Alternative investment trusts for the dividend drought
By Dave Baxter, Investors Chronicle, 16 April 2020
Some 45 per cent of UK companies had scrapped their dividends by 5 April and the situation is likely to deteriorate…
But equity trusts are not the only source of income – many investment trusts focused on alternative asset classes such as property, leasing and infrastructure also offer chunky yields. So if you are looking to diversify your income sources you could consider these. But before you invest in trusts focused on these kinds of assets due diligence is vitally important…
As of 14 April, 16 investment trusts have suspended, reduced or deferred their dividend payments, and all but one invest in alternative assets…
Renewable infrastructure investment trust JLEN Environmental Assets Group (JLEN) has well-diversified income sources and little exposure to power prices. Otherwise, Mr Scouller suggests Greencoat UK Wind (UKW), Greencoat Renewables (GRP) and Renewables Infrastructure Group (TRIG).
Income at a price
After selling off, infrastructure investment trust share prices have generally recovered…
Selective income exposure
Many other types of income-generating alternative assets have been hit hard by the coronavirus lockdown…
Several trusts in the Association of Investment Companies (AIC) Leasing sector buy and lease aircraft, and have suffered because of the massive reduction in travel. Amedeo Air Four Plus (AA4) and DP Aircraft I (DPA), for example, have suspended dividends. And James Carthew, head of investment companies research at QuotedData, notes that while Tufton Oceanic Assets (SHIP) looks better placed for now it could run into problems due to its exposure to global shipping…
Rent collection by real estate investment trusts (Reits) has varied considerably, depending on which type of property they have exposure to. Mainstream Reits have struggled to collect rent, but certain property specialists such as Civitas Social Housing (CSH) have managed to operate as normal for now. It generates an income from rental payments from housing associations funded by housing benefits, so has some added security from the element of government backing.
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