ITs use reserves to maintain yields post-BP

Investment trusts increased their dividend yields last year despite BP hampering many income portfolios, according to research by Oriel Securities.

Income trusts dug deep into dividend reserves built up during the boom years to compensate for income lost when BP temporarily suspended payouts, the firm says. The study highlighted 15 trusts yielding more than 4%, including Neil Woodford’s £852m Edinburgh investment trust with 4.7%, and the £59m Shires Income trust, which tops the list, yielding 6.3%. Oriel analyst Iain Scouller says investment trusts offer investors a degree of “dividend certainty” in pursuing income in a low interest rate environment. “One of the great advantages investment trusts have over open-ended funds is t...