Investment Trust Dividends
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The current fcast for the first quarter is income of £2,903.00, which is comparable to the yearly fcast of £10,500
The figures includes the next dividend for NESF which after it’s paid will be trimmed but as the dividends are re-invested that will make up the shortfall.
GRS but GR.
Often before a long weekend strange closing prices are printed, which may not be available when the market re-opens.
After the long weekend, the SNOWBALL starts again with an empty pot.
The fcast is to earn £10,500 of income, all of which is to be re-invested back into the SNOWBALL to earn more income.
The plan is shown below, if you don’t have a plan with and end destination, you are unlikely to achieve your goals.
The SNOWBALL is in year 4 of the above plan, so if the fcast of £10,500 is achieved the SNOWBALL will be 3 years ahead of plan. The SNOWBALL has outperformed the fcast every year and the intention is to do so again this financial year but the fcast remains unchanged.
Option One
The SNOWBALL has a comparator share VWRP where the current value is
£151,249. Using the 4% rule that would provide a ‘pension’ of £6,051, if you ignore the requirement to have a recommended 3 year cash fund.
Option 2
Use your hardearned to buy an annuity, currently around 7% depending on age etc., so income £10,587. You have to surrender all your hardearned, so not an option, unless you have a fund of a million, then take out an annuity and concentrate soley on spending your income.
Option 3
A dividend re-investment scheme or part option 1 and option 3.
April and therefore every 3 months is a weak month for dividends to be received but remember
Mr. Market is going to present you with some wonderful opportunities.
but be careful, otherwise it could be
The SNOWBALL has booked a ‘profit’ of £180 from the recent purchase in MRCH. If the SNOWBALL had bought a full position the ‘profit’ would have been £360 but it didn’t, so it isn’t.
The intention is to buy back the shares that have been sold plus others at a higher or lower price.
Shares and Markets Writer
Bonds have historically provided shelter and ballast to portfolios during times of market uncertainty because of their stable fixed income.
That has not happened over the last month because the shock to stock markets has come from rising energy prices. Something which is likely to lead to higher inflation.
The worry is that central banks might be forced to hike interest rates to bring inflation back down, in an echo of what happened coming out of the pandemic.
Inflation is the enemy of bond investors because it reduces future spending power. For example, if inflation were to average 5% over the next 20 years it would shrink the value of £1,000 today to around £375.
These concerns have pushed up bond yields (prices move inversely to yields) since the end of February with UK 10-year gilt yields rising from 4.3% in late February to 4.9% in late March.
Two-year yields which more closely mirror expectations for the direction of Bank of England base rate have increased by almost one full percentage point, reversing prior expectations for interest rates to fall in 2026.
The reason bond prices fall is because new government debt will be issued with higher, prevailing yields which make existing bonds less attractive.
Bonds are sensitive to changes in interest rates and as a rule of thumb, longer-dated bonds are more sensitive than shorter-dated issues.
For example, 10-year bonds have seen a price fall of around 5% over the last month, while two-year bonds have lost around 2% of their value.
This means that investors holding a diversified UK gilts fund, could have experienced losses of between 2% and 5% depending on the composition of bonds held.
Remember that no capital losses are incurred when government bonds are held until maturity, because they expire at the same price they were issued.
The corporate bond market has also been impacted by rising yields with UK investment grade (the highest quality part of the market) bond yields rising by around 0.5% to 5.4%.
This is reflected by diversified investment grade bond portfolios dropping by around 3.5% since the end of February. Corporate bonds typically have higher yields than government bonds to reflect the higher risk of default.
It is also worth emphasising that Bank of England policy makers have urged caution and recognise that aggressively hiking interest rates into an energy shock could do serious harm to the economy.
Even so, it could be a close call with market prices implying a 50% chance of a rate hike at the April or May meeting, which is a big change from the 80% chance of a rate cut priced into markets just four weeks ago.
Recent events indicate US-Iranian talks are finding some traction, implying the conflict is likely to be short lived. This scenario is the base case for most economists although the range of outcomes remains wide.
This view is supported by the state of the oil market which has been in deep contango (meaning oil derivatives are trading at levels that imply prices will be lower in a few months) since the war began.
However, the longer the supply of oil from the Strait of Hormuz remains blocked, the greater the potential damage to the global economy. It is useful here to think of higher energy costs as a tax hike.
It means consumers have less to spend on other things and given consumer expenditures represent two thirds of the economy, this is important.
