Looking to create a passive income stream with minimal effort? Here are three brilliant funds to consider investing in.

Passive income with minimal risk

First up, we have the Fidelity Cash fund. This is a short-term money market fund, meaning that it invests in high-quality, short-term fixed income securities and cash-like securities in an effort to provide a healthy yield for investors with minimal risk.

Currently, the yield here is about 4.5% (fees on Hargreaves Lansdown are 0.15%). Income can be tax-free if the fund is held in a Stocks and Shares ISA.

I have some money in this fund as I see it as a great place to park cash I’m not investing (in the stock market). With this product, I can pick up a solid yield and not have to worry about the value of my investment falling.

It’s worth noting that while short-term money market funds are designed to be risk-free, a large-scale global financial collapse (like the Global Financial Crisis of 2008/2009) could impact them negatively. That’s something to keep in mind – while they’re very low risk, they’re not as safe as cash itself.

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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

40+ years of income growth

Next we have the Merchants Trust (LSE: MRCH). This is an income-focused investment trust that aims to deliver a high-and-rising income (along with some capital growth).

It predominantly invests in higher-yield UK stocks. Currently, its yield is about 4.8% (fees are 0.52%).

There are a few things I like about this trust. One is that it has increased its payout every year for over 40 years (so it has provided inflation protection for investors).

I also like the fact that its overall performance has been solid. Over the five-year period to the end of November, it outperformed the FTSE All-Share index while simultaneously generating a higher yield for investors.

I’ll point out that it’s possible to lose money with this fund. If UK dividend stocks underperform, this fund’s likely to underperform too.

I think it’s worth considering as a part of a diversified income portfolio however.

A basket of UK and European high-yield dividend stocks

Finally, we have the WisdomTree Europe Equity Income UCITS ETF (LSE: EEI). This is an exchange-traded fund that’s income focused.

A rules-based fund, it invests in the highest dividend-yielding European companies (including UK companies) but takes quality and share price momentum into consideration when selecting companies for investment (and excludes companies that do not meet ESG criteria). At present, it offers a yield of about 5.3% (fees are 0.29%).

I see this product as a good portfolio diversifier. While it provides exposure to UK stocks, the majority of the fund (about 80%) is allocated to European equities.

Of course, an economic slowdown in Europe is a risk here. Sized properly within a portfolio however, I think considering it could potentially add value and help to generate a solid passive income stream.

The post 3 brilliant funds for passive income in the UK appeared first on The Motley Fool UK.

In the November Budget, Chancellor Rachel Reeves slashed the Cash ISA limit by £8,000 to £12,000. It won’t happen until April 2027, and it only affects those under 66. But the idea is to encourage investors to consider stocks and shares instead.

A Cash ISA can be great for stashing emergency and short-term cash. And also for those who don’t want any stock market risk. But over the long term, UK shares have beaten cash hands down.

Interest rates

The Bank of England is expected to cut interest rates before Christmas. That’s something else that should make cash-based savings less attractive. And some analysts are already predicting two further cuts in the first half of 2026, giving shares an even better edge.

And come April, registered banks and financial firms will be able to offer investment recommendations based on wider trends. It falls short of individual financial advice. But Sarah Pritchard of the Financial Conduct Authority (FCA) said it could be “game changing“, adding: “We know people in the UK invest less compared to the EU or US“.

Tax-free investing

For me, a Stocks and Shares ISA is already a no-brainer. We can invest up to £20,000 a year and not pay tax on any profits. And it doesn’t matter how big the pot is — even the country’s 5,000-or-so ISA millionaires don’t pay a penny.

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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

There’s a lot needs doing to get UK financial education up to the standards of some other countries. But while that remains a dream, I hope these changes will lead more people to consider opening a Stocks and Shares ISA in 2026.

A stock to consider

What might be a good starter stock to look at for a new ISA? An index tracker like the iShares Core FTSE 100 UCITS ETF can be a good, low-effort, first choice. It tracks the FTSE 100 with low charges, and we have to do no more work.

For something a bit more specific, I’m a big fan of investment trusts. And I prefer ones that pay reliable dividends, like Merchants Trust (LSE: MRCH). Reinvesting dividends can provide a serious long-term boost.

