With a second interest rate cut on the cards before the end of 2024, investors searching for long-term income and capital growth may be keen to review their portfolios. The Association of Investment Companies (AIC) has published a comprehensive list of the 26 investment trusts that invest in equities and yield at least 4.5% to help investors.
Nearly all of these investment trusts (23 out of 26) are currently on a discount with over half (15 trusts) on double-digit discounts. The average discount for the investment trust sector (excluding 3i) is currently -14.8%.
The highest-yielding equity and flexible investment trusts
| Company | AIC Sector | Yield (%) | Discount / premium (%) | Share Price Total Return | |||
| 1yr | 5yr | 10yr | |||||
| Henderson Far East Income | Asia Pacific Equity Income | 10.3 | 2.4 | 18.5 | -2.3 | 50.5 | |
| Marwyn Value Investors | UK Smaller Companies | 9.9 | -51.3 | 19.2 | 1.1 | -30.0 | |
| British & American | Global Equity Income | 8.5 | -34.8 | 42.1 | -14.7 | -36.6 | |
| UIL | Flexible Investment | 8.1 | -34.9 | -13.0 | -51.5 | 38.0 | |
| Chelverton UK Dividend Trust | UK Equity Income | 7.4 | 2.8 | 15.4 | 38.7 | 85.4 | |
| abrdn Equity Income Trust | UK Equity Income | 7.2 | -4.6 | 9.8 | 18.2 | 38.7 | |
| BlackRock Latin American | Latin America | 7.1 | -14.2 | -11.8 | -5.9 | 16.3 | |
| Premier Miton Global Renewables | Infrastructure Securities | 6.9 | -16.0 | 1.9 | 13.5 | 14.8 | |
| European Assets | European Smaller Companies | 6.8 | -13.0 | 12.4 | 18.5 | 79.5 | |
| Lindsell Train | Global | 6.7 | -20.7 | -5.8 | -31.4 | 179.5 | |
| CT UK High Income | UK Equity Income | 6.4 | -11.2 | 19.0 | 28.6 | 62.3 | |
| CT Global Managed Portfolio Income | Flexible Investment | 6.4 | 0.6 | 9.6 | 14.4 | 56.3 | |
| Henderson High Income | UK Equity & Bond Income | 6.3 | -8.2 | 12.9 | 34.3 | 72.5 | |
| BlackRock World Mining Trust | Commodities & Natural Resources | 6.1 | -6.0 | 0.6 | 106.8 | 128.0 | |
| Shires Income | UK Equity Income | 5.8 | -8.2 | 12.4 | 25.1 | 76.4 | |
| Athelney Trust | UK Smaller Companies | 5.8 | -14.9 | -8.0 | -3.1 | 3.7 | |
| abrdn Asian Income Fund | Asia Pacific Equity Income | 5.3 | -12.3 | 17.5 | 31.5 | 74.7 | |
| JPMorgan Claverhouse | UK Equity Income | 5.0 | -6.8 | 12.6 | 27.5 | 89.0 | |
| Lowland Investment Company | UK Equity Income | 4.9 | -12.4 | 20.9 | 30.3 | 48.4 | |
| JPMorgan China Growth & Income | China / Greater China | 4.8 | -12.9 | -1.7 | -10.8 | 80.3 | |
| Dunedin Income Growth | UK Equity Income | 4.8 | -11.8 | 12.5 | 33.1 | 73.1 | |
| Merchants Trust | UK Equity Income | 4.8 | -0.1 | 15.6 | 57.1 | 108.7 | |
| Schroder Income Growth | UK Equity Income | 4.8 | -11.2 | 14.6 | 31.1 | 74.0 | |
| City of London | UK Equity Income | 4.7 | -0.3 | 17.3 | 34.4 | 86.3 | |
| Diverse Income Trust | UK Equity Income | 4.6 | -6.2 | 21.5 | 24.5 | 76.1 | |
| Middlefield Canadian Income | North America | 4.5 | -12.1 | 18.7 | 47.0 | 75.2 | |
Source: AIC / Morningstar (to 27/09/2024). Includes investment trusts in all equity sectors and the Flexible Investment sector. Excludes VCTs and alternatives. Excludes investment trusts where wind-up or restructuring plans have been proposed.
A total of 18 investment trusts yield 5% or more and a further eight trusts yield between 4.5% and 5%. Of the 26 investment trusts, the highest yielding is Henderson Far East Income which invests in Asia Pacific equities and yields 10.3%.
Almost a quarter (six) of the highest yielding investment trusts are AIC dividend heroes, meaning they have consistently increased their dividend for at least 20 years in a row. abrdn Equity Income Trust is the highest yielding of the dividend heroes offering a 7.2% yield and has increased its dividend for 23 consecutive years. A further eight investment trusts have increased their dividend consecutively for ten years or more, but less than 20 years.
Eleven of the 26 investment trusts are from the UK Equity Income sector and there are two trusts from each of the following sectors – UK Smaller Companies, Asia Pacific Equity Income, and Flexible Investment in the list.
Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “When interest rates fall, millions of investors will take a hit on their income. This list of high yielding equity investment trusts is a helpful place for income seekers looking to invest in the stock market to start their research. These trusts offer a range of opportunities in regions and sectors around the world, from the UK and Asia-Pacific to smaller companies and commodities. Many of these investment trusts are trading on historically wide discounts which could present a buying opportunity.
“Investors may find it reassuring that 14 of these high yielding investment trusts have raised their dividends every year for the past ten years, and six of these have raised their dividends for 20 years or longer. Of course, dividends are never guaranteed, and if an investor is in any doubt about the suitability of an investment trust for their portfolio, they should speak to a financial adviser.”
