Even though equity investment trusts have been superseded by cheaper, more efficient tracker funds, open-ended investment companies, and unit trusts, mean the structure of these investment companies, unlike most other funds, they are not limited to where they can invest.

This model means that there are some very eclectic trusts out there which give investors exposure to all kinds of different assets offering market-busting dividend yields and diversification. Here are two such opportunities. 

Income from lending 

The aim of the Honeycomb Investment Trust (LSE: HONY) is “is to provide shareholders with an active level of dividend income and capital growth through the acquisition of loans made to consumers and small businesses as well as other counterparties.“

This strategy might seem risky at first, but the team behind the firm is extremely experienced. They have decades of experience and the loans are high quality. 

For example, three portfolios of 40,000 loans acquired in the second quarter had an average outstanding loan amount of £4,190. For the first half, the trust reported investment income of £13.3m, an increase of 161% on investment assets of £300.2m. At the time of its IPO, Honeycomb stated that it was targeting a dividend yield of 8% on its initial listing price of 1,000p. Since listing, it has outperformed this target, achieving an average annualised yield of 9%.

Year-to-date, the trust has paid out 48p per share in distributions and is in line to payout a total of 96p – giving a yield of 8.1% at the current share price. The net asset value per share was 1,018p at the end of Septemeber. 

Income from unloved property 

If Honeycomb isn’t for you, Aew UK (LSE:AEWU) might be of more interest. 

Aew invests predominantly in a portfolio of smaller commercial properties around the UK. These properties might not interest the likes of Land Securities, but they’re still interesting investments. 

With a net asset value of £120m, and gearing of 22%, the firm is currently producing a dividend of 8p per annum for a dividend yield of 7.9% at the time of writing. For the three months to the end of July, Aew generated £3.3m in income from operations, easily covering the dividend for the period of £2.5m. 

To help fund the expansion of the trust’s portfolio, management recently conducted a fundraise by way of a placing. Net proceeds were £27.5m, which will allow property managers to acquire new, high-quality assets to support dividend growth yet further. The company is looking to raise a total of £40m-£60m over the rest of the year to buy more assets. Management has a record of creating value, so it looks as if this cash call is the right decision. 

Aew recently sold Valley Retail Park in Newtonabbey, Belfast, for £11.1, making a return of £4m after buying it for £7.1m in 2015. 

The post 2 top-performing investment trusts with dividends yielding 7% appeared first on The Motley Fool UK.

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• £2,000 in this REIT could pay £340 in annual passive income
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Rupert Hargreaves owns no share 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.

Commercial property also has a low level of correlation to fixed income and equities asset classes, and this makes it an important investment to include as it can help to diversify risk and reduce overall volatility in a portfolio.

However, building your own property portfolio may not be an option for most investors as it requires large, upfront amounts of capital and is potentially very time-consuming. Most investors would instead benefit from putting their money into real estate investment trusts (REITs), quoted companies which own and manage income-producing property portfolios. As such, REITs offer a way for investors to access the property market without having to buy property directly.

With this in mind, I’m taking a look at two tempting high-yield REITs.

Industrial

Hansteen Holdings (LSE: HSTN) is undergoing a major transformation as the pan-European REIT sells off its entire property portfolio in Germany and Netherlands for €1.28bn. This leaves the company with investments in the UK totalling £677m, with another £35m invested in Belgium and France.

The company is also looking to increase its UK exposure, with Hansteen seeking to buy beleaguered Industrial Multi Property Trust (LSE: IMPT) for 330p per share. IMPT has a property portfolio valued at £86.2m with an annual rent roll of around £8m, but is highly geared, with a loan-to-value ratio of 73% .

Given IMPT’s estimated adjusted NAV figure of 307.4p per share, I expect the acquisition to be slightly dilutive to Hansteen’s NAV in the short term. In the longer run though, the deal seems likely to be accretive given the proximity of IMPT’s properties to existing Hansteen management offices, which will likely yield significant cost synergies. There’s also the potential for NAV growth from asset management opportunities, which due to IMPT’s high debt load, may have been previously overlooked.

Looking forward, Hansteen’s shareholders could be due a hefty special dividend of up to £600m following the sale of its German and Dutch assets. And post-special dividend, shares in Hansteen could look to trade at a respectable prospective dividend yield of 5%.

Diversification

One major benefit of investing in property via REITs over direct investment is diversification. A typical REIT owns a large number of properties and pursues a strategy of leasing properties to multiple tenants, with some even investing in a mix of property types associated with different business sectors.

AEW UK REIT (LSE: AEWU) is one such company — it’s a diversified small-cap which invests in office, retail and industrial space, with each of the three sectors representing roughly a third of its portfolio value.

The company is managed by AEW UK Investment Management, an affiliate of AEW Global, one of the largest real estate investment managers in the world, with more than €50bn in assets under management in North America, Europe and Asia. It has an annual management fee of 0.9% of invested NAV, with the company targeting a total annual return in excess of 12% on the IPO issue price over the medium term.

The REIT currently trades at a 7% premium to its NAV and pays its shareholders a yield of 7.8%.

The post These 2 property stocks could be retirement cash cows appeared first on The Motley Fool UK.

More reading

• £2,000 in this REIT could pay £340 in annual passive income
• How to invest £10,000 to aim for a £6,108 annual passive income

Jack Tang has no position in any shares mentioned. The Motley Fool UK has recommended Hansteen Holdings. 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.