Tough period

Reporting on Monday was Troy Income & Growth Trust (LSE: TIGT). It has experienced a somewhat disappointing year, with its share price total return of 4% being well down on the FTSE All-Share’s rise of 11.9%. The main reason for this was the company’s style, with it being focused on defensive stocks which have generally been unpopular among investors during the last year.

However, this could create an opportunity for investors with a long-term timeframe. The trust currently trades at a small discount of 0.45% to its net asset value (NAV), while many of its major holdings appear to be relatively cheap. For example, Lloyds, British American Tobacco and GlaxoSmithKline are all among its top 10 holdings. All three stocks as well as other major holdings trade on historically low ratings at the present time, and this could signal that the trust has value appeal.

As well as this, Troy Income & Growth Trust has a dividend yield of 3.3%. This is above the rate of inflation and with many of its major holdings appearing to have a bright long-term future, its dividend growth rate could be above average. As today’s update from the company discusses, risks remain throughout the global economy. Therefore, its focus on defensive stocks could be rewarded in the long run.

More dividend growth potential

Also offering impressive income prospects is Edinburgh Investment Trust (LSE: EDIN). The company has also experienced a difficult year. Its return in the last year has been just 3.2% versus an increase of 13.8% for its UK Equity Income benchmark. However, with it now trading at a discount of 8.4% to its NAV, the company could offer good value for money for the long term.

It has a dividend yield of 3.7% at the present time. Its major holdings include a number of stocks which could offer high and yet reliable dividend growth in future years. For example, Imperial Brands has a solid track record of dividend growth which looks set to continue as it invests in new products. Likewise, AstraZeneca is expected to return to positive bottom line growth after a period of declines, and this could mean it is able to afford a higher shareholder payout.

As such, while Edinburgh Investment Trust has been a relatively disappointing place to invest in recent months, its long-term future appears to be bright. A mix of defensive characteristics, a relatively high yield and a wide margin of safety could mean it delivers strong income prospects over the coming years.

The post 2 dirt-cheap investment trusts for dividend-growth investors appeared first on The Twelfth Magpie.

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Peter Stephens owns shares in Lloyds, GlaxoSmithKline, AstraZeneca, Imperial Brands and British American Tobacco. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca, Imperial Brands, and Lloyds Banking Group. 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.

This year has been a particularly challenging one for Neil Woodford. He has come under sharp criticism from a range of investors for his lacklustre performance, with several of his funds delivering disappointing performance.

As such, many investors may be wondering if now is the time to look elsewhere for investment trusts to buy for the long term. Could this top-performing trust be worth buying ahead of Neil Woodford-managed funds such as the Woodford Patient Capital Trust (LSE: WPCT)?

A difficult year

Over the last year, the Woodford Patient Capital Trust has underperformed its benchmark, the UK All Companies index, by around 17.3%. In fact, it is down 3.2% on where it was this time last year. As such, it has been a relatively poor year for the trust at a time when a wide range of stocks, funds and indices have enjoyed a major Bull Run.

However, the nature of the trust suggests that over a relatively short-term timeframe it could struggle when compared to its benchmark. It focuses on early-stage and early-growth businesses which may have outstanding intellectual property, but require capital through which to develop. While they may have strong investment potential for the long term, their lack of positive correlation with market indices may mean there are years of significant under and overperformance. As such, a disappointing year for the trust may not be a fair reflection of its potential for long-term investors.

Further criticism

In the last year, the general performance of Neil Woodford-managed funds has not been as strong as many investors have come to expect. For example, he has been criticised for the performance of major holdings within some of his funds, such as AstraZeneca and Provident Financial.

Furthermore, his decision to sell GlaxoSmithKline and British American Tobacco has also caused some investors to become uncertain about his future performance outlook. Both stocks appear to offer sound forecast growth rates, and therefore some investors have been surprised that they have been sold in favour of other shares.

Outperformance

While the Woodford Patient Capital Trust has disappointed of late, the Troy Income & Growth Trust (LSE: TIGT) has surged 30% higher in the last three years. This means it has outperformed the wider UK Equity Income benchmark by around 7%. And with it trading at a small discount to its net asset value, it could offer good value for money for the long term.

With a dividend yield of 3.3%, the Troy Income & Growth Trust offers an inflation-beating income return. It holds a number of large, UK-listed income shares such as Shell and British American Tobacco. Therefore, it could benefit from a further weakening of the pound as Brexit uncertainty builds. It may also be able to offer defensive characteristics due to its geographical diversity on a company level.

Long-term outlook

While the Troy Income & Growth Trust appears to be worth buying, the Woodford Patient Capital Trust could also have investment potential. Neil Woodford has an excellent reputation which has been built up over a long period. He has not suddenly become a worse investor in the last year, but rather has experienced the same disappointment which ultimately inflicts all investors at some point in their investing careers.

As such, the trust and his other funds continue to have investment appeal for the long run. Indeed, with a discount of 5% to its net asset value, the recent poor performance of Woodford Patient Capital Trust could be an opportunity to buy, rather than sell.

The post Should you ditch Neil Woodford and buy this top-performing investment trust? appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Peter Stephens owns shares in Shell, British American Tobacco, AstraZeneca and GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK has recommended AstraZeneca and Royal Dutch Shell B. 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.