New research from investment bank Stifel highlights 14 investment trusts which offer a historical dividend yield of more than 4%.
The report comments: ‘The strong increase in many share prices post the EU referendum has resulted in a decline in dividend yields. We calculate there are 14 trusts (with market caps in excess of £80 million) investing in equities with a yield of 4.0% or higher and this has declined from 19 back in May.'
The risk with chasing higher yields is that dividends can be cut. Very high yields can be a signal from the market that it doesn’t believe the payout can be maintained. And often the market is proved right.
Stifel notes: ‘The list includes two funds (BlackRock Commodities Income (BRCI) & BlackRock World Mining (BRWM)) which have flagged dividend cuts in the current year, although even when the lowered dividend is taken into account, the yields are expected to be in excess of 4%.’