Dividend picks

Merchants Trust invests in UK dividend stocks, and it holds some top FTSE 100 companies. Its top five holdings are currently GSK, Lloyds Banking Group, Shell, Rio Tinto and British American Tobacco — which make up 25% of the trust’s total investments.

There’s a 5% dividend yield expected. And the trust has raised its annual payout for 43 years in a row.

It still faces stock market risk. And if a dividend increase doesn’t happen one year, the share price could be hit. But I reckon it’s a nice halfway house between a tracker and the extra work picking individual stocks. I really think ISA investors should consider it, as well as a range of other UK investment trusts.

And 2026 really might be the best year we’ve had for some time to get a Stocks and Shares ISA started.

The post These 3 things could make a Stocks and Shares ISA a no-brainer in 2026 appeared first on The Motley Fool UK.

Sitting on £100k and looking for income ideas? Here are three to consider.

Gilts

Gilts are UK government bonds. When you buy one, you’re essentially lending the government money in return for interest.

With these investments, the investor typically receives ‘coupon’ payments twice a year. Interest rates will vary depending on when the gilt was issued and the time to maturity but there are some attractive rates available in the market today (4.5%+).

Returns also come from the return of the loan at maturity. For example, if someone buys a gilt for £99, they’ll make a profit of £1 when it matures because gilts have a ‘face value’ of £100.

One big advantage of gilts is that they are relatively safe investments (assuming that the UK government is not going to default on its debt). They can also be very tax-efficient.

On the downside, with conventional gilts, coupons are fixed. Therefore, there’s little protection from inflation.

Dividend Heroes

One type of income investment that can potentially solve the inflation issue is a Dividend Hero. These are investment trusts that have increased their annual income distributions for 20 years or more.

An example here – which could be worth considering – is the Merchants Trust (LSE: MRCH). This invests predominantly in high-yield UK shares and has registered 43 consecutive annual dividend increases now meaning that it has provided investors with inflation protection for decades.

Looking beyond the brilliant long-term income track record here, there are a few things I like about this trust. One is that it has a yield in excess of 5% (at the moment).

Another thing I like is that it trades at a 7% discount to the value of its assets. In other words, investors are getting access to a basket of UK shares at a significant discount.

An advantage of investment trusts like Merchants is that they generally invest a range of different dividend stocks so they can provide investors with diversification. For example, this trust currently holds about 50 different stocks.

They don’t always beat the broader market though. This is a risk to be aware of with this kind of investment.

Individual dividend stocks

Finally, individual dividend stocks can be a great way to generate passive income. On the London Stock Exchange today, there are many stocks with yields in excess of 6%.

One example here is savings and investment company M&G. It currently sports a yield of about 8.3%.

Another example is insurance company Admiral. It’s offering a yield of about 6.3% at present.

These kinds of stocks are not without their risks. However, sized properly in a portfolio, they can be a good way to boost income.

Building an income portfolio

It’s worth pointing out that these three types of passive income investments are not mutually exclusive. In other words, they can all be included in a Stocks and Shares ISA.

I think combining different types of investments is the best strategy. With this approach, someone could potentially generate £5,000 to £7,000 in income a year from a £100k portfolio while simultaneously minimising investment risk.

The post 3 savvy passive income ideas for a £100k Stocks and Shares ISA appeared first on The Motley Fool UK.

Here, I’ll spotlight two dividend-paying investment trusts that I think are worth checking out for income.

136 years old

Established in 1889, Merchants Trust (LSE:MRCH) is one of the UK’s oldest investment trusts. It’s listed in the FTSE 250 and aims to provide above-average income growth, as well as long-term capital appreciation.

Merchants holds 53 dividend stocks, including FTSE 100 staples such as GSK, Lloyds, Shell and BP. However, it isn’t afraid to bank profits and take positions in lesser-known companies.

For example, it recently trimmed strong performers including British American Tobacco, Barclays and Burberry. With the proceeds, Merchants started a new position in MONY Group, the company behind websites such as MoneySuperMarket and MoneySavingExpert.

Portfolio manager Simon Gergel says MONY “is attractive, given potential future growth and efficiency opportunities. This is backed by a strong balance sheet, healthy cash generation and a 6% dividend yield.”

