Investment trusts have provided a refuge for income seekers in this crisis and shares in the closed ended funds rate highly in our income screens this month including Murray Income (MUT), JP Morgan Global Growth and Income (JGGI), Henderson High Income (HHI) and The Merchant’s Trust (MRCH).
- Some big FTSE All Share companies could be forced to cut dividends again, given the falls in GDP being forecast for 2020 – the International Monetary und (IMF) now expects the world economy to contract by 4.9 per cent in 2020. Investors must factor possible cuts in before being seduced by juicy yields on offer from the likes of miner Rio Tinto (RIO), defence and aerospace manufacturer BAE Systems (BA.) and tobacco company Imperial Brands (IMB). Although, it may be that even adjusting the trailing yield down, the risk-reward profile of the shares still stacks up.
- On Aim, dividend yield is as much a value indicator as a sign of sustainable cash flows to enjoy for years and investors need to evaluate how much of the trailing pay outs are sustainable, especially when special dividends have been paid.
