One-third of trusts yield more than FTSE, says AIC

One-third of investment companies currently yield more than the FTSE 100, according to the research by the Association of Investment Companies (AIC).

Figures published by the AIC show 80 out of the trade body’s 244 conventional members offer a dividend yield above the index’s 3.2% annual average. Two-thirds of these trusts trade at a discount.

The Property Direct UK sector displays the highest average yield with 7%. UK High Income comes in second place at 6.6% and Global High Income is in third with 5.4%.

In terms of individual trusts, British & American’s dividend yield of 11.1% tops the ranking, followed by Greenwich Loan Income’s 10%, IRP Property Investments’ 9.7% and Picton Property Income’s 9.6%.

The AIC says investment trusts are able to sustain their dividends through ‘smoothing’, which allows them to build up revenue reserves in good years to pay dividends in more difficult times.

“The investment company sector has long recognised the importance of dividends and it’s encouraging to see such a significant proportion of the sector yielding more than the FTSE 100 annual average,” the association comments.

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