In other words, at some point a sustained rise in energy costs will start to impact economic growth and potentially lead to interest rate cuts as central banks look to stimulate the economy.
Remember that no capital losses are incurred when government bonds are held until maturity, because they expire at the same price they were issued.
If you buy above the issue price of £100, you will make a capital loss.
If you buy a long dated gilt and you have to sell you could make quite a large loss if the market moves against you.
A twenty-year perspective
It is always valuable to place any single year’s performance in a longer-term context. Our investment manager at Allianz Global Investors, Simon Gergel, this year celebrates his twentieth as the lead manager of The Merchants Trust. A shareholder who invested at the beginning of his tenure in January 2006 would have seen significant share price appreciation and consistently growing dividends, which when combined, exceeded the value of their initial investment. In other words, Merchants shareholders today who have held their initial shares for twenty years effectively now have this shareholding for free !
Including dividends £3 > £12. Interesting to note how despite all the market blips, the share price recovers. You need to allow for inflation in the returns.
Revenue earnings per share for the year were 30.6p, compared to 29.4p in the previous year. The Board is proposing a final dividend of 7.5p per share, payable on 27 May 2026 to shareholders on the register on 17 April 2026. The ex-dividend date is 16 April 2026 and the last date for election for the Dividend Reinvestment Plan (DRIP) will be 5 May 2026. This final dividend, together with the interim dividends already paid, will bring the total dividend for the year to 29.5p per share. This represents an increase of 1.4% on the previous year and marks the 44th consecutive year of dividend growth for Merchants, which therefore also retains its place in the AIC’s prestigious list of ‘Dividend Heroes’ – those investment trusts which have consistently delivered a rising dividend stream to shareholders for over twenty years. The total dividend for the year is fully covered by revenue earnings, allowing reserves to be further rebuilt. At the end of the financial year, revenue reserves stood at 20.3p per ordinary share.
If the worse case scenario plays out for the oil price, those reserves may be needed. This is a very scary market and most probably the best action is to just watch and wait.
Mar 31, 2026, 6:00 AM ETUnited States Brent Oil Fund LP ETF (BNO), CL1:COM, CO1:COM, LTPZ, TIP, GLD, USOSP500, DXY, WEAT, CORN, DE, BG, DEER:CA, BND, SPY
Rena Sherbill: Happy to welcome back to Investing Experts, James Kostohryz, who runs Successful Portfolio Strategy on Seeking Alpha.
We’ve been fortunate enough to have James on a few times, most notably talking about the Iran War and its likelihood of it being protracted is a matter of when and not if.
And that has proven to be the case. He was also discussing the likelihood of the Strait of Hormuz being closed. Also something that has come to pass.
And it seems that every day brings more and more depressing, devastating news out of that region and also how it’s stretched into various regions in the globe as we’ve all seen. So happy to bring back James to get some context and to ground us in this moment and to get more insight and edification on how he sees the war going and what that means for us as investors.
So James, welcome back to the show and happy for you to just reintroduce yourself for those that haven’t been fortunate enough to hear your previous episodes and then lay out the picture as you see it as we’re heading into April 2026, how you see the next few days, few weeks, few months going.
James A. Kostohryz: Thank you for having me again, Rena. I appreciate it. Yes, as you’ve pointed out, for quite a while, going back even a couple of years, I’ve been saying that a major war between Iran and Israel was likely, and that in the course of this war, it’s likely that Iran would be likely to resort to blocking the Strait of Hormuz, which would turn this conflict into something of global interest and would have global economic and financial repercussions.
And here we are. People, a lot of people probably hadn’t even heard of the Strait of Hormuz and most people hadn’t been aware of the fact that blocking commercial traffic through the Strait of Hormuz could actually practically strangle the global economy.
And that’s a very real risk that we’re dealing with right now. We’re a little over four weeks, a little over a month into this war now. And so I think that the important thing to focus on is how long is this war likely to last? For how much longer is it likely to last?
And what are going to be the repercussions of that under various different scenarios in terms of the duration of the remainder of this conflict. And then we’re also going to talk a little bit about various sectors and stocks, asset classes that might do well or poorly given the different scenarios.
So to start this off, think the very first thing that’s important to understand is that thinking about when and how this conflict is going to end really goes back to why it got started in the first place.
In other words, if you understand why it was almost inevitable that this war was going to happen, that’s going to go a long way towards understanding what it’s going to take for the war to end. Now, in terms of focusing on the timing of the end of this war, there’s really two very distinct parts that it’s absolutely crucial that people separate these two parts.
