Explore global earnings opportunities through Henderson International Income
Top Global Equity Income Trusts Offer Attractive Yields and Diversification
Investors seeking income from their portfolios are increasingly turning to global equity income trusts, which provide a steady stream of dividends from a diversified portfolio of international companies.
These trusts, such as Henderson Far East Income (yield ~10.9%), Artemis Global Income, and others with popular investor flows and strong historic returns, generate income by investing in high-yield stocks from a variety of sectors and regions. The FTSE Global Equity High Income Index Series serves as a benchmark for such diversified portfolios, including large and mid-cap stocks across developed and emerging markets worldwide.
One of the key advantages of global equity income trusts is their international diversification. For example, Henderson International Income (LSE: HINT) has a significant allocation to the US (just over 37%) and France (13%), while the UK makes up less than 5% of its total portfolio. This diversification helps reduce regional risks while maintaining attractive payout levels.
The largest holding in Henderson International Income's portfolio is Microsoft. The trust's holdings have the potential to deliver earnings growth of 10.4% for the year ahead. To further boost its income, Henderson International Income uses trading strategies such as investing in corporate bonds and writing covered call options.
Another notable trust is Murray International (LSE: MYI), with £1.7bn of assets and a yield of 4.6%. STS Global Income and Growth (LSE: STS) has £309m and a yield of 2.9%, while Scottish American (LSE: SAIN) has £1.1bn and a yield of 2.8%. JPMorgan Global Growth & Income (LSE: JGGI) is the largest trust in the AIC Global Equity Income sector with £2.9bn of assets and a TTM yield of 3.4%.
Henderson International Income (LSE: HINT) has £385m and a yield of 4.7%. The FTSE 100 has an average yield of 3.55% on a trailing twelve-month basis (TTM). However, global equity investment trusts often offer yields that match or exceed the yield of UK equities, providing a compelling alternative for income-focused investors.
It's worth noting that these strategies have historically accounted for 4%-10% of the company's cash available for distribution in dividends. After factoring in the current NAV discount, the valuation of Henderson International Income falls to 13.3. This suggests that the trust may be undervalued, offering a potential opportunity for investors.
Investors should consider international diversification when investing in the UK market, as global equity income trusts offer a way to tap into the income opportunities available in other markets while maintaining a diversified portfolio. These trusts provide a balance between income generation and risk management, making them an attractive option for income-focused investors.
- Global equity income trusts, like Henderson International Income (LSE: HINT), also generate income by investing in alternative areas such as corporate bonds and writing covered call options.
- Besides high-yield stocks, some global equity income trusts, such as JPMorgan Global Growth & Income (LSE: JGGI), invest in bonds as part of their financial strategies to boost their income.
- Technology companies, like Microsoft, venture into global equity income trusts' portfolios, exemplifying the diversified nature of these investment trusts spanning various sectors, including technology.
