75% of investment trusts can weather company dividend cuts over next year

Companies cancelled £11.8bn in payments so far

More than three quarters (96) of equity investment trusts with a yield in excess of 1% have enough cash in their revenue reserves to pay at least one year's dividend to shareholders, according to Morningstar/AIC data, despite the fact many companies are cancelling or suspending dividends amid the coronavirus crisis.

Of those, 24 have enough in reserve to pay more than two years' worth of dividends. An active year for trust boards The outbreak of Covid-19 has forced many firms to scrap, cut or defer dividends in order to preserve balance sheets and weather the unprecedented hit to economic activity. Analysis by Peel Hunt showed FTSE 350 and AIM 100 companies had cancelled £11.8bn in dividends, with a further £13.6bn still at risk. While open-ended funds are required to return all income generated to unitholders every year, investment trusts can save surplus income received in good years to c...