2 high-yielding investment trusts for dividend growth investors

These two investment trusts could offer high total returns.

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With the outlook for the global economy being highly uncertain, dividends could become increasingly important for investors. They may begin to offer a higher proportion of total return, and could even provide defensive prospects due to increased demand for high-yield shares among investors. Furthermore, obtaining a real income return may in itself become more challenging. Inflation has risen to 2.9%, which could make these two high-yielding investment trusts even more enticing.

Improving performance

Reporting on its first-half performance on Monday was primary care property investor and developer, Assura (LSE: AGR). The company continued to make encouraging progress during the period, with the acquisition of 75 medical centres completed for a gross consideration of £154m. They have an aggregate passing rent roll of £7.7m and a weighted average unexpired lease length of 12.7 years.

The company now owns 475 medical centres, with the weighted average annual rent increase being 1.81% based on 88 reviews settled during the first half of the year. It continues to have a strong pipeline of future acquisitions and developments. With strong support across the UK political spectrum for more investments in modern primary care properties, it appears to have a sound growth outlook.

With a dividend yield of 4%, Assura appears to have high income appeal. It is forecast to raise shareholder payouts by 8% next year and has a strong track record of increasing dividends in recent years. In fact, in the last five years they have risen by 125% and this suggests the business may offer a long-term dividend growth rate which is well in excess of inflation. Since the sector in which the company operates also offers a degree of stability and defensive characteristics, the stock could be an attractive buy for the long run.

Growth potential

Also offering an upbeat outlook for income investors is property investment and development company, Londonmetric (LSE: LMP). It has a dividend yield of 4.7% and is due to increase payouts to its shareholders by 3.3% next year. This should keep payments ahead of inflation – especially since the Bank of England is expected to raise rates in the near term. This could cool the recent rises in inflation and make the stock more appealing.

Londonmetric trades on a price-to-book (P/B) ratio of 1.15. This suggests that it offers a wide margin of safety which could help to protect its valuation should the performance of the sector come under pressure.

The company’s focus on distribution could also provide it with a defensive outlook. Around £0.9bn of its £1.5bn asset base is invested in distribution assets. That sector should benefit from a tailwind as consumers gradually shift their shopping habits towards online retail. And since the average lease length of 13 years is one of the longest in the listed real estate sector, the company’s certainty of income remains high. As such, it appears to offer a solid investment case for the long run.

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.

Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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