I think these investment trusts could be brilliant buys before next month’s Stocks and Shares ISA deadline. Here’s why.
Euro star
I don’t need to actually buy shares to make use of my £20,000 annual ISA allowance. I simply need to add money to my account by 5 April to ensure I don’t lose any remaining allowance.
But I don’t see any point in delaying. The London Stock Exchange is packed with bargain trusts that I’d like to buy before they have a chance to recover in price.
Tritax Eurobox (LSE:EBOX) is one such stock on my radar today. With a share price of 52p per share, it trades at a significant discount to the value of its assets. The company’s net asset value (NAV) currently sits at around 84.8p.
To add to its investment case, the FTSE 250 company’s forward dividend yield comes in at a whopping 8.2%.
Tritax Eurobox shares could remain under pressure if interest rates fail to recede sharply, keeping the pressure on its NAVs. But the direction of travel looks highly encouraging as inflation in the eurozone steadily falls.
Regardless, I’ll be happy to accept a little short-term trouble considering the company’s bright long-term outlook. The company owns and lets out warehouse and distribution hubs across Mainland Europe, demand for which should continue to grow thanks to the e-commerce boom and supply chain evolution.
In fact, I think rental growth could continue to accelerate as a dearth of new development projects drags on. Tritax’s like-for-like rents rose 4.5% in the 12 months to September, up from 3.6% in the prior year.
Check it out
I think real estate investment trust (REIT) Supermarket Income REIT (LSE:SUPR) also offers terrific value today.
At 77p per share, the business trades at a discount of around 16% to its estimated NAV per share of 89.9p. On top of this, its forward dividend yield stands at a market-busting 7.9%.
Indeed, REITs like this can be especially effective ways to make long-term passive income. This is because they are obligated to pay at least 90% of annual rental profits out in the form of dividends.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
But why this particular REIT, you ask? Well, I love its defensive qualities that allow it to pay big dividends year after year. As the name implies, it focuses on the food retail sector, where profits remain broadly stable regardless of economic conditions.
On top of this, Supermarket Income lets out its properties to the ‘Big Four’ supermarkets (like Tesco) alongside other big players like Aldi and M&S. I think it’s highly unlikely that large institutions like this will fail to pay their rent..!
Pleasingly, the grocery sector is poised for long-term growth that the company can exploit. As the population steadily increases, so will demand for new shopping outlets.
Competition for land is high, and this may impact the trust’s ability to grow profits. But on balance I still expect it to deliver excellent returns in the coming years.
