New research from Oriel Securities has highlighted 31 investment trusts that are paying out a dividend of 4% or more.
“With ten year UK gilt yields falling to around 1.7%, we thought it was worth highlighting the higher yielding equity funds for income seekers who are prepared to take some equity risk. We list funds primarily investing in equities which have a dividend yield of 4% or greater,” explained Oriel Securities’ analysts Iain Scouller and Rob Jones. “This [4% yield] represents a premium to the yield on the FTSE All Share Index of 3.7%.”
Below are 10 equity-focused funds listed by Oriel Securities that currently have a historic yield above 4%.
European Assets (EAT)
Dividend Yield: 7.4%
Market Cap: £82 million
Shires Income (SHRS)
Dividend Yield: 6.6%
Market Cap: £54 million
Henderson High Income (HHI)
Dividend Yield: 6.6%
Market Cap: £114 million
Schroder Income Growth (SCF)
Dividend Yield: 5.5%
Market Cap: £125 million
British Assets (BSET)
Dividend Yield: 5.4%
Market Cap: £330 million
Henderson Far East Income (HFEL)
Dividend Yield: 5.4%
Market Cap: £295 million
Middlefield Canadian Income (MCT)
Dividend Yield: 5.2%
Market Cap: £85 million
Aberdeen Latin American (ALAI)
Dividend Yield: 4.8%
Market Cap: £60 million
City of London (CTY)
Dividend Yield: 4.7%
Market Cap: £682 million
Edinburgh Investment Trust (EDIN)
Dividend Yield: 4.6%
Market Cap: £930 million
Amongst the full list of high-yielding investment trusts are a few funds that specifically invest in UK equities. “Examples include City of London Investment Trust which primarily invests in UK blue-chip companies and has a yield of 4.7%. Schroder Income Growth has a 5.5% yield and is trading on a 5% discount. Edinburgh Investment Trust has a yield of 4.6% and is managed by Neil Woodford, with a defensive bias in the portfolio which has been helpful to relative performance over the last few months,” said Scouller and Jones in their report.
While many investment trusts trade at a significant discount to their net asset value (NAV), the majority of the funds listed above do not have that problem. “Most of these higher yielding funds continue to trade close to NAV, with some of them on premiums, which partly reflects the ongoing demand for income,” said Scouller and Jones in their report.
The list of investment trusts excluded funds with multiple share structures and funds with a market capitalisation of less than £50 million.