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Summary
- UK VCTs’ investment returns have been robust despite the pandemic’s impact.
- More than £8 billion have been raised in these trusts since 1995.
Started in 1995 in the UK, Venture Capital Trusts (VCTs) were launched to stimulate investment in unquoted young companies, which are less than seven years old, by giving tax incentives to investors. Though such investments have higher risks as compared to investment in a listed firm on the London Stock Exchange, in return, investors get compensation through a variety of generous tax breaks.
Investment returns from VCTs have been robust despite the pandemic’s impact on the British economy. Nick Britton, head of intermediary communications, Association of Investment Companies, said that the average return on VCT investment for the last year was around 4 per cent. The reason is VCTs invested in companies that performed well over the course of the outbreak in 2020, he added.
According to the HM Revenue & Customs data, a whopping sum of over £8 billion has been raised in these trusts since 1995, the year it was launched in the UK.
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Let us now take a closer look at 3 VCT stocks with a 5-year dividend yield of over 20 per cent.
Maven Income and Growth VCT PLC (LON:MIG1)
The UK-based venture capital trust (market cap: £49.12 million) is focused on achieving capital appreciation in the long-term and generating maintainable levels of income for its investors. Its 5-year average dividend yield was at 24.6 per cent. The VCT declared its latest dividend of 1.00p on 20 November 2020.
The VCT stock was valued at GBX 40 on Wednesday, 31 March, in the afternoon trade. The stock’s value was the same as of the previous day’s close.
Mobeus Income & Growth 2 VCT PLC (LON:MIG)
Managed by Mobeus Equity Partners LLP, Mobeus Income & Growth 2 VCT PLC (market cap: £61.51 million) was launched in May 2000 with the objective of providing its shareholders with a regular income stream. The firm invests across a variety of sectors in the UK’s unquoted companies.
The stock had a 5-year average dividend yield of 24.1 per cent. The VCT’s dividend paid in respect of current financial year has been 7.0p. Its net asset value per share was 87.2p as on 31 December 2020.
The share price of the VCT was trading at GBX 85.50 on Wednesday, 31 March at 1.56 PM. The stock was giving a YTD return of 10.32 per cent at the time of reporting.
Mobeus Income & Growth VCT PLC (LON:MIX)
The London-based VCT (market cap: £89.70 million) provides its shareholders with a regular stream of income through tax-free dividend generated by income and capital returns.
The VCT stock had a 5-year average dividend yield of 21.7 per cent. The company share price was up 1.50 per cent to GBX 67.50 on Tuesday, 30 March at 2.00 PM.
