Investments in FTSE-listed companies that benefit from the fall in the value of sterling pushed the trust to break its half a century in dividend gains, according to the trust’s manager Job Curtis.
Mr. Curtis said that with 70 per cent of the earnings of FTSE 100 companies derived from overseas, the outlook for dividends and for company earnings is "quite positive".
"This time last year people were worried about the sustainability of the dividends of a lot of FTSE 100 companies.
"Many thought that the HSBC dividend could be in jeopardy. Oil and commodity prices had fallen which meant that people were worried about those dividends.
"But concerns about HSBC’s dividend have receded, the commodity companies have delivered on dividends, and the most recent results from Shell were very good.”
Shell and HSBC are respectively the second and third largest investments in the City of London Investment Trust. Mr. Curtis has 4.5 per cent in Shell and 4.3 per cent in HSBC.
The trust has a current dividend yield of 3.9 per cent.
The fund manager said: “Economic growth has also helped the trust over the past year. The outlook for the US is good, and Europe is starting to grow now, even China is doing better than many expected.
"The UK has had a bit of a slowdown in growth but it is still doing OK.”
Mr. Curtis has been buying shares in one particular stock that generates the bulk of its earnings from within the UK - Dixons Carphone.
The company operates the Dixons chain of electronic goods retailers, and the Carphone warehouse chain of mobile phone shops.
He said: “The company was very out of favour both because the market was worried about the economic outlook for the UK and because the market took the view that company was on the wrong side of technological change.
"But the most recent set of results from the company were positive and they have now been living with Amazon [competing with them in the market] for a long time. So I am positive on those shares and have been buying them.”
The City of London Investment Trust trades at a premium to net assets of 2.4 per cent.
Brian Dennehy, managing director at Dennehy Weller, said he has been investing in the City of London Investment Trust on behalf of clients since the early 1990s and feels the returns since the have been sufficient that clients are happy to have their capital deployed in them.