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Investment company sectors yielding 3% or more

17 June 2019

Two sectors, Debt - Structured Finance and Leasing, yielding 8%+ at end May 2019.

With investors’ demand for income unabated, the Association of Investment Companies (AIC) has released a list of the investment company sectors yielding over 3%. This follows the AIC’s sector review which took effect on 28 May 2019.

At the end of May, 15 investment company sectors were offering yields of over 3%, representing a wide range of assets and investment strategies.

The highest-yielding sectors, Debt – Structured Finance and Leasing, yielded over 8%, offering 9.2% and 8.3% respectively. Companies in the Debt – Structured Finance sector invest in securitised debt, while those in the Leasing sector generate income by renting out aircraft, shipping or industrial equipment.

Completing the top five are Property – Debt (3rd) which yielded 6.5%, Debt – Direct Lending (4th) at 6.2% and Commodities & Natural Resources (5th) at 6.1%.

Sectors investing in alternative assets made up 11 of the 15 entries (73%) with Asia Pacific Income (10th) the highest-yielding equity sector at 4.7%.

In some sectors, yields have been enhanced by discounts. 10 of the 15 sectors (67%) traded at an average discount to their net asset value (NAV).

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “There is an array of choice for income-seeking investors who are considering investment companies. Clearly substantial yields are available from sectors investing in alternative assets such as specialist debt, leasing, property and infrastructure. That said, there are four equity sectors amongst the highest-yielding and several have delivered healthy levels of dividend growth over five years.

“It’s important income investors realise that higher yields can come with higher risks and investors need to do their investment research thoroughly. If investors have any doubts as to whether investment companies are suitable for them they should speak to a financial adviser.”

Highest-yielding investment company sectors at 31 May 2019

Position

Investment company

Dividend yield
at 31 May 2019 (%)

Discount / Premium (%)

5-year
dividend
growth (%)

Equity/
Alternative sector

1

Debt - Structured Finance

9.19

-5.89

8.28

Alternative

2

Leasing

8.27

9.33

0.45

Alternative

3

Property - Debt

6.51

2.48

1.92

Alternative

4

Debt - Direct Lending

6.20

-2.09

2.05

Alternative

5

Commodities & Natural Resources

6.13

-21.2

-1.21

Alternative

6

Renewable Energy Infrastructure

5.28

11.54

3.48

Alternative

7

Property - UK Residential

5.16

-9.1

n/a

Alternative

8

Property - UK Commercial

4.99

-3.15

4.45

Alternative

9

Debt - Loans & Bonds

4.91

-1.75

1.48

Alternative

10

Asia Pacific Income

4.74

-4.31

12.6

Equity

11

Infrastructure

4.66

10.82

1.10

Alternative

12

Private Equity ex 3i

4.48

-16.5

3.74

Alternative

13

Global Equity Income

4.07

0.67

7.77

Equity

14

UK Equity Income

3.97

-4.65

4.33

Equity

15

Financials

3.78

-1.94

n/a

Equity

 

Investment company industry (ex 3i & VCT)

3.32

-5.31

4.33

 

Source: AIC/Morningstar, ex 3i & VCTs, weighted average on market capitalisation.

Visit the AIC’s Income Finder to build a virtual portfolio of income-paying investment companies and track dividends

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Notes

  1. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 359 members and the industry has total assets of approximately £191 billion.
  2. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise.  You may not get back the full amount invested and, in some cases, nothing at all.
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Media enquiries

Annabel Brodie-Smith
Communications Director
Tel: 020 7282 5580
annabel.brodie-smith@theaic.co.uk
@annabelbrodies
@aicpress

Elmley de la Cour
Communications Manager
Tel: 020 7282 5583
elmley.delacour@theaic.co.uk
@aicpress

William Sanderson
Communications Executive
Tel: 020 7282 5584
william.sanderson@theaic.co.uk
@aicpress