The fact that Merchants’ portfolio is full of UK stocks adds some risk, because the economy is currently in a fragile state. Some of the holdings might struggle in this tough environment, resulting in weaker earnings and dividend growth.

The flip side to this, of course, is that tons of UK shares are cheap. And this inevitably creates opportunities, as Gergel points out: “We are finding numerous cheap UK companies to invest in, especially among the medium-sized businesses. These have been largely shunned by investors and many are offering compelling value, even allowing for subdued domestic growth in the short term“.

In this spirit, Merchants recently added three building-related companies: building products supplier Marshalls, housebuilder Barratt Redrow and building materials distributor Grafton.

The stock sports a decent 5.4% dividend yield. And it’s currently trading at an 8.2% discount to net asset value (NAV), suggesting there’s solid value here.

Of course, no dividend is guaranteed. But I find it encouraging that Merchants has increased its annual payout for 43 consecutive years.

Infrastructure

3i Infrastructure (LSE:3IN) is also in the FTSE 250, but has stakes in unlisted infrastructure companies across the UK and Europe. These range from offshore wind vessels and fibre communications networks to biogas plants.

One immediate risk here is that these are illiquid, private infrastructure assets. In other words, they can’t be easily offloaded if something goes wrong, and the portfolio’s quite concentrated (just 11 companies).

However, infrastructure assets tend to generate stable cash flows, and last year the dividend increased 6.3% to 12.65p per share. For this year (FY26, which ends in March), the payout’s expected to rise another 6.3% to 13.45p. Then goes up to 14.2p next year.

This put the forward dividend yield at a respectable 4%.

3i Infrastructure has a strong track record of successful investment exits. Since going public in 2007, it has generated a 14% annualised NAV total return.

The trust’s excellently managed by the FTSE 100’s 3i Group, which has a 29% stake. And it’s currently trading at an 8.6% discount to NAV, suggesting value is also on offer.

The post 2 top UK dividend stocks offering effortless passive income appeared first on The Motley Fool UK.

Here are two from the FTSE 250 index that might be of interest.

Blue-chip holdings

Merchants Trust (LSE:MRCH) aims to deliver a “high and rising income together with capital growth“.

Founded in 1889 and managed by Allianz Global Investors, it invests mainly in high-yield FTSE 100 dividend stocks. So we’re talking Lloyds, Shell, BP, and so on.

However, the £823m trust is quick to point out that many of these are multinationals. GSK, for example, sources more than half of revenue from the US, while British American Tobacco‘s tentacles stretch from Latin America to Asia and just about everywhere in between.

Impressively, Merchants has grown its payout for 43 consecutive years at an annualised growth rate above inflation. At 553p, the dividend yield is 5.3%, which is above the FTSE 100 average of about 3.4%.

One developing risk here is that two of the top five holdings are UK banks (Lloyds and Barclays). Earlier this week, an influential think tank said the cash-strapped government should consider taxing the interest banks receive from reserves held at the Bank of England.

If this idea became policy, bank stocks would probably fall lower and their dividend growth could be jeopardised. This could have a knock-on effect on the trust.

This is just speculation, though, and Merchants has lived through far worse, including two World Wars and the Wall Street crash. I expect it will survive a potential bank tax raid by the government.

Finally, the trust is trading at an attractive 10% discount to its net asset value (NAV).

Looking eastwards

The second FTSE 250 trust I think is worth digging into is Schroder Oriental Income Fund (LSE:SOI).

The trust does what it says on the tin, providing shareholders with a way “to tap into the Asian income story and help investors diversify their dividends“.

The [Asian] region is forecast to enjoy higher economic growth than many other parts of the world over the medium to longer term. Favourable demographics and a growing middle class in Asia are expected to continue to fuel strong domestic consumption — increasing the prospects for both capital and income growth.

Schroder Oriental Income Fund

Turning to the portfolio, there are 60-80 stocks spread over multiple countries and in a range of industry sectors. Names include Samsung Electronics, Singapore Telecommunications, and Telstra Group (Australia).

In July though, the trust’s top holding was Taiwan Semiconductor Manufacturing Co (TSMC), the world’s leading chip foundry. Now, this may not scream juicy dividends because the stock is up 200% in five years, with the current dividend yield only 1.3%.

