I’d buy these 2 investment trusts to retire on a rising passive income

first_img Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Our 6 ‘Best Buys Now’ Shares I believe investment trusts are one of the best ways to invest in the market, especially if one is looking for a passive income. Unlike other funds, investment trusts operate as companies. This means they have a level of flexibility regarding how much income they can distribute to investors as dividends. The structure also gives these businesses more flexibility for choosing investments.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Most investment trusts focus on stocks and shares, but some own commercial property, precious metals, private equity, hedge funds and even renewable energy assets. Another quirk of the investment trust structure is the ability to hold back a percentage of income every year. This enables investment trusts to hold back revenue in the good times to cover dividend payouts when the going gets tough. This proved extremely helpful in 2020 when many blue-chip companies slashed their dividends. Investment trusts were able to dig into their dividend reserves to cover shareholder payouts.So, with that in mind, here are two investment trusts I would buy today to retire on a rising, passive income. Passive income investments There are a handful of investment trusts that have maintained their dividends for several decades. One of these is the City of London Trust (LSE: CTY). This firm prides itself on its dividend track record. It has maintained the distribution to investors since 1966. At the time of writing, the trust provides a dividend yield of 5.1%. To cover this income stream, it owns a portfolio of blue-chip income stocks. Some 86% of the portfolio is invested in UK equities, with the remainder spread worldwide to provide a level of diversification. As well as targeting a steady stream of income, the trust also aims to achieve a level of capital growth every year. It has been relatively successful on this front, achieving a total return of nearly 100% over the past 10 years. As long as the investment management sticks to the strategy that has been so successful over the past decade during the next 10 years, I think City of London could be one of the best investments to own when looking to build a passive income stream. Growth and incomeWith a dividend yield of 6.4% of the time of writing, the Value & Income Trust (LSE: VIN) could be another option for passive income investors like me. This trust uses an interesting model to generate income for its shareholders. Some 41% of the portfolio is invested directly in property across the UK. This provides exposure to the asset class and an uncorrelated income stream. The rest of the portfolio is invested in high-quality blue-chip stocks.As such, investors receive the best of both worlds. Income from high-quality global dividends and a steady stream of income from property here in the UK. Unfortunately, due to the pandemic, Value & Income’s exposure to UK property has become a bit of a liability. Investors have dumped the stock as a result. It’s now trading at a discount of 23% to its underlying net asset value. However, I think this could be a great opportunity for long-term investors seeking a passive income to buy up a portfolio of high-quality income-generating assets at a discount. It’s on my watchlist. I’d buy these 2 investment trusts to retire on a rising passive income Don’t miss our special stock presentation.It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.That’s why they’re referring to it as the FTSE’s ‘double agent’.Because they believe it’s working both with the market… And against it.To find out why we think you should add it to your portfolio today… See all posts by Rupert Hargreaves Simply click below to discover how you can take advantage of this.center_img Image source: Getty Images I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Click here to get access to our presentation, and learn how to get the name of this ‘double agent’! Enter Your Email Address There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it! Rupert Hargreaves | Sunday, 10th January, 2021 | More on: CTY VIN last_img

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