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.
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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.
The second highest yielder is European Assets Trust (LSE: EAT), at 6.1%.
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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
|Henderson Far East Income||7.2|
|European Assets Trust||6.1|
|Value and Indexed Property Inc||5.9|
|Henderson High Income||5.7|
|BMO UK High Income||5.7|
|Aberdeen Standard Equity Income||5.6|
|City of London||4.9|
|BlackRock Latin American||4.7|
|Invesco Perpetual UK Smaller Cos||4.6|
|JPM Japan Small Cap Growth & Inc||4.5|
|Dunedin Income Growth||4.2|
|Jupiter Emerging & Frontier Income||4.2|
|Schroder Income Growth||4.1|
|BlackRock North American Income||4|
|Aberdeen Asian Income||4|
|JPMorgan China Growth||4|
Source: Stifel. Data to 11 May 2021.
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