The first part has to do with the very reason that the war was initiated in the first place on the part of Israel and the United States. The second part of it has to do with what’s going to happen in the aftermath of those objectives, those war objectives being accomplished.
Specifically, what’s going to happen to the Strait of Hormuz? Will Iran continue to block the Strait of Hormuz even after the United States and Israel have obtained their military objectives or not.
So let’s focus on the first part first. The two most critical goals, there were several other goals, but in terms of absolutely non-negotiable musts for the Israelis and their American allies was that number one, the threat of Iran being able to acquire a nuclear weapon be completely eliminated.
The second, existential requirement as far as Israel was concerned was that Iran’s stockpile of long range missiles that are able to reach Israel and because of the numbers of them essentially overwhelmed their defenses, that these stockpiles and their ability to launch be either eliminated or extremely severely reduced and that their ability to produce these sorts of weapons in the future would also be pretty much wiped out.
Now, both of these objectives can be accomplished through negotiation. In other words, the US in, for example, the recent 15 points that it submitted to the Iranians for consideration, those two points are in there.
The first one was, hand us your enriched uranium that you have there that’s it rich to 60 % for civilian nuclear energy purposes you only needed about 3 % they had basically brought themselves to the threshold of being able to produce 11 nuclear weapons with the amount of material they had and if they had the technology to actually what’s called weaponized this uranium that would have taken them only maybe three weeks or something like that.
So they really were on the verge of being able to do this provided that they had the weaponization technology, but nobody knew knows exactly when they were going to acquire that. They could have acquired that a week from now, or they could have acquired a year from now.
But, and nobody would know there was no way that intelligence could actually determine what exactly it is that they were working on there. They knew that they would eventually acquire this, but they wouldn’t be at ever know for sure. What they didn’t know for sure is that they possessed the enriched uranium, which is the most difficult part to actually acquire.
It takes years and years and billions in investment to actually get to the point where the uranium’s got. And so that’s really the critical component. So Trump in the 15 points laid out, we need you to completely give away this uranium, either give it to us or give it to the IAEA, the International Atomic Energy Association, and thereby forego any ambitions to build a nuclear weapon in the future.
And secondly, we need to decommission all your nuclear plants that would allow you to like rebuild this program. So that would have fulfilled the first of the two objectives in terms of the most existential objectives of the war. And then the second objective was that they agree to limitations on the range of their ballistic missiles.
And the Iranians, of course, have said that that wasn’t something they would even consider negotiating. But it’s among the list of things that both Israel and the United States consider to be absolutely crucial. The Iranians currently are believed to have missiles that can be accurate up to 2000 kilometers. That’s what was believed until recently, but recently they actually shot off and fired off a missile to Diego Garcia in the Indian Ocean, which is almost 4,000 kilometers away, which shows that they’re actually currently able to get their missiles to penetrate deep into Europe and even all the way to Great Britain.
So this has become something of a security threat to the entirety of Europe. It also shows how advanced the Iranians had become in their missile technology. They’re essentially only a small step away from having their missiles being able to reach the United States.
The United States and Israel need for this capability of the Iranians to either be negotiated away or destroyed. Those are the two biggest reasons they entered this war in the first place.
And that will also give you the answer of when they’re gonna be willing to exit. They’re gonna be willing to exit when they accomplish the objectives that they set out from the beginning, which was to make sure that Iran is not able to get its hands on this nuclear material because as long as that nuclear material remains in Iran and the Iranians are able to access it, they will always be on that breakout verge of being able to produce a nuclear weapon in let’s say three or four weeks.
We’ll be hearing about this three or four weeks until Iran becomes nuclear forever. And basically the United States in years will want to put an end to this whole fear that the Iranians may actually do this and in fact they probably have even greater reason to fear now because if the Iranians did get their hands on this uranium it’s actually more likely under this current set of circumstances that they would actually really do everything possible to go ahead and be able to produce that nuclear weapon.
It becomes even more existential now that they be able to get their hands on this uranium whether it be through negotiation or whether it be militarily. The second point has to do with their missile stockpile and their missile capabilities, that has clearly been degraded. It’s thought that about a third of their stockpile has been destroyed or permanently damaged.
Another third of their stockpile is believed to be damaged but possibly salvageable. And then there’s a whole other third that’s been untouched. The key to this issue is that Iran has enormous underground, what they call underground cities.
These are facilities that both assemble the missiles and where the missiles are stored and where they’re actually deployed using a very sophisticated rail networks and then trucks that come out of there and essentially deploy these missiles by use of mobile launchers.
