3 dividend investment trusts I’d buy to fund my retirement

Edward Sheldon looks at three investment trusts that focus on dividend-paying stocks.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Cruise Ship

Image: Public domain

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Investment trusts can be a great way to add diversification to your portfolio. With one simple trade, you have the ability to invest in a portfolio of securities, managed by a professional fund manager. With that in mind, today I’m looking at three dividend-focused investment trusts that could appeal to those looking for high levels of income from their portfolios. 

Murray Income Trust

Run by Aberdeen Asset Management, the Murray Income Trust (LSE: MUT) is an investment trust that aims to achieve a high and growing income, combined with capital growth. The trust invests predominantly in UK equities, however it does have the freedom to diversify into international stocks. 

At the end of June, the top holdings in the trust included Unilever (4.5%), British American Tobacco (4.5%) and GlaxoSmithKline (4.5%), and the largest international positions were Roche (3.4%), Nordea Bank (3.1%) and Microsoft (2.5%). Sector-wise, the trust had the largest exposure to the financials, consumer goods and healthcare sectors. 

Dividends are paid quarterly, and the total dividend paid last year was 32.25p last year, equating to a yield of a healthy 4% at the current share price. The trust has an excellent dividend growth track record, having raised its payout 43 years in a row. Ongoing charges are 0.76%. 

Temple Bar Investment Trust

With 33 years of consecutive dividend growth, the Temple Bar Investment Trust (LSE: TMPL) is another trust that could appeal to dividend investors. 

Launched in 1926, it aims to provide growth in income and capital, and to outperform the FTSE All-Share Index on a total return basis. The trust invests primarily in UK securities, with the majority of portfolio holdings selected from the FTSE 350 index. The portfolio manager uses a contrarian approach to value investing, seeking out undervalued, out-of-favour companies with strong balance sheets. 

At the end of June, the three largest sectors in the trust were financials, cash & short-dated gilts and industrials. The top three holdings were HSBC Holdings (8.1%), GlaxoSmithKline (6.8%) and Grafton Group (5.2%).

Dividends are paid quarterly, and last year it paid out a total of 40.45p, equating to a yield of 3.1% at present. Ongoing charges are 0.51%. 

Merchants Trust 

Lastly, the Merchants Trust (LSE: MRCH) is another trust that has a strong focus on dividend-paying companies. Its objective is to provide an above-average level of income, income growth and long-term capital growth by mainly investing in higher-yielding FTSE 100 stocks. 

Established in 1889, the trust is managed by Allianz Global Investors, with the portfolio manager often looking to go against the herd and invest in high-quality stocks that are out of favour. At the end of June, the trust had the largest exposure to the financials, industrials and consumer services sectors, and the three largest holdings were GlaxoSmithKline (7.4%), Royal Dutch Shell (7.2%) and HSBC Holdings (5.9%).

The Merchants Trust has the highest yield of the three, with this year’s dividend payment of 24.2p equalling a yield of an impressive 5%. Dividends have been increased for 35 consecutive years and are paid on a quarterly basis. Ongoing charges are 0.58%. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in GlaxoSmithKline and Royal Dutch Shell. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. 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.

More on Investing Articles

Young Black woman looking concerned while in front of her laptop
Investing Articles

The IAG share price is dirt cheap and profits are flying. So why am I worried?

After today's positive full-year results, I expected the International Consolidated Airlines Group (IAG) share price to be doing better than…

Read more »

Investing Articles

Is Tesla stock a steal below $200?

Tesla stock has fallen 19% so far in 2024. Currently hovering around $200, this Fool checks if now is the…

Read more »

Investing Articles

3 high-yield dividend stocks to consider for my passive income portfolio in 2024

I want to build a portfolio of dividend stocks that pay enough passive income to retire comfortably. Here are my…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

Direct Line shares soar 25% on takeover bid!

Direct Line shares surged by a quarter on Wednesday, after receiving a takeover bid from a Belgian rival. But the…

Read more »

Investing Articles

Will it be too late to buy Nvidia stock in March?

NVIDIA stock is up more than 60% since the start of 2024. Our writer considers whether it might still be…

Read more »

Typical street lined with terraced houses and parked cars
Investing Articles

Why did Direct Line shares just soar 27%?

Direct Line shares have jumped more than a quarter in the course of today's trading session. Our writer explains why…

Read more »

Close-up of British bank notes
Investing Articles

These 2 shares are Dividend Aristocrats. Which should I buy this March?

Our writer likes the business model of this pair of FTSE 100 Dividend Aristocrats. So why would he only consider…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Investing Articles

I bought 49 Unilever shares in June. Here’s what they’re worth today

Harvey Jones bought a modest amount of Unilever shares last summer hoping the stock would soon recover. He's having to…

Read more »