However, this is because TSMC is prioritising investments to capitalise upon AI opportunities rather than income. With a 12.6% portfolio weighting, though, there’s a risk this large holding could affect performance if AI growth slows.

Nevertheless, I expect TSMC to increase payouts substantially in future due to its incredible margins and dominant market position.

The trust is currently yielding just under 4%. Add in potential share price growth in future, and I like the long-term prospects here.

The post 2 top FTSE 250 investment trusts to consider for passive income appeared first on The Motley Fool UK.

Wondering how much income an investor could potentially generate with this kind of ISA? Let’s explore some scenarios involving a £20,000 investment.

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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

A lower-risk income strategy

There are several different ways to generate passive income within an ISA. Each approach has a different level of risk. A lower-risk strategy (but still higher risk than investing in cash savings products) is to invest in an income-focused fund, exchange-traded fund (ETF), or investment trust. These products generally provide exposure to many different dividend stocks, significantly lowering stock-specific risk for investors.

The dividend yields on these products vary. Some aren’t much higher than the interest rates offered on savings accounts however, others are a bit higher.

One product with quite a high yield at the moment is the Merchants Trust (LSE: MRCH), an investment trust that’s focused on income stocks. For the 2024 financial year, it rewarded investors with dividend income of 29.1p per share.

Given that its current share price is 558p that puts the trailing yield at 5.2%. If someone was to put their whole £20,000 ISA allowance into this product (which I’d never do as diversification’s crucial), that would result in annual income of around £1,040.

Now, this product has its advantages. One is that it pays dividends on a quarterly basis – this is handy for those looking to obtain regular cash flow. Another is that it regularly increases its payout — it’s done so for 43 consecutive years now.

It’s also provided long-term capital gains. Over the last 10 years, the share price has climbed about 27%, which translates to annualised gains of about 2.5% a year.

Given these advantages, it could be worth considering. However, I wouldn’t go ‘all-in’ on it. At times, this trust has produced underwhelming returns due to the portfolio mix (generally ‘old-economy’ stocks). And it could be possible to obtain higher total returns (income plus gains) elsewhere.

Targeting higher levels of cash flow

Another strategy is investing directly in dividend stocks. This is higher risk but there’s potential for higher returns (risk and potential returns are directly related in the investing world).

On the London Stock Exchange today, there are plenty of stocks with yields in excess of 7%. Some examples include Legal & General Group, Phoenix Group, M&G, Primary Health Properties, and Renewables Infrastructure.

So let’s say an investor bought 10 different high-yield stocks (£2k in each, ignoring trading commissions) and the average yield on the portfolio was 7.5%.

In this scenario, the investor would be looking at annual income of around £1,500. That’s a decent level of income (and quite a bit more than can be obtained from cash savings).

Now, investors do need to be careful with this approach. Because dividends are never guaranteed and a high yield on a stock often signals that there are problems with the underlying business (and that a cut may be coming).

The strategy’s definitely worth considering though. If you’re looking for dividend stock ideas, you can find plenty right here at The Motley Fool.

The post How much passive income can you generate with £20k and a Stocks and Shares ISA? appeared first on The Motley Fool UK.

The FTSE 100 and FTSE 250 are loaded with companies boasting market-leading positions, diverse revenue streams, and rich balance sheets. Many of these operate in mature industries with limited growth potential, too: this means they’re more likely to return surplus cash to shareholders than invest it for future growth.

This rich selection means investors can create income-generating portfolios that are closely tailored to their specific investment goals and appetite for risk. It also allows for terrific diversification that can generate a strong second income at all points of the economic cycle.

A mini-portfolio

Here’s what a well-diversified ISA portfolio could look like today:

As you can see, this selection of Footsie and FTSE 250 shares covers a range of cyclical and non-cyclical industries. It also includes companies with long records of annual dividend growth. These businesses have helped investors protect their income from inflation by providing consistent, growing payouts year after year.

Finally, many of the dividend stocks here have long histories of paying dividends above the UK share average. For this year, the average dividend yield for this grouping is 5.5%.

Top trust

Let me explain why investment trusts like Merchants Trust can be powerful tools for targeting passive income. This particular one has grown annual payouts for 43 straight years, and provides a dividend yield far ahead of the FTSE 350 average of 3.3%.

