The experts’ income-friendly options

THE Mail on Sunday asked a panel of investment experts to come up with their top income friendly investment trusts and investment funds. Here are their top picks.

City of London

Ryan Hughes, head of active portfolios at AJ Bell, says: ‘This trust has a track record of increasing its dividends every year for over 50 years and the board has committed to this continuing, making use of the income reserves built up over the past. Even after the recent market rally, it is yielding around 5 per cent with holdings in high quality UK equities such as Unilever, Glaxo and Reckitt Benckiser. With annual fees at just 0.36 per cent, this is a good option for investors either wanting to take an income or who want exposure to UK equities and reinvest the income to generate future growth.’

Law Debenture

Justin Oliver, deputy chief investment officer at Canaccord Genuity Wealth Management, says: ‘Law Debenture, managed by investment house Janus Henderson, aims to deliver shareholders long-term capital growth and a steadily increasing income stream. Its portfolio combines traditional investments as well as a private asset in business Independent Professional Services that helps bolster the trust’s dividends. It has 40 years of dividend growth behind it.’

Diverse Income

Dzmitry Lipski, head of fund research at Interactive Investor, says: ‘The trust aims to provide investors with an attractive level of dividends as well as capital growth over the long term. Although its dividend payment slipped last year, it is different to most other UK equity income funds because of its bias towards medium- sized and small companies. Dividends are paid quarterly.’

JOHCM UK Equity Income

Brian Dennehy, managing director of FundExpert, says: ‘Many dividend cuts were Covid- related. These dividends will flow back and if a fund is focused on the right sectors it could enjoy a 50 to 60 per cent increase in dividends in the next 12 to 24 months. JOHCM UK Equity Income is one of the funds best placed to take advantage of this rare opportunity.’