But during phases of heightened market volatility, I turn to energy investment trusts instead of individual shares.

These are companies structured as closed-end entities designed to invest in a range of energy equities, assets and debt. In unpredictable climes, their portfolio diversity may offer risk mitigation and a stable income.

In choosing these, apart from chasing income from dividends, I pay close attention to their net asset value (NAV) per share, or total assets minus liabilities, divided by the number of issued shares. So, if a trust’s shares are trading at a discount, then it provides an indication that its share price is lower than its NAV per share.

The discount suggests the market values securities/assets in the trust to be below their comprehensive NAV value. It may offer an opportunity for profiting through higher value realisation later in the trading cycle for a cyclical sector like energy while banking potentially regular dividends.

My two top picks are:

1. Blackrock Energy and Resources Income Trust

Managed by BlackRock, Blackrock Energy and Resources Income Trust (LSE: BERI) has been around for nearly 20 years. I regularly turn to it for dip-buys as well as profit realisation on a future upswing at high points in the energy cycle. It offers relatively stable quarterly dividends with a current yield of 4.15%.

Capital growth and income objectives are achieved by investing primarily in the securities of companies operating along Blackrock Energy and Resources Income Trust’s three investment pathways – traditional energy (30%), energy transition (30%) and mining and resources (40%), including transition minerals and metals.

I like this trust’s agility and global energy equities exposure. Its top holdings include Glencore, Vale, Shell, NextEra Energy and RWE. Finally, its NAV discount is just north of 13%.

2. Triple Point Energy Transition

Triple Point Energy Transition (LSE: TENT) features regularly among the 20 highest dividend-yielding investment trusts, with a current yield of over 8%. This energy trust mainly invests in UK renewable energy assets with “high quality counterparties” that provide its shareholders with an “attractive, long-term income source with a positive impact”.

It generates investor returns by focusing on three key areas: distributed energy generation, energy storage and distribution, and onsite energy generation and efficient, low-carbon consumption.

Its 60-40 debt and equity investment split has been a source of stable income for me in recent years. I also view it as a dip-buy with a long-term investment potential and an attractive NAV discount of 30%.

Pros and cons

Current portfolios of both trusts highlight long-term investments in energy transition companies and assets. Their NAV discounts are attractive and not alarming. Both have a revenue reserve, or money put aside in good years, to dip into in their lean years in what is a very cyclical sector. So, I believe they are likely to maintain dividends over the long term.

Investors may need to do background research and gauge their suitability in line with investment objectives and risk appetite. Trusts in other sectors, e.g. some REITs, may offer higher returns. Energy remains a cyclical business and trusts in the sector aren’t immune to cyclical headwinds. But for me, on balance, the pros of buying outweigh the cons.

The post My 2 top energy investment trust picks for a passive income appeared first on The Motley Fool UK.

Here are two I’d buy for big dividends today. In fact I think they could deliver exceptional returns for the rest of the decade.

The PRS REIT

Forward dividend yield: 4.8%

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Higher-than-usual construction costs threaten earnings growth at build-to-rent specialist The PRS REIT (LSE:PRSR). But I still expect the business to perform strongly as rents across the country rip higher.

Average asking rents outside London rose by 9.3% in the second quarter to £1,231, according to property website Rightmove. And asking rents for new tenants are now 33% higher than they were before the pandemic as the housing shortage rolls on.

There’s no sign that Britain’s supply and demand imbalance is set to end. In fact there’s a good chance it will continue to worsen in the years ahead. Rising costs mean the exodus of buy-to-let investors looks here to stay. At the same time, new housing starts remain weak.

PRS REIT is already capitalising effectively on this favourable landscape. Like-for-like rent growth picked up to 6.5% in the year to May. This was up from 5.7% in the prior 12-month period.

Buying residential property stocks has an added advantage in tough times like these. This is because demand for accommodation remains stable at all points of the economic cycle. Indeed, PRS REIT’s occupancy stood at 98% as of May. The business also collected 100% of the rents it was due.

Triple Point Energy Transition

Forward dividend yield: 8.1%

Snapping up renewable energy stocks also has huge investment potential as the world moves away from fossil fuels. Triple Point Energy Transition (LSE:TENT) is one such UK share I’m considering buying to hold for the long term.

At current prices it looks especially attractive. As well as carrying that huge dividend yield, the investment trust trades at an attractive discount to the value of its underlying assets. Net asset value sits at 99.5p per share compared with a share price of 70p.

Triple Point invests in a range of assets to capitalise on the growing green economy. It has wide exposure across the energy generation, storage, and distribution sectors, which in turn reduces the risk to investors.

I believe the investment trust is especially attractive in this period of macroeconomic uncertainty and high inflation. Around nine-tenths of the income it makes is locked into to long-term contracts, while 45% of it is linked to retail price inflation (RPI).

Changes to green legislation could affect future earnings growth here. But as things stand today, Triple Point looks like a great stock to hold for the rest of the decade.

The post 2 UK dividend shares I’d buy to hold to 2030! appeared first on The Motley Fool UK.

Primary Health Properties

Medical facility operator Primary Health Properties (LSE:PHP) is a company I actually own some shares in with my Stocks and Shares ISA.

It’s one of a couple of real estate investment trusts (or REITs) in my portfolio. These shares can be great sources of passive income as they pay a minimum of 90% of their annual earnings out by way of dividends.

Primary Health Properties (PHP) owns and operates more than 500 facilities like GP surgeries in the UK and Ireland. The need for such assets is increasing as elderly populations grow and demand for regular medical care steps higher.

The Office for National Statistics predicts that a quarter of the British population will be aged 65 or above by 2050. PHP is seeking to keep expanding to exploit this opportunity, though the business has recently cooled investment activity on account of higher interest rates and economic uncertainty.

My main concern as an investor is that GP shortages could worsen in the years ahead. A recent Royal College of GPs survey suggested that one in four doctors are considering quitting practicing thanks in part to unmanageable workloads.

But on balance I believe the potential benefits of owning PHP shares outweigh this risk. I especially think it remains highly attractive because of its ultra-progressive dividend policy.

The FTSE 250 firm has raised the annual dividend every year for almost three decades. City analysts expect the shareholder reward to increase for a 28th successive year in 2023, too. And so the forward dividend yield sits at a healthy 6.7%. I plan to hold my PHP shares for years to come.

Triple Point Energy Transition

The growth of green energy is another hot investment trend for the next decade. And Triple Point Energy Transition (LSE:TENT) is a renewable energy stock I’m considering buying to make money from it.

I like the firm’s enormous 7.9% dividend yield for the financial year to March 2023. It’s a reading that moves to an even-better 8.1% for the new fiscal period starting next month.

Triple Point invests capital in a range of technologies that are critical to the clean power revolution. These include battery storage energy systems, hydroelectric energy projects, and co-generation assets, which use steam to produce heat instead of burning fuel.

The energy transition is still in its early days and future environmental legislation could damage the long-term returns of certain technologies. But by investing in different types of assets, the business reduces this risk for its shareholders.

There are several top renewable energy stocks on my radar today. But the cheapness of Triple Point’s shares makes it one of the most attractive to me. At current levels below 70p, they trade at a big discount to the value of the firm’s assets. Its estimated net asset value per share stands north of 100p.

The post Yields of up to 7.9%! 2 dividend shares I’d buy for long-term passive income appeared first on The Motley Fool UK.