The ten investment trusts with the highest dividend yields

Here at MoneyWeek, we believe investment trusts are one of the best ways to participate in the stockmarket. Trusts have a record of beating unit trusts, tend to have lower management fees, and their closed structure means they can more easily make long-term investments.

On top of these qualities, they can also borrow money to invest, which can improve returns, and they can also hold back 15% of the income generated from their portfolios every year to build what is known as a “revenue reserve”.

This is another key difference between investment trusts and traditional open-ended funds. It means in the good years they can put aside a bit of money to build a pot of cash they can dip into when the environment changes.

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As such, they are more likely to be able to maintain their dividends over the long term. Indeed, in 2020 when a large number of companies decided they were going to hold back their dividends in order to conserve cash in the pandemic, few trusts followed. They were able to dig into their revenue reserves and maintain shareholder distributions.

Using this strategy, some investment trusts have grown their dividends every year for more than half a century!

With that in mind, is a list of the ten highest-yielding investment trusts on the market today.

Some of these investment companies support dividend yields in the double digits, but a word of warning – many rely on non-traditional investments to generate returns, including assets like mortgage securities and short-term loans. Not only are these assets more complex and, as a result, riskier, but they also tend to incur higher fees and charges.

This list only includes trusts priced in sterling.

Investment trusts with the highest dividend yields

*Source - Trustnet

Crystal Amber Fund, the Aim-listed activist fund, tops the list of the highest-yielding investment trusts, and it’s also trading at a large discount to net asset value.

However, while the headline yield figure might seem attractive, I should note that the firm is in the process of selling off its underlying assets and returning the capital to investors. Therefore, further cash returns are likely to be lumpy. The dividend yield published above is based on historical figures and may not be repeated in future years. (I’ll leave you to update this par or do as you see fit).

There is also the Henderson Far East Income, which launched in 1930 and manages assets totalling £401m. It currently trades at a premium of 3.3% to net asset value and yields over 10% year from a portfolio of shares from the Asia-Pacific region, including Australia, China, South Korea, Singapore, Hong Kong and Taiwan.

See also:

The ten highest dividend yields in the FTSE 100