The Highest Yielding Investment Trusts

Oriel Securities pinpoints the investment trusts that have a dividend yield of 4% or more

Alanna Petroff 19 June, 2012 | 2:40PM

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.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Alanna Petroff

Alanna Petroff  is a financial journalist with Morningstar UK.