These financial vehicles own a basket of assets, which provides investors’ portfolios with even better diversification. This Allianz-owned one holds shares in 52 different companies, ranging from banking stock Lloyds and pharmaceuticals developer GSK, through to utilities company National Grid.

Merchants Trust is also focused on the more robust companies found on the FTSE 100 and FTSE 250 as well. This provides it with added strength that supports strong and consistent dividend growth.

A focus on UK shares leaves the trust more exposed to regional difficulties than more geographically diversified ones. However, this could also pay off over time if the recent rotation into British stocks from US shares continues.

Targeting a large ISA income

Based on this year’s 5.5% forward dividend yield, our mini ISA portfolio of shares could deliver a £1,100 passive income this year on a £20,000 lump sum investment.

What’s more, if their dividends grow by an average 5% a year over the next 25 years, it could provide a second income of £3,725 at the end of the period.

Dividends are never guaranteed, even with a diversified portfolio. But I’m confident this set of shares could deliver a robust long-term passive income.

The post Here’s how you could target a £3,725 passive income in a Stocks & Shares ISA appeared first on The Motley Fool UK.

The good news is that it’s never been easier to achieve this goal. With that in mind, here are some passive income investment ideas to consider for 2025.

Investment funds and ETFs

Without doubt, one of the easiest ways to generate extra cash flow today is to invest in an income-focused investment fund. These generally invest in a range of dividend-paying companies and pass on the dividends to investors in the form of income distributions.

One example of such a fund is the Vanguard FTSE All-World High Dividend Yield UCITS ETF. This currently offers a yield of around 3%, meaning that an investment of £10,000 generates annual income of around £300.

That’s not the highest yield out there, but this fund tends to generate solid long-term capital gains too. Over the last five years, the share price has climbed around 20%, meaning investors have enjoyed total returns of close to 8% a year.

Investment trusts

Putting money into investment trusts can also be a good way to build an income stream. These are quite similar to funds as they offer broad exposure to the market.

One example of a trust that’s income-focused is Merchants Trust (LSE: MRCH). It aims to deliver a high and rising income (along with some capital growth) and currently offers a yield of around 5%.

It’s worth noting that this trust is one of the Association of Investment Companies’ Dividend Heroes. This means it has increased its income payout every year for at least 20 years.

Some of the top holdings in this trust’s portfolio include British American Tobacco, GSK, Shell, Barclays, and Rio Tinto. All of these stocks are regular dividend payers.

Now, it’s worth noting that the while the yield here’s high, the trust hasn’t delivered much in the way of capital gains in recent years. Over the last five years, for example, the share price has gone nowhere.

This is a good example of why it’s important to look beyond an investment’s yield and focus on total returns. Just because a product has a high yield doesn’t mean it will be a fantastic long-term investment.

In this case, many of the stocks it owns haven’t done so well over the last five years as they operate in structurally-challenged industries such as oil and gas and tobacco. This trend could continue.

Individual dividend stocks

Finally, investing in individual dividend stocks can be a great way to generate extra income. This approach is riskier than investing in a fund. That’s because every company has its own risks. But the yields on offer can be attractive.

HSBC, for example, is currently forecast to pay out 64.5 cents per share for the 2025 financial year. Given that its share price is 782p today, that translates to a yield of about 6.7%.

M&G, meanwhile, is currently expected to pay out 20.7p per share for 2025. That equates to a yield of about 10.4% at today’s share price.

As I said though, investors need to factor in company-specific risks with stocks like these. With individual stocks, share prices can fall 10%, 20% or more if company results are poor.

So it’s crucial to build a diversified portfolio to manage risk.

The post 3 simple passive income investment ideas to consider for 2025 appeared first on The Motley Fool UK.

Well, investing, like all things, shouldn’t take over our lives. Instead, we should use it to improve them. And our lives aren’t things that happen 20 years in the future, they’re happening now.

So I’m not one of those investors we read about who lived the lives of paupers so they could build enough cash to keep the local hamster sanctuary in straw for the next 50 years when they die.

Balance

No, I’d say the first part of investing is balance. Whether we want to build passive income for retirement or seek multibagger growth stocks, we should live for today too.

So that’s my first step for 2025. I’ll invest as much as I can comfortably afford, but I’m not going to leave myself short.

