Interactive Investor

The 25 highest-yielding equity investment trusts revealed

17th May 2021 11:14

Tom Bailey from interactive investor

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The trusts on the list are found across a diverse range of sectors.

The past year has been grim for income seekers, with companies across the board cutting dividend payments during the pandemic. While the worst of the cuts looks to be behind us, it will likely take years for payments to return to where they were.

However, for those looking for steady income, one of the better options has been investment trusts. Trusts are able to hold back payments in years when dividends are plentiful and distribute the reserves in tougher times – such as now. As a result, many investment trusts are still offering attractive yields.

As the table below shows, there are 25 investment trusts investing in equities that offer yields of 4% or more, according to data from the investment trust analyst Stifel.  

The trusts on the list come across a diverse range of sectors. For example, UK equity income stalwarts such as City of London (LSE: CTY), JPMorgan Claverhouse (LSE: JCH) and Merchants (LSE: MRCH) are on the list.

The trio are ‘dividend heroes’, as they have consistently raised dividends for decades. City of London has raised payouts for 54 years on the spin, while JPMorgan Claverhouse and Merchants have increased income for 48 and 38 years, respectively.

Also on the list are trusts investing in Asia, notably Aberdeen Asian Income (LSE: AAIF) and Henderson Far East Income (LSE: HFEL). The latter is the highest yielding, at 7.2%.

The second highest yielder is European Assets Trust (LSE: EAT), at 6.1%.

Several emerging market trusts are also on the list. For example, BlackRock Latin American (LSE: BRLA), JPMorgan Russian (LSE: JRS) and Jupiter Emerging & Frontier Income (LSE: JEFI).

Stifel keeps a close eye on investment trusts yielding more than 4%. It notes that this latest list is smaller than in recent months. There are two reasons for the decline. First, Edinburgh and Temple Bar were removed following dividend cuts. This was due to the appointment of new managers.

Several other trusts fell out of the table owing to rising share prices. Over the past few months, equity markets around the world have performed relatively well, the recent falls in the US market notwithstanding. As a result, the share price of many trusts has increased. That means that their yields have fallen, even if their dividend payments have remained the same.

25 highest-yielding investment trusts

Source: Stifel. Data to 11 May 2021. 

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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