I invest in growth and income shares. In each case, I try to gain more in value than I pay. I focus on finding good companies selling at attractive prices. Some high-yield shares do not attract me because they do not meet that criterion – but some do.
Here is a trio of high-yield shares each paying out at least 9% of their current share price annually in dividends. If I had spare money to invest now, I would be happy to add all three to my portfolio.
Henderson Far East Income
The investment fund Henderson Far East Income has a 9.1% yield.
With China open for international business again in a big way, I expect Asia to do well economically in coming years. That could be good for shareholders in Henderson’s Asian-focused fund, which invests in a range of companies that have extensive exposure in the Far East.
There are risks in such an approach. Asian economic recovery since the pandemic has been uneven, which could hurt profits. A weak pound also poses exchange rate risks. But with its broad portfolio and juicy yield, I would be happy to own Henderson Far East Income in my portfolio.
The investment manager M&G (LSE: MNG) is a well-known name. Its well-established brand and large customer base are both attractive assets, in my view. Over the long run, I expect high demand for financial services and see M&G as well-placed to benefit from that.
Yielding 9.8%, the shares are attractive to me from an income perspective. M&G’s dividend policy is to maintain or raise the shareholder payout each year. That is not guaranteed. But last month saw the financial services powerhouse raise its annual dividend by 7%.
There are risks. Uncertain markets and a weak economy could lead to investors withdrawing money from M&G funds, hurting profits.
But I am optimistic about M&G’s long-term prospects and it is among the high-yield shares I expect to keep holding in my portfolio in coming years.
Income & Growth Venture Capital Trust
When I see a double digit dividend yield, one of the first questions that comes to my mind is how sustainable it is (in fact, this is a good question for investors to ask about any yield, whatever the size).
So what do I make of the 10.8% yield offered by the venture capital trust Income & Growth (LSE: IGV)? I do not expect the dividend to stay at its current level year after year. Historically, it has moved around a lot.
But I am optimistic about the trust’s overall income outlook for the coming decade. By investing in young and growing businesses, it has been able to reap rewards and pay them out to its own shareholders in the form of dividends.
That approach has risks. If the young businesses do poorly, that will affect the trust’s income streams. But with a track record of investing in some excellent businesses and rewarding its own shareholders handsomely, I would be happy to tuck Income & Growth shares away in my own portfolio.
If dividends are maintained at their current level, putting £1,000 today into it and each of the two other high-yield shares above would hopefully earn me almost £300 a year in passive income.