Income payments are increasing in frequency and size from investment trusts, new data suggests.
Data from broker Winterflood Securities cited by the Financial Times shows that between 2013 and 2017, the proportion of trusts that paid some form of dividend for the year rose from 69 per cent to 82.
The proportion of the 321 surveyed that paid a yield above 5 per cent also doubled from 10 per cent to 20 per cent
Commentators have put the uptick in investment trust sales down to an increase in demand for income in a low rate environment.
The Association of Investment Companies tells the FT that increasing yields are also down to a shift in the buying strategies of trusts, which are starting to favour higher-income investments like debt and infrastructure over equities.
The AIC says: “We are seeing such a strong demand for income among investors that many trusts are now paying a dividend and perhaps paying at least some of it from capital to meet the demand.”
Investment trusts have been allowed to pay investors dividends out of their capital reforms since new flexibilities were introduced in 2012.