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Excessive dividend yields are sometimes handled as a entice. Typically, when an organization presents traders greater than 10% a 12 months, alarm bells must be ringing.
In any case, corporations need to stability shareholder rewards with reinvestment of their operations. If the payout is simply too beneficiant, income ultimately undergo. And when income fall, dividend cuts often observe. Most of the time, a double-digit dividend yield is the signal of a sinking share value, not a sustainable stream of earnings.
However there are exceptions. Some funding trusts are particularly designed to ship excessive yields and long-term earnings for his or her shareholders. A few these look surprisingly regular to me, regardless of their eye-watering payouts.
Listed below are two that stand out on the FTSE.
Henderson Far East Earnings
This £419m belief has one of many highest yields available on the market, sitting at a hefty 10.78%. Usually, that might have me suspicious. However Henderson Far East Earnings (LSE: HFEL) has an extended observe file of rewarding shareholders, with 15 consecutive years of dividend development.
Its present share value is 231p, up 1.7% in 2025, and it sometimes trades at a small premium to internet asset worth — presently round 4.18%. The portfolio is stacked with Asian heavyweights, together with Taiwan Semiconductor Manufacturing Firm, CTBC Monetary, China Hongqiao Group, Evergreen Marine and Tencent.
Financially, it’s one thing of a combined bag. A internet margin of 66.8% is spectacular, and the return on capital employed (ROCE) of 5.36% exhibits effectivity. However the payout ratio of 207.8% suggests dividends aren’t well-covered by earnings, which dangers a reduce if income slide.
At a price-to-earnings (P/E) ratio of 19.3, the belief just isn’t low-cost both. Nonetheless, given its 15-year dividend historical past, I feel it’s price contemplating as a part of an earnings portfolio — albeit, with restricted development potential.
SDCL Power Effectivity Earnings Belief
This one is a little bit completely different. Moderately than specializing in big-name equities, SDCL (LSE: SEIT) invests in power effectivity tasks throughout Europe, America, South East Asia and Africa, spanning healthcare, retail, industrial and industrial sectors.
With a market-cap of £637m and a share value of 58p (up 6.36% this 12 months), it presents a dividend yield of 10.77%. In contrast to Henderson, its payout ratio of 97.8% seems much more sustainable – however it solely has six years of consecutive dividend development below its belt.
Nonetheless, the numbers look strong. A staggering internet margin of 94.8% makes for extremely worthwhile operations, and with a P/E ratio of simply 9.1, the belief really seems undervalued in comparison with friends. The stability sheet is powerful too, with no debt – uncommon for an funding belief.
The principle threat is political. With shifting insurance policies within the US leaning again in direction of fossil fuels, renewable and sustainable power tasks may face strain. However with such sturdy financials, I really feel assured in its dividend coverage and imagine it’s worthy of additional analysis.
Remaining ideas
Most double-digit yields within the FTSE are unsustainable. However funding trusts like Henderson Far East and SDCL Power are constructed with earnings in thoughts. Each include dangers — one seems overvalued, the opposite uncovered to coverage headwinds — however their dedication to shareholder returns provides them credibility.
For long-term earnings traders, I feel these trusts are among the many uncommon few the place a dividend yield above 10% is definitely price contemplating.
