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Ground Rents offering a low-risk dividend

Ground Rents Income Fund expects its dividend yield to reach 4 per cent in the current financial year.
December 5, 2016

Ground Rents Income Fund (GRIO) continued to offer an attractive combination of low risk and decent return in the year to September. In that time it completed purchases of £3.9m of freeholds and there is another £9m in the pipeline that is expected to be completed in the current year.

IC TIP: Buy at 135p

Operating as a closed-ended real estate investment trust, Ground Rents posted a valuation uplift on its property portfolio of £16.6m, up from £9.2m a year earlier, which helped to lift net asset value by 14 per cent to 131.8p. Around 29 per cent of the portfolio will be subject to a rent review within the next five years, and two-thirds of the portfolio is directly linked to an inflation based index. The dividend yield for the year was approximately 3.96 per cent and in the coming year this is expected to edge up to 4 per cent.