What’s my next step? I’m not going to rush to invest either. I’m happy to put some cash away each month into my Stock and Shares ISA, and let it build until there’s something I’m sure I want to buy.

I’ve seen too many people with money to invest and it burns a hole in their ISA. They pick the best stock they can find on the day, even if it’s not one of their all-time favourites.

Be selective

I’m very selective on the stocks I buy. And if nothing really grabs me, the cash will still be there next month, or the month after.

I’ll tell you one stock I do like the look of right now, and that’s Merchants Trust (LSE: MRCH). It’s an investment trust that targets income from UK equities. And at the moment, it’s offering a 5% dividend yield.

What’s more, it’s lifted its dividend every year for 42 years in a row. That’s something I like about investment trusts for generating steady income. They can retain cash in better years to keep the dividends going when things are leaner.

Saying that, should the trust be unable to raise its dividend one year, I could see the share price tumbling. And I reckon that’s the biggest risk.

Diversify

Diversification‘s a core part of my passive income investing strategy. And I’d get some with Merchants Trust. It has GSK, British American Tobacco, Shell, Barclays and WPP as its top five holdings.

That’s diversification in one go. And I’d be doing better than that, as I’ve already bought some City of London Investment Trust shares. It has a similar strategy, and I think the two should see me well covered in terms of top FTSE 100 dividend stocks.

After that, it’s just a case of accumulating cash and investing only when a really great stock catches my eye.

Overall, my ISA buys have pretty much balanced between investment trusts and individual stocks. And as investing strategies go, I don’t find it too time consuming. It still leaves plenty of time for life.

The post Here’s my passive income investing plan for 2025 appeared first on The Motley Fool UK.

By reinvesting dividends I receive, I can substantially boost my returns by earning money on my initial capital investment as well as those income payments.

With my total dividends rising over time as the number of shares I hold increases, the power of compounding significantly enhances my overall returns, leading to exponential growth in my investment portfolio.

Investment trusts can be excellent shares to buy to help me make this a reality. Many are focused specifically on generating income for their shareholders. And with a diversified range of assets and professional management teams, they offer the potential for steady and reliable income streams.

There are many such trusts for UK investors to choose from today. Here are three of my favourites that I think are worth serious consideration.

City of London Investment Trust

City of London Investment Trust (LSE:CTY) is one of the London stock market’s greatest dividend aristocrats. It’s raised the annual dividend for a staggering 57 years on the spin.

At 432p, the trust carries a trailing dividend yield of 4.7%. That’s more than a percentage higher than that of the broader FTSE 100 index.

City of London’s highly geared towards British blue-chip stocks like BAE Systems, RELX, HSBC and Unilever. These businesses tend to be sound investments over time, thanks to their market-leading positions and solid balance sheets.

More than 88% of City of London’s capital is allocated in UK shares. Investors should be mindful that this could lead to disappointing results if economic conditions in Britain worsen.

Alliance Trust

Alliance Trust (LSE:ATST) may be a better buy for investors seeking greater geographical diversification. Right now, 57% of its money is tied up in US equities. The remainder is spread broadly across other global regions.

As with City of London, the trust is also focused on stable, market-leading multinational businesses. Key holdings here include Microsoft, Amazon, Visa and Nvidia.

Alliance has a larger weighting towards tech stocks than many other trusts. This gives investors a chance to exploit hot growth themes like artificial intelligence (AI), though on the downside it also means returns may be more vulnerable during economic downturns.

At £12.20 per share, the trust’s trailing dividend yield is 2.1%. It has also raised annual dividends for 57 straight years.

The Merchants Trust

The Merchants Trust (LSE:MRCH) has fewer years of steady dividend growth than those other two. But at 42 years, it can clearly still be considered a top dividend aristocrat.

Some of the largest holdings here include GSK, Shell, British American Tobacco and Barclays. Almost 45% of its capital is tied up in just 10 companies though, which makes it less diversified in this respect than certain other trusts.

At 576p per share, Merchants boasts a trailing dividend yield of 4.9%. Its exposure to cyclical, sensitive, and defensive sectors suggests it could continue to deliver a healthy passive income to investors.

The post Looking for dividend stocks? These 3 investment trusts might be great buys appeared first on The Motley Fool UK.