Investment trust pays dividends 4.1% above base rate

Investors seeking income should look to well established investment trusts say J.P. Morgan Asset Management.

Today, shareholders in J.P. Morgan Asset Management managed The Mercantile Investment Trust are receiving their first quarterly dividend of 6.00p per share for the new financial year. During the last financial year, to 31st January 2009, investors in the investment trust received total dividends of 36.00p, a yield of over 4.6%. With Bank of England base rates remaining at 0.5%, the consistently attractive yield from the investment trust has been welcomed by shareholders.

In addition, The Mercantile Investment Trust board announced in its most recent annual report that it intends to continue to pay two more quarterly dividends at the current rate of 6.0p per ordinary share throughout the new financial year, with the fourth quarter dividend determined by the board based on the current 40.0p residual revenue reserve, meaning investors will continue to receive a steady income from dividends.

James Saunders Watson, Head of Sales and Marketing for Investment Trusts at J.P. Morgan Asset Management explains, "Long term savers and investors, who may have seen their income reduced with the lowering of interest rates, can benefit from the regular returns that established investment trusts, such as The Mercantile Investment Trust, can provide through the consistent payment of dividends. The board's commitment to continue paying dividends at an attractive level for the rest of the financial year indicates that it has utilised the unique structure of investment trusts, which allows boards to retain up to 15% of the trust's annual income. As a result, The Mercantile Investment Trust has been able to build up considerable revenue reserves during rising markets and shareholders are now reaping the benefit of this."

Other investment trusts continuing to maintain dividend levels include JPMorgan Mid Cap Investment Trust and JPMorgan Claverhouse Investment Trust who paid annual dividends of 16.5p and 20.0p respectively for the last financial years. Both investment trusts have also indicated their intention to continue to provide increased dividends to shareholders during the new financial year.