Over two years have passed since the Bank of England began raising interest rates in the UK, moving from a prolonged period of ‘emergency’ rates to a current level of 5%. As households continue to navigate rising bills and expenses, concerns about financial stability are likely to persist well into the end of 2024, driving a renewed focus on savings.
Although inflation has eased somewhat, it remains high, eroding the real value of cash savings despite elevated interest rates. For those seeking higher income, equities present an alternative to traditional savings, offering the potential for dividends that can match or exceed current savings rates.
In this article, we highlight nine investment trusts with dividend yields over 4%. Remember: investment trusts also benefit from having a revenue reserve where they can store excess dividends in the good times to ensure dividend stability in the bad times.
Nine investment trusts with dividends above 4%*
Invesco Bond Income Plus – 6.74%
Invesco Bond Income Plus aims to provide capital growth and a high income by investing predominantly in high-yielding fixed income securities. The portfolio is well diversified across countries and industries and has maintained a consistently high level of dividends for many years.
BlackRock World Mining Trust – 6.37%
BlackRock World Mining Trust is a specialist trust offering exposure to mining and metals companies globally. In addition to investing in quoted securities, the trust may also invest in royalties derived from the production of metals and minerals, physical metals, and unquoted securities.
JPMorgan China Growth and Income – 5.55%
JPMorgan China Growth & Income invests in ’Greater China’ companies which are quoted on the stock exchanges of Hong Kong, China, and Taiwan, including A-Shares listed in Shenzhen and Shanghai or which derive a substantial part of their revenues or profits from these territories. The managers are growth-oriented investors who target higher quality companies which also pay an income.
City of London Investment Trust – 4.80%
Launched in 1891, The City of London Investment Trust is one of the longest-running investment trusts in the UK. It aims to provide growth in income and capital by investing predominantly in larger UK companies with international exposure. It has increased its dividend payment every year for the past 57 years.
Schroder Income Growth – 4.76%
Schroder Income Growth’s principal aim is to provide real growth of income in excess of the rate of inflation. It invests mainly in the shares of UK larger and medium sized companies although it can also invest some of the portfolio in the shares of firms listed abroad.
TR Property Investment Trust – 4.72%
TR Property Investment Trust invests in the shares of property companies of all sizes, typically within Europe and the UK. It will also have a small amount invested in physical property in the UK. Its managers look for well-run businesses in sectors including retail, office, residential, industrial property, and alternatives (which includes student accommodation, self-storage, and healthcare).
Murray International Trust – 4.64%
As the name suggests, this trust offers an international portfolio of UK and global equities, as well as some bonds. The manager may invest anywhere in the world and in any sectors, with a focus on maintaining an above-average yield for investors. It aims to achieve a total return greater than its composite benchmark.
Murray Income Trust – 4.46%
Murray Income Trust aims to provide a high and growing income combined with capital growth by investing in a portfolio of 30-70 UK companies. The trust is conservatively managed and targets resilient companies which can thrive in any economic scenario. The trust announced its 50th consecutive year of dividend growth this week.
Schroder Oriental Income – 4.38%
Schroder Oriental Income aims to provide income and capital growth by investing in Asia Pacific companies (including Australia and New Zealand) that offer attractive yields and growing dividend payments.
*Source: AIC, 10 August 2024
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and fund managers and do not constitute financial advice.
