Number of high-yield investment trusts up 50%!
Stormy equity markets the past three months have impacted on the share prices of many investment trusts, pushing dividend yields upwards - and throwing out new opportunities for income-seekers.
According to a new report from broker Stifel, there are now 21 equity-focused closed-ended funds with assets under management of £80 million plus that are yielding more than 4% - up from 13 six months ago in September and 11 in March 2017. Trust numbers have been further boosted by changes in policy for two trusts that have recently adopted a high-yield investment strategy and now feature in the table.
At the same time share price discounts to the underlying asset value have tended to widen over the period, offering an attractive opportunity for income investors to top up or expand their portfolios.
Increases in yield are evident across a broad swathe of sectors. Unsurprisingly, given the fact that domestic markets have fallen so heavily out of favour with international investors over recent months, more than half of the table are UK-oriented trusts.
They include newcomers Schroder Income Growth (SCF) (4.2% yield) and Invesco Perpetual UK Smaller Companies (IPU), which has recently adopted a more dividend-focused policy and now pays 4.1%. It has boosted its payouts by 22% over the past year and is prepared to supplement dividend takings with capital if need be. Several other trusts in the list have also adopted dividend-boosting policies, including Baring Emerging Europe (BEE) (on a 4.3% yield) and JP Morgan Asian (JAI).
Other UK-focused Rated Fund members worth noting on the list include City of London (CTY) (4.2% yield), which has grown its dividends for more than 50 consecutive years, and Shires Income, yielding 4.7%, though this latter sits on a 2% premium.
Asian funds are also in evidence, in the shape of Henderson Far East Income (HFEL), on a 3% premium but producing a meaty 5.9% yield. Aberdeen Asian Income (AAIF) and JPMorgan Asian, meanwhile, are both on a 4.4% yield and offer better value in discount terms as they sit on high single-figure discounts.
The top-yielding equity trust, however, is interactive investor Rated Fund European Assets (EAT), paying 6.3% and sitting on a modest 0.5% premium. It pays its dividend primarily from capital and the board resets the dividend level each year. Stifel says that the forecast for 2018 amounts to a 6.3% payout.
Source: Datastream Past performance is not a guide to future performance
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|CITY OF LONDON INVESTMENT T...||439.50p||-0.68%|
|HENDERSON FAR EAST INCOME L...||371.64p||-0.10%|
|ABERDEEN ASIAN INCOME FUND ...||212.75p||0.35%|
|BARING EMERGING EUROPE PLC ...||717.50p||-0.35%|
|EUROPEAN ASSETS TRUST NV OR...||122.07p||-0.35%|
|INVESCO PERPETUAL UK SMALLE...||516.08p||-1.32%|
|JPMORGAN ASIAN INVESTMENT T...||364.00p||-1.22%|
|SCHRODER INCOME GROWTH FUND...||306.75p||-1.05%|
|All data 15min delayed as of: 13:38:03 23/05/18|