Looking to invest £1,000? Try these two investment trusts
Real estate investment trust Tritax Big Box REIT(LSE: BBOX) describes itself as is the only such trust giving pure exposure to big box logistics assets in the UK - so that plugs a gap in your portfolio.
REIT stuff
Today the trust has published its full-year results to 31 December 2017 and the market is quietly satisfied, with the share price up 1.72% at time of writing. It delivered a total return of 15.2%, up an impressive 58.3% on last year's 9.6p, beating its target of 9% a year over the medium term. EPRA net asset value per share increased 10.3% to 142.24p, while dividends totalled 6.4p per share, in line with its target. This is a modest 3.2% rise on last year's 6.2p.
Profit before tax rose 169.6% to £247.8m with the contracted annual rent roll up 26.2% to £125.95m. The group now has a market capitalisation of £2.03bn, with its portfolio independently valued at £2.61bn, spread across 46 assets plus 114 acres of strategic land.
Big and Boxy
Tritax raised £350m of equity through a substantially oversubscribed share issue and continues to expand, acquiring 11 big boxes during the year with an aggregate purchase price of £434.99m, further diversifying the portfolio by geography and tenant.
This is a company that even sees a bright side to Brexit uncertainty, as chairman Richard Jewson pointed out: "Brexit may provide a silver lining, since with increased border controls our customers will require more warehousing domestically, further supporting our business case."
Last month Paul Summers highlighted the stock for those wanting solid dividend income, and it is hard to disagree after today's update. The forecast yield is currently 4.8%, historic yield 4.56%. The investment trust is still trading at a premium of 7%, which makes me slightly uncomfortable, but that is also evidence of investor demand, as is the premium forward valuation of 18.6 times earnings.
Mid-cap marvel
If you prefer to buy your investment trusts when they are trading at a discount, as most are, you might like to consider Mercantile Investment Trust (LSE: MRC). The £2bn trust, run by JP Morgan, has a fine historic pedigree, having been established in 1884. It targets medium and smaller UK companies outside the FTSE 100 and is up 19% in the last 12 months, and 90% over five years, according to Trustnet.com. My Foolish colleague Peter Stephens is particularly excited by its prospects.
Fund manager Guy Anderson looks for companies that have significant room for growth and are not recognised by other investors. 2017 was a very good year for mid-caps, although lately 2018 has not been as good, something that could be said for global stock markets as a whole.
Trust me
The trust offers broad diversification, with its largest holding, Bellway, making up just 2.5% of the portfolio. Other top holdings such as Man Group, Intermediate Capital, Spirax Sarco, Sophos and Jupiter Fund Management should give you a flavour of its portfolio. It pays quarterly dividends which it aims to grow at least in line with inflation. Currently it yields 2.21%. The growth is the thing, though. It may complement Tritax's steady dividend flow quite nicely.
Tritax Big Box may not be worried about Brexit but plenty of people are, and understandably so.
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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