A single aim 

Secure Income REIT (LSE: SIR) was founded with the sole objective of generating a steady double-digit annual return for investors from property. 

The focus of the company is finding properties with tenants on ultra-long-term leases. The weighted average unexpired lease term in its portfolio is 22 years, with no break clauses. What’s more, over half of the leases in place with tenants have fixed annual rent uplifts of at least 2.8% per annum, with the rest linked to inflation.

Management has set out to create one of the best property businesses around and they are said to benefit more than most because they own more than 16% of the company. In other words, if they fail, they stand to lose a lot of money.

Rising yield 

Management skin in the game, coupled with Secure Income’s robust property portfolio, are the primary reasons why I believe this real estate investment trust is a great alternative to buy-to-let property. 

At the time of writing, the shares are trading just under net asset value per share of 382p, and support a dividend yield of 3%. This distribution is slightly lower than I’d like, but over the next two years, analysts think the payout will increase by 60%, giving a prospective dividend yield of 4.4%. And the prospects for dividend growth in the years after is also bright, with property lease income linked to inflation.

Defensive income 

Along with Secure Income, I’m also attracted to the defensive qualities of Target Healthcare (LSE: THRL). 

Much like Secure Income, Target is focused on inking long-term lease deals that guarantee income for extended periods. The trust’s speciality is purpose-built UK care homes. As there seems to be a constant stream of care home providers going out of business, this sector doesn’t have the best reputation for investor returns. However, the lack of social care facilities is one of the most significant problems facing the UK right now, and the government is currently working on many solutions to the problem. Whichever solution policymakers decide on, I reckon it’s highly likely the industry will see a boost in funding in the near term, which should improve its overall financial health.

Target only invests in modern care home facilities with multi-decade leases which, in my opinion, makes the company one of the most attractive investments in a troubled sector. With a dividend yield of 6% at the time of writing, it’s also highly attractive from an income perspective. 

A net asset value of 106p at 30 September puts the 108p shares on a slight premium although, as my colleague Alan Oscroft has pointed out, this premium suggests investors believe that the market-beating dividend yield is here to stay.

The post Forget buy-to-let. I think these stocks are a better buy appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.

Law Debenture Corp (LSE: LWDB) is one of my favourite investment trusts for this reason.

Strong track record

Law Debenture is not your average investment trust. This company is a financial services business with an investment trust attached, which was initially established to invest clients’ money. Its professional services arm and investment portfolio is a potent combination that has enabled Law Debenture to generate outstanding returns for investors over the past decade. 

Indeed, over the past 10 years, the firm’s total net asset value return is 169% compared to the FTSE Actuaries All-Share Index total return of 111%. The fund’s total share price return is 203% since June 2008.

And I expect this trend to continue. Law Debenture’s financial services business offers services such as corporate and pension trust management as well as governance solutions, all highly specialist sections of the market where reputation counts for everything and areas where companies are more than happy to outsource to lower costs. Profit after tax at this division increased 10.7% year-over-year for the half year ended 30 June 2018.

Alongside the professional services business, there’s Law Debenture’s investment trust. The portfolio is managed by James Henderson of Janus Henderson Investors. The main holdings are FTSE 100 dividend stalwarts such as Royal Dutch Shell and BP. Some 64% of the portfolio is invested in the UK, with the remainder spread across Europe North America and Asia. So, if you’re worried about the impact Brexit might have on your portfolio, this globally diversified investment trust offers plenty of diversification. Further, the annual management fee is less than 0.5%. 

The latest net asset value (NAV) is 697p per share so you can currently acquire this investment trust at a 12% discount to NAV. The current dividend yield is 2.8%.

Defensive income 

If Law Debenture does not interest you, Target Healthcare (LSE: THRL) might be a better buy. This company owns and operates specialist, purpose-built UK care homes on long leases. 

According to the group’s results for the year ended 30 June 2018, published today, the weighted average unexpired lease term of its current portfolio is 28.5 years. With income guaranteed for nearly three decades on the company’s care home portfolio, I’m confident that Target Healthcare will benefit any retirement portfolio. 

Today the group reported a 3.7% increase in NAV per share to 105.7, along with a 2.7% increase in its annual dividend to 6.5p. Based on these numbers, the trust is currently trading at a slight premium (6%) to underlying NAV and supports a dividend yield of 5.8%.

Target Healthcare might not be shooting the lights out regarding growth, but if you are looking for a long-term income champion, then it seems to me as if this healthcare real estate investment trust has all the hallmarks of an income play you can buy for your retirement portfolio and forget.

The post 2 top income investment trusts that could help you retire early appeared first on The Twelfth Magpie.

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• 3 beautiful bargain shares to consider for an ISA in July!
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Rupert Hargreaves owns shares in Law Debenture Corp and Royal Dutch Shell. 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.

These two companies offer the perfect blend of income from property with the long-term durability of healthcare, two qualities few other companies can match. 

High-quality income 

Target Healthcare’s goal is to “acquire a diversified portfolio of high-quality modern care homes providing excellent accommodation standards” while at the same time generating a sustainable income stream from rents for investors and maximising shareholder returns.

Today the company reported its results for the six months to 31 December and gave updates on these critical objectives. At the end of 2017, EPRA net asset value per share was 104.4p, up 2.5% and the trust achieved a total return for investors during the period of 5.7% including share price appreciation and dividends. Five new properties were added to the rent roll in the period, including the completion of one development asset and four acquisitions, taking the total value of Target’s property portfolio to £335m. Three new tenants were added during the period increasing the “diversity of portfolio income” to 19 tenants with an average weighted unexpired lease term of 28.9 years and loan-to-value ratio of 24.2%. 

Based on the numbers reported by the firm today, shares in Target are currently trading with a dividend yield of 6.4% and a discount to net asset value of 1%. Granted, the company is never going to win any awards for earnings growth, but its sustainable income stream from property (locked in for nearly three decades) is highly attractive. Also, a robust and unleveraged balance sheet should help management grow the dividend further through the acquisition of new properties. 

With this being the case, I’m considering adding Target to my ISA portfolio as a defensive income play. 

6% dividend yield 

Impact is also targeting a dividend yield of 6%. The company only went public at the beginning of 2017, and it still flies under the radar of most investors. Indeed, since hitting the market, the share price has hardly budged. Still, management is targeting a dividend of 6p per share per annum, paid in quarterly instalments, which equates to a dividend yield of 6% based on today’s share price of 100p. 

Like Target, Impact owns a portfolio of care homes, and while management does have plans to expand the portfolio gradually over the next few years, the company is limited to borrowing 35% of the gross value of its asset portfolio, which in my view makes this an exceptionally defensive, fiscally responsible business. 

What’s more, all of the company’s clients are on long-term leases with a weighted average lease term of 19.2 years and an annualised rent roll of £11.9m. There are annual rental uplifts based on the retail price index with a floor of 2% and cap of 4% per annum. So, just like Target, Impact offers a defensive income stream that is set to grow with inflation and is tied to multi-decade contracts. The firm’s strong balance sheet only adds to its appeal.

The post 2 defensive income investment trusts I’d buy for my ISA appeared first on The Twelfth Magpie.

More reading

• 3 beautiful bargain shares to consider for an ISA in July!
• Could I REALLY retire on a Stocks and Shares ISA with passive income shares?

Rupert Hargreaves owns no share 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.