2 investment trusts from the FTSE 250 worth digging into for passive income
The FTSE 250 index is home to loads of investments trusts, and a fair few of these pay dividends. Here, I want to highlight two that I reckon investors interested in passive income ought to dig into.
High-quality infrastructure assets
Let’s start with 3i Infrastructure (LSE:3IN). This investment trust has stakes in 12 assets spanning areas including energy networks, fibre broadband, and transport infrastructure. These generate long-term, often inflation-linked cash flows, underpinning predictable income.
Given this stability, the forward-looking dividend yield isn’t particularly high at 3.8%. However, 3i Infrastructure has delivered 14% annualised returns since going public nearly 20 years ago. So this is a high-quality income trust.
Now, one risk here is that the portfolio is quite concentrated. For example, it has a chunky 16.5% weighting towards TCR Group, which is Europeâs largest independent manager of airport ground support equipment. So were problems to emerge at TCR, this would be an issue for 3i Infrastructure.
However, in the six months to 30 September, total income and non-income cash increased by 18%, setting the trust up for a 6.3% hike in the annual dividend. The long-term dividend growth prospects look very strong.
Right now, investors can pick up shares of the trust at a very attractive 9.2% discount to net asset value (NAV).
Our largest investment, TCR, continues to outperform expectations and deliver significant value growth. We remain confident in the long-term growth potential of the portfolio. The Company is on track to deliver results ahead of its return target for this financial year. 3i Infrastructure.
Income from Asia
Heading eastwards now with Schroder Oriental Income Fund (LSE:SOI). I find this trust’s investment proposition attractive: “Asian companies are increasingly world-leading and returning cash to shareholders. The Schroder Oriental Income Fund aims to tap into the Asian income story and help investors diversify their dividends“.
Top holdings here include Taiwan Semiconductor Manufacturing (TSMC), Samsung Electronics, and Singapore Telecommunications. It also has a smattering of Australian dividend stocks including Telstra Group (Australiaâs biggest telecoms provider).
The share price is up 20% year to date. Despite this, the trust still offers a decent 3.7% starting yield.
Of course, investors would have to take the long view here, as US tariffs aren’t ideal for many Asian firms in the near term. There could be some volatility in 2026 if trade tensions flare up once more.
Again though, I see this trust as having solid dividend growth prospects. By 2050, emerging Asia could account for more than 50% of global growth. Plus, with holdings like leading chip foundry TSMC and China’s NetEase (a video game powerhouse), I think the share price will also do well.
Schroder Oriental Income Fund is currently trading at a near-5% discount to NAV.
Foolish takeaway
As mentioned, these two trusts don’t have huge 10%+ yields like some others in the FTSE 250 today. Yet through a combination of growth and income, I reckon considering them can build wealth inside a diversified ISA portfolio.
The post 2 investment trusts from the FTSE 250 worth digging into for passive income appeared first on The Motley Fool UK.
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Ben McPoland has positions in Taiwan Semiconductor Manufacturing. The Motley Fool UK has recommended Taiwan Semiconductor Manufacturing. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
