Fourteen investment trusts that primarily invest in equities have a yield of more than 4 per cent, a significant premium to the FTSE All-Share index yield of 3.4 per cent, reports broker Oriel Securities.
The list contains one new entrant, IC Top 100 Fund BlackRock World Mining (BRWM), which reflects its adoption of a new higher dividend policy over the past year, together with some weakness in the share price following the sell-off in the mining sector.
Read our tip on BlackRock World Mining
Meanwhile, another IC Top 100 Fund, Edinburgh Investment Trust (EDIN), has fallen out of Oriel's list of high-yielders following a 9 per cent rise in its share price in the past couple of months. This has had the impact of reducing the yield from 4.1 per cent to 3.8 per cent and the price rise has lifted Edinburgh from a 2 per cent to a 5 per cent premium to net asset value (NAV).
The list of high-yielders is led by Merchants Trust (MRCH), which yields 5.4 per cent and trades on a 2.7 per cent discount. "Its focus is on FTSE 100 companies and the trust is normally quite highly leveraged (indebted) - this was 23 per cent of NAV at 28 February," says Mr Scouller. "The leverage was one factor helping Merchants to outperform the FTSE 100 Index total return benchmark over the past year to 28 February, posting a NAV total return of 21 per cent versus a rise of 12 per cent for the index."
However, the highest yielders are not necessarily the best performers. Merchants' share price total return failed to beat the average UK Growth & Income Trust share price total return over one, three and five years. Similarly, Henderson Far East Income (HFEL), which also features on the list, made the poorest share price returns of the three Asian Income investment trusts over three and five years.
Read our Sell note on Henderson Far East Income
Oriel's list excludes funds with multiple share structures and a market cap of less than £50m.
Investment trusts primarily investing in equities with a dividend yield above 4%
| Trust | Dividend yield (%) | Premium/discount (%) | 1 year NAV Return (%) | 3 year NAV Return (%) | 5 year NAV Return (%) | Ongoing charge (%)* |
| Merchants Trust | 5.4 | -2.7 | 20.2 | 13.2 | -1.1 | 0.66 |
| Henderson High Income | 5.3 | +2.6 | 20.6 | 23.3 | 7.3 | 0.89 |
| BlackRock Commodities Income | 5.2 | -1.5 | -5.5 | -18.3 | -29.7 | 1.29 |
| Shires Income | 5.2 | +1.7 | 24 | 21.4 | -3.9 | 1.09 |
| European Assets | 5 | -2.8 | 25.1 | 25.4 | -5.3 | 1.71 |
| British Assets | 4.7 | -5.5 | 11.3 | 4.7 | -2.5 | 0.74 |
| Henderson Far East Income | 4.6 | +1.7 | 18.6 | 13.4 | 24.7 | 1.21 |
| Middlefield Canadian Income | 4.4 | +4.4 | 12.4 | 27.2 | 20.5 | 1 |
| Dunedin Income & Growth | 4.2 | +0.1 | 18.7 | 22 | 7.2 | 0.62 |
| Standard Life Equity Income | 4.1 | -3.3 | 17.9 | 15.1 | 13.5 | 0.99 |
| City of London | 4.1 | +2.9 | 20.2 | 25.9 | 17.1 | 0.45 |
| BlackRock World Mining Trust | 4.1 | -11.9 | -22.6 | -22.7 | -28.2 | 1.42 |
| Scottish American | 4.1 | +0.7 | 11.1 | 5.5 | -4.6 | 0.93 |
| Schroder Income & Growth | 4 | -0.1 | 18.2 | 18.7 | 18.4 | 1.07 |
Source: Oriel Securities, *Morningstar.
