As you’ll see, their forward dividend yields are more than double the average for FTSE 100 shares.

Greencoat Renewables

Dividend yield: 8.3%

The stable nature of energy demand provides trusts investing in power-generating assets with excellent stability. As a consequence, they have the means and the confidence to pay decent and often growing dividends over time.

This is the case with Greencoat Renewables (LSE:GRP), which specialises in onshore and offshore wind across Ireland and Continental Europe. It’s provided a growing annual payout in six of the past seven years.

Unfavourable weather conditions can significantly impact returns from these companies. When the wind doesn’t blow, for instance, their turbines can’t produce profit-making electricity.

However, Greencoat Renewables’ wide geographic footprint reduces the impact of localised weather issues at group level, providing earnings (and thus dividends) with excellent stability.

The trust predicts Europe’s investible renewables market will be worth €1.3trn by 2030, and €2.5trn by 2050. This suggests enormous long-term investment potential.

Supermarket Income REIT

Dividend yield: 8.9%

Trusts that specialise in food retail also enjoy excellent earnings stability from year to year. This is what can make Supermarket Income REIT (LSE:SUPR) such a great investment for risk-averse income seekers.

Today it owns 73 grocery properties that it lets out to some of the industry’s biggest players. These include Tesco, Sainsbury‘s, Aldi, and Morrisons. Needless to say, Supermarket Income doesn’t have to worry about rent collection problems with blue-chip tenants like these.

The steady growth of e-commerce poses a structural threat to the trust. However, its focus on omnichannel supermarkets servicing both physical and online customers is — for the time being, at least — helping to mitigate this threat.

One final reason I like Supermarket Income is because of its classification as a real estate investment trust (REIT). REITs are obligated to pay at least 90% of annual rental profits out in the form of dividends, whether they like it or not.

This provides dividend-hungry investors with added peace of mind.

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CVC Income & Growth

Dividend yield: 8.4%

The London stock market hosts plenty of trusts that derive their earnings from debt instruments. However, CVC Income & Growth‘s (LSE:CVCG) focus on sub-investment-grade credit means it can charge far higher interest rates than other trusts, supercharging the earnings it makes.

This in turn fuels its enormous dividend yields.

Returns here can be at risk if one or more companies fail to meet their debt obligations. However, the trust’s impressive diversification means such events can be absorbed without decimating total returns.

CVC Income & Growth has investments in between 40 and 60 companies at any one time. And these are pretty evenly spread across a wide variety of sectors and regions, a quality that reduces risk still further.

Like Supermarket Income and Greencoat Renewables, I think it’s worth serious consideration from savvy investors.

The post 8%+ dividend yields! 3 investment trusts to consider for enormous passive income appeared first on The Motley Fool UK.

A specialist manager

One idea that caught my eye last week was CVC Income & Growth (LSE:CVCG). It’s an investment trust listed on the stock market. What this means is that CVC (a private equity and debt manager) runs the trust and invests the money. The value of the portfolio at any point is referred to as the net asset value (NAV) of the company. As a result, the share price should closely mirror the movements in the NAV, over time.

As a dividend investor, these trusts can be a great source of income. The reason is that unlike a more traditional company, the focus of CVC is to purely generate income for shareholders while aiming to grow the value of the trust over time.

The firm has a good track record, with the current dividend yield returning 9%. It generates the funds by providing loans and other forms of credit to private companies. Given that some of these firms might struggle to get traditional lending from major banks, the interest rate charged can be quite high.

It focuses on Europe, so doesn’t try and get too fancy in targeting obscure investment opportunities in other far flung parts of the world.

Growth from here

The 12% move higher in the stock over the past year impresses me. It currently matches the NAV, so I don’t see it as being overvalued. Looking forward, I’m optimistic about how the trust can continue to profit.

Unlike some trusts that focus just on stocks and have a heavy weighting to tech, this trust has a really diversified sector exposure. The largest sectors are healthcare and beverage & food, both with a 17% allocation. In fact, tech has just a 3% weighting at the moment. Based on my view on which sectors could outperform over the next year, this is a positive.

One risk that people could flag up is that trading in debt is a dangerous business. If CVC is involved with a firm that defaults on the debt, it’s seriously bad news. I accept this as a risk, but do counter it with the fact that it mostly deals in senior secured loans. This means there’s some form of collateral attached to the loans (eg a business asset). So in the case of a default, it’s not like there’s nothing left to claim against.

Putting things all together, I think this is a positive option for investors to consider, including for income. I’m looking at buying it when I have some free cash.

The post I’m an income-hunter and this dividend stock with a 9% yield looks juicy appeared first on The Motley Fool UK.