CTY is a UK-listed investment trust that focuses on stable, dividend-paying companies. Established in 1932, it is one of the oldest and most reliable trusts on the London Stock Exchange.
It is actively managed, meaning it carefully selects a portfolio of blue-chip companies that have strong dividend-paying histories. Unlike passive ETFs that track an index, CTY’s managers aim to maximize stable income while ensuring capital preservation.
What makes it especially unique is its long track record of dividend growth: CTY has increased its dividend payout every year for the past 58 consecutive years. This means that even during major financial crises, its dividends have never been cut, only raised. Think about the oil crisis in 1973, Black Monday in 1987, dot-com crisis in 2000, global financial crisis in 2008, and the recent COVID-19 crisis. Simply amazing.
Reasons I Invested in the City of London Investment Trust
Now, I would like to share with you why I invested in CTY in the first place. These reasons continue to be relevant today.
1. Amazing Track Record Arising from Unique Strategy
CTY’s current dividend yield is around 5%, which is attractive for long-term income investors. But what really makes it special is its unbroken 58-year streak of dividend increases. Dividend track record never gets better than this!
You may ask, how is that possible? Listing out all the crises over the past 60 years will be longer than the length of this video! Other than the diversification and strength of the individual holdings in the trust, which I’ll discuss later, one key reason that CTY is able to keep raising dividends is because of its revenue reserve strategy.
Unlike ETFs or most funds, investment trusts have a unique revenue reserve system. Instead of distributing all of its earnings as dividends, CTY keeps a portion of its profits aside for times when companies in its portfolio may cut their payouts. This smooths out the dividend payments, and makes it extremely reliable for income investors, particularly for those who depend on dividends to cover expenses or fund retirement, because it ensures that even during recessions or stock market downturns, you can still rely on a steady dividend payout.
2. Portfolio of Top Stable Companies with International Businesses
CTY invests in dividend-paying companies listed on the London Stock Exchange. Now, the depth of the London Stock Exchange is one of the greatest in the world. The UK FTSE 100 Index consists of some of the largest companies in the world, many of which are mature businesses with stable revenues globally.
One key strength of CTY is the ability to identify top dividend companies. Hence, with CTY, you’re not just buying one company,you’re getting exposure to multiple strong dividend payers at once.
Just look at some of its biggest holdings. It’s largest holding is HSBC, one of the largest banks in the world. HSBC has a strong presence in Asia and Europe, making it well-positioned for global growth. Next is Shell. As one of the largest oil and gas companies, Shell benefits from rising energy prices and has a long history of dividend payouts.
The third largest holding is RELX, which you may not be as familiar. It is a global leader in data analytics and information services, specializing in risk management, scientific research, and legal publishing. Its strong recurring revenue model and focus on high-value data make it a resilient, growth-oriented stock in the FTSE 100. Just to mention one more recognisable company, Unilever. The consumer goods giant owns brands like Dove, Lipton, and Magnum. People buy these products regardless of economic conditions, making Unilever a stable dividend payer.
By holding CTY, I’m essentially investing in all of these companies in one go, without needing to manage individual stock positions.
3. Well-Diversified Portfolio Across Stable Sectors
Another of CTY’s biggest strengths is its well-diversified portfolio. Unlike many popular ETFs that focus on high growth individual stocks in sectors such as technology or biotechnology, CTY spreads its investments across multiple sectors with stable revenues, ensuring stable income generation for the Trust.
The largest sector is Financials at 30.9%. This includes major banks and insurers that will benefit from rising interest rates. The second largest sector is Consumer Staples at 20.9%. This consist of defensive companies that provide everyday essentials. This is followed by Industrials, Energy and Healthcare, making up between 7% and 9% of the Trust. This mix allows CTY to balance defensive and high-yielding sectors, making it resilient across different market conditions.
4. Zero Withholding Tax
You might already know this: there is no withholding tax for Singapore investors in UK-listed stocks. This means that I keep 100% of the dividends distributed by the Trust, unlike US stocks where 30% withholding tax is deducted from dividends distributed upfront.
For dividend-focused investor like me, focusing on UK-listed stocks makes sense, and this makes CTY a compelling option compared to many other ETFs.
Several Risks to Consider
While CTY has many strengths, there are definitely risks that I keep in mind and review frequently.
First, the UK Market Exposure. The UK stock market has underperformed in recent years, especially against the US market. But with interest rate cuts expected in the UK and Europe, this could change. A stronger UK market would improve CTY’s performance.
Secondly, while CTY increases dividends every year, the growth rate is only around 2% per year, which may not keep up with inflation. Thirdly, similar to the Straits Times Index or STI which we are more familiar with, CTY is heavily weighted in financials. This sector concentration means that it could be more affected by banking sector downturns.
Finally, CTY has higher fees compared to passive ETFs. CTY charges a 0.38% management fee, whereas passive ETFs like iShares FTSE 100 ETF or I.S.F. only charge 0.07%. However, CTY’s focus on dividend payers may make it more attractive for income investors.
The Dividend Uncle’s Take
For me, CTY is one of my core dividend investments, and I don’t see that changing anytime soon even after my latest review. It’s not a flashy, high-growth stock, but that’s not what I need it for. Instead, I hold it for one simple reason: reliable, predictable dividend income that I can count on, even during tough times.
CTY plays a very specific role in my portfolio. As someone who invests heavily in Singapore dividend stocks and REITs, I use CTY as my diversifier: a way to gain exposure to the UK market’s top dividend payers, while maintaining a strong and steady income stream.
There are two key reasons why I continue to hold CTY. Firstly, it’s a set-and-forget dividend machine – its dividend growth track record gives me confidence, though past performance is no guarantee of future results. That level of reliability is rare in any stock, trust, or REIT. Secondly, it complements my Singapore REITs – Singapore REITs offer high yield but come with interest rate risks. CTY’s exposure to sectors like financials, consumer staples, and energy adds stability and diversification to my income stream. Thirdly, as a Singapore investor, the zero withholding tax makes this investment sweeter than it already is.
That said, I’m fully aware of CTY’s limitations. It’s not designed for rapid capital appreciation, and with dividend growth averaging only about 2% per year, it may not keep up with inflation in the long run. But for someone like me, who values stability over chasing the highest returns, it’s a perfect fit.
I also know some investors might prefer an index tracking ETF, which has lower fees. But for me, CTY’s active approach and selection of strong dividend payers justify the slightly higher cost.
At the end of the day, CTY is not for everyone, but for those who prioritize dividend stability, CTY’s long track record may make it an interesting option to explore.
Now, what do you think? Do you already own CTY, or are you considering adding it? Let me know in the comments!
And if you found this video useful, subscribe if you want to follow my journey in building a resilient dividend portfolio—one that we can hold through all market cycles. I’ll be covering more deep-dives into strong dividend stocks, REITs, and strategies for passive income, so stay tuned!
Until next time, happy investing!
The Dividend Uncle 
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