Looking for 6% yields? Check out these dividend investment trusts
Many investors believe that in order to receive big dividends, they need to buy popular FTSE 100 stocks such as Royal Dutch Shell, HSBC Holdings and GlaxoSmithKline. However, there are many other stocks that have high yields, including several investment trusts. Today I'm looking at two FTSE 250-listed investment trusts that have dividend yields of around 6%.
NewRiver(LSE: NRR) is a property investor, asset manager and developer that specialises in the UK retail sector. Its mission is to own and operate top quality retail properties that provide an attractive environment for shoppers and generate a high, sustainable income. Fund manager Neil Woodford is an admirer of the stock, as it was the 11th largest holding in his Equity Income fund at the end of October.
The investment trust has been an absolute cash cow for investors recently. In the last two years, shareholders have received dividends of 18.5p and 20p per share. At the current share price of 330p, that equates to yields of 5.6% and 6%. Last year, the property manager even paid a special dividend of 3p, meaning that investors received a total yield of 6.9%.
NewRiver released its half-year results this morning, and the good news for income investors is that the dividend has been increased further. Funds from operations (FFO) rose 8%, enabling a half-year dividend increase of 5% to 10.5p. The company stated that the third quarter dividend would also be increased 5% to 5.25p. Chairman Paul Roy commented: "I am pleased to report another successful and highly active period for NewRiver across all aspects of the business, as we continue to build a strong platform to deliver growing cash returns."
Investors should note that the investment case isn't risk-free. The company reported a net asset value (NAV) per share of 297p today, yet the share price is currently 330p. That means the shares trade at an 11% premium to the NAV, which is not ideal. However, with City analysts expecting a full-year dividend of 21p this year, and 21.8p next year, there's potential for some big cash payouts here.
Renewables Infrastructure Group
Another dividend investment trust rewarding investors with sizeable cash returns, is the Renewables Infrastructure Group(LSE: TRIG). This trust invests in a diversified portfolio of renewable energy infrastructure assets, such as wind farms and solar assets in the UK and Northern Europe. As such, it could be a good option for income investors who prefer to invest on an ethical basis. It aims to provide investors with long-term stable dividends, whilst preserving the capital value of the portfolio.
Over the last three years, the trust has paid dividends of 6.1p, 6.2p and 6.3p per share. Last year's payout is a yield of 5.9% at the current share price. City analysts predict a payout of 6.4p this year and 6.6p next year, which would tip the yield over 6%.
Another advantage of this trust, is that like NewRiver, it pays its dividends quarterly. That's handy for income investors who depend on regular dividends for their living expenses. At 106p, it also trades at a premium to its NAV, which was 100.6p on 18 August, however, I believe the trust offers potential as part of a diversified income portfolio.
Edward Sheldon owns shares in Royal Dutch Shell and GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended HSBC Holdings and Royal Dutch Shell B. 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.