The equity funds paying monster dividends

UK equity investors have been pretty spoiled in recent years, with the FTSE 100 returning to form and plenty of funds capturing those gains.

But there’s some cause for gloom when it comes to income. UK-listed companies have carried out prolific share buybacks in recent years, sometimes at the expense of dividends.

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That, and rising valuations, have helped to suppress the yields available. The dividend yield on the FTSE 100, and that available from names such as the iShares Core FTSE 100 ETF GBP Acc GBP (LSE:CUKX), comes to around 3%, a long way down from old levels of approximately 5%.

We’ve previously looked at the investment trusts offering high dividend yields as one source of income, but as we’ve noted, it’s worth remembering some of the pitfalls involved in following that one metric alone.

High yields can sometimes signal that an asset, be it a trust, company or even a bond, is lumbered with an increasingly unsustainable payout.

That’s arguably the story for the Association of Investment Companies (AIC)’s Renewable Energy Infrastructure sector, a cohort plagued by troubles, where the average dividend yield now comes to a substantial 11.4%.

One other way to judge an income investment is to ask how much it has paid out in the past, and how. Those assessing the biggest payers should at least find a diverse selection.

Running the rule over equity income funds

With most bonds unable to increase your income in line with inflation and alternative assets still facing a multitude of problems, it’s worth analysing that dividend-generating stalwart, the equity income fund.

Here we look at those UK and global equity income funds and investment trusts that paid out the biggest chunk of cash in 2025, had you invested a £10,000 lump sum in late December 2024.

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We have excluded other equity income regions (think Europe, Asia, emerging markets and Japan) in this instance as these tend to attract relatively little investor cash, much as some experienced investors might rightly be tempted by their yields and dividend growth.

Our first table provides a selection of the top payers from both the UK and global equity income space.

Just two global names make the cut here, in the form of UBS Global Enhanced Equity Income C Inc and Premier Miton Global Sust Optm Inc C Inc, although we also list the biggest global payers in another table.

Source: FE. Based on income payments over the course of 2025, had £10,000 been invested on 27 December 2024. All data as at 20/01/2026. 

A few themes stand out.

For one, so-called enhanced income funds are still doing their job pretty well.

The UBS fund, Schroder Income Maximiser Z Inc, both Premier Miton funds and Fidelity Enhanced Income W Inc all employ such an approach, which involves underwriting call options on some of their holdings in exchange for a fee.

This strategy, which gives another investor the right to get exposure to a given share if it rises above a certain price, boosts the fund’s income. But it can limit a fund’s gains in rising markets.

As the table shows, a fund can in theory take this approach and still do nicely on the total return front – although many have not had such an ideal outcome.

The Schroders fund has had a good overall performance, if slightly behind the FTSE 100’s 24.1% return over the same period.

Things have been much less rosy for Fidelity Enhanced Income and Premier Miton Optimum Income B Inc if we judge them by performance versus the market. As such, it could be a case of sacrificing overall performance for a big payout.

Little wins

UK income investors have likely become accustomed to backing big companies in their pursuit of good dividends.

FTSE 100 names such as Legal & General Group (LSE:LGEN), Phoenix Group Holdings (LSE:PHNX), Mondi (LSE:MNDI) and M&G Ordinary Shares (LSE:MNG) all have yields of at least 6%, while some of the big banks and energy stocks have long been seen as income stalwarts.

Some names in the table do back the big names, with the yield-chasing iShares UK Dividend ETF GBP Dist (LSE:IUKD) holding well-known blue-chip stocks among its top holdings.

Meanwhile, CT UK High Income Ord (LSE:CHI) has almost 80% of its portfolio tied up in FTSE 100 stocks, giving it a pretty clear bias to large caps.

But what’s striking here is that many of the names in the list deliberately look further down the market cap scale for dividends.

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Chelverton UK Dividend Trust Ord, a fairly tiny investment trust in its own right, focuses on small and mid-cap stocks, with top holdings including Chesnara (LSE:CSN), Smiths News (LSE:SNWS), Hargreaves Services (LSE:HSP), MTI Wireless Edge Ltd (LSE:MWE) and Polar Capital Holdings (LSE:POLR).

Recent strong performer Aberdeen Equity Income Trust (LSE:AEI) has just under half its portfolio in the FTSE 100, with a 41.5% allocation to FTSE 250 stocks. The stablemate it’s looking to absorb, Shires Income Ord (LSE:SHRS), also paid out a decent income but is excluded from the table in case the two trusts do merge.

Meanwhile, the term “multi cap”, which features in the name of several funds here, denotes a focus beyond the biggest companies in the hunt for yield.

As such, the roles may currently be reversed for some of the main UK markets. The FTSE 100 has been busy generating good capital growth, while small and mid-cap shares are in fact doing well on the income front.

But as the table shows, the funds with a multi-cap approach have not done terribly by total returns over 12 months.

Global income

Enhanced income funds are pulling their weight on the global front too, if judged merely by payouts.

The UBS fund takes this approach, but so does Premier Miton Global Sust Optm Inc C Inc and Fidelity Global Enhanced Income W Inc.

Source: FE. Based on income payments over the course of 2025, had £10,000 been invested on 27 December 2024. All data as at 20/01/2026. 

The Premier Miton fund has done very poorly by total returns, however, given the MSCI World index made a 10% (sterling) return over the same period.

Beyond those names, we have a mixture of approaches on show.

There’s the widely followed Murray International Ord (LSE:MYI), long known for being less US-centric than many global funds. A third of the portfolio is in North America, with almost a quarter in Europe (ex UK) and a similar allocation to Asia.

Top holdings range from Philip Morris International Inc (NYSE:PM) to CME Group Inc Class A (NASDAQ:CME), AbbVie Inc (NYSE:ABBV), Taiwan Semiconductor Manufacturing Co Ltd ADR (NYSE:TSM) and Merck & Co Inc (NYSE:MRK).

Speaking very generally, Murray International has tended to struggle in years dominated by the US tech mega-cap shares and outperform when that group stumbles. MYI shares returned just 4.5% in 2024 (when the MSCI World index made almost 21%), but enjoyed enormous gains in 2025.

Invesco Global Equity Inc UK Z Inc has also taken a US-light approach, with roughly 40% of the portfolio there at the end of the year. Around a fifth of the fund is invested in UK shares, with 3i Group Ord (LSE:III) and Rolls-Royce Holdings (LSE:RR.) among its top holdings.

By its own reckoning, the fund’s strength is “finding companies that have a strong track record of dividend payment, but, critically, can grow those dividends too”.

But the presence of low-yielding names such as Rolls-Royce suggests the team either has a very long time frame for such dividend growth or is using certain holdings to make good capital gains too.

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In the extension of a theme, Schroder Global Equity Income Z Inc has an allocation of just 35% to US shares and had a relatively feeble total return in 2024.

This does reflect a common dilemma for global income investors: that the US tends not to yield much, forcing them to look beyond the biggest (and sometimes best-performing) market.

A contrast comes from the presence of JPMorgan Global Growth & Income Ord (LSE:JGGI), which pays out 4% of its net asset value each year, in the table.

The trust has made huge returns from backing the likes of the Magnificent Seven in recent years. However this exposure, along with other factors such as currency effects, made for a painful 2025.