Nineteen equity investment trusts yield over 4 per cent

19 equity investment trusts yield over 4 per cent

While UK gilt yields remain at ‘extraordinarily’ low levels of 2 per cent, there are 19 equity-based investment trusts that boast a dividend yield of more than 4 per cent.

Of these 19, three have a dividend yield of 6 per cent or more, according to research by broker Oriel Securities. Henderson High Income, European Assets and Merchants Trust take the top spots, yielding 6.5, 6.3 and 6 per cent respectively.

The yields compare favourably to that of the FTSE 100, which is currently yielding 3.3 per cent on average.

The broker also found that many of the highest-yielding trusts invest mainly in UK equities. The City of London Investment Trust and Edinburgh Investment Trust, both of which invest primarily in UK blue-chip companies, have dividend yields of 4.5 per cent.

However, income can also come from overseas. Oriel highlights European Assets and Henderson Far East Income, which both invest outside the UK, as paying fat dividend yields of 6.3 and 5 per cent respectively.

In addition to the equity trusts, investors in property and infrastructure trusts continue to enjoy decent dividends of ‘between 6 and 8 per cent’, according to the broker.

‘Most of these higher-yielding funds are trading on relatively narrow discounts or premiums, and we think this partly reflects high demand for high-yielding funds at this point in time,’ comments Ian Scouller, contributing analyst at Oriel.


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Comments

Bit simplistic really - could

Bit simplistic really - could we have more detail, please, on whether these high yields are likely to be sustainable?
For example, are they mainly achieved by eating into revenue reserves, which can't continue for ever? And to what extent do they entail a sacrifice of capital growth compared to their peers?

Agreed - we should be looking

Agreed - we should be looking for sustainable dividend growth funded out of income rather than just the yield high spots. More in depth IT analysis please.

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