The Association of Investment Companies (AIC) has published a list of the highest yielding equity investment trusts, with 18 trusts yielding 5 per cent or more.

The association noted that, with a second interest rate cut expected before the end of the year, investors searching for long-term income and capital growth may be looking to review their portfolios.

Of the listed investment trusts, the Henderson Far East Income, which invests in Asia Pacific equities, had the highest yield of 10.3 per cent, followed by Marwyn Value Investors, which invests in UK smaller companies, with 9.9 per cent.

The British & American global equity income trust, UIL flexible investment trust, and Chelverton UK Dividend Trust, which invests in UK equity income, made up the rest of the top five.

Almost all (23 out of 26) of the investment trusts with yields of 4.5 per cent or higher were currently on a discount, with more than half (15 trusts) on double-digit discounts.

Nearly a quarter (six) of the highest-yielding investment trusts were AIC ‘dividend heroes’, meaning they have consistently increased their dividend for at least 20 years in a row.

The Abrdn Equity Income Trust was the highest yielding of these ‘dividend heroes’ at 7.2 per cent, and has increased its dividend for 23 consecutive years.

Eleven of the 26 investment trusts were from the UK equity income sector, while two trusts from each of the UK smaller companies, Asia Pacific equity income, and flexible investment sectors were on the list.

“When interest rates fall, millions of investors will take a hit on their income,” commented AIC communications director, Annabel Brodie-Smith.

“This list of high yielding equity investment trusts is a helpful place for income seekers looking to invest in the stock market to start their research.

“These trusts offer a range of opportunities in regions and sectors around the world, from the UK and Asia-Pacific to smaller companies and commodities. Many of these investment trusts are trading on historically wide discounts which could present a buying opportunity.

“Investors may find it reassuring that 14 of these high-yielding investment trusts have raised their dividends every year for the past 10 years, and six of these have raised their dividends for 20 years or longer.

“Of course, dividends are never guaranteed, and if an investor is in any doubt about the suitability of an investment trust for their portfolio, they should speak to a financial adviser.”

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