There’s somewhere between 15 and 20 of these sites that are scattered all throughout Iran. The United States has managed to already hit a few of them with some of the United States most powerful bunker buster bombs.
But the Iranians have actually been very smart in building these underground cities in places that are so deep underground or that are so buried so deeply underneath mountains that these bunker busters actually can’t get to them.
So really what it’s gonna come down to now is that unless the Uranians are willing to negotiate away these two things, both their missiles and the nuclear material, the United States and Israel are gonna be forced into a situation in which they will have to actually execute ground operations to either recover or destroy the uranium on the one hand, and also execute demolition activities on these deep underground cities.
These missions would be extremely dangerous, extremely complex, and they would likely take a number of weeks, if not months, under the best set of assumptions. In other words, it would be pretty optimistic that over the course of let’s say four to six weeks, you would actually be able to accomplish these objectives if you actually had to go and do it militarily.
And it could actually take a lot more time than that. So that’s really kind of in terms of a timeline, this is the first set of, we’ll call it deadlines that we’re facing in terms of the market. We’re looking at a situation where the United States and Iran may be forced into making a decision to try to go in with ground troops, probably assisted by their allies in the Persian Gulf, to try to accomplish both of these objectives.
Under a best case scenario, it would probably take weeks to accomplish these objectives. Plus, they’re not actually quite ready to do that because they want to continue to degrade the Iranian defenses even further than they are right now.
So the US and Israel probably won’t actually be in a position to actually perform these types of ground operations for another two to four weeks. Now at the end of those two to four weeks, if they actually go ahead with these planned operations, we’re talking about several more weeks to several more months to get these particular objectives accomplished. So that’s the kind of timeframe we’re looking at.
Roughly speaking, we’re talking about if the United States and Israel can’t know, attain these objectives through negotiations, we’re talking about starting ground operations anywhere between two to four weeks from now.
And then we’re probably looking at another four weeks minimum after that to accomplish those objectives. So in a best case scenario, we’re probably looking at six to eight weeks out before these two objectives are accomplished. And that would be pretty optimistic case scenario.
Then there’s an entirely other dimension to this conflict now that goes beyond what the initial objectives of the war were, which is that since Iran elected to block the Strait of Hormuz, now you have to actually try to get the Strait of Hormuz unblocked.
But the type of military operation that would be required to actually do that is enormous. would probably take, certainly take tens of thousands, probably hundreds of thousands of ground troops and essentially would involve taking over the entire country in order to be able to get traffic through the Strait of Hormuz back to its normal levels.
So again, unless the Iranians are willing to negotiate an opening of the Strait of Hormuz, then it’ll have to be done by force, most likely through a multinational force. Here we’re probably talking about dozens of countries involved in a very, very large operation that would take probably several months before they could actually have any success.
And that’s if they’re able to have success at all, because it’ll be very, very difficult to accomplish this particular objective. I won’t actually get into the military weeds here of why this is so difficult and why this would take so long, unless you’re actually specifically interested in that.
But I do think that this is something that even under very rosy optimistic scenarios would take several months and that’s above and beyond the point where they’ve attained the other two objectives which as I mentioned We’re probably at least six to eight weeks away from occurring.
All in all we’re talking about two stages one stage, is probably six to eight weeks and another stage Which is likely to take months. Now, of course there’s always the possibility that one or two things could happen.
Either the the Iranians negotiate and so the the actual accomplishment of these objectives doesn’t have to be by military force, but through diplomacy. I think the likelihood of that is extremely low, particularly in terms of the first phase. I think it’s quite unlikely.
And I also think it’s also pretty unlikely that the Iranians are going to unblock the Strait of Hormuz and go back to the situation like it was before the war, where there was free transit through the Strait of Hormuz.
They’ve already said they’re not gonna do that. They’re in fact getting ready to pass legislation in their Congress where they are declaring sovereignty over the whole area and they’re going to essentially collect tolls and raise revenue by selectively allowing transit through the Strait.
And so we’re really looking at a situation that if there is no negotiations, we’re talking about this whole disruption that’s happened to global markets could last for many, many months beyond this initial, say, six to eight week period that I’ve mentioned, which would enable the United States and Israel to achieve their initial, let’s say, military objectives.
Rena Sherbill: And if I might add, as we’ve seen, one of the devastating things about war is that there are so many unknowns and unpredictable things that happen as a result of initial actions and catalysts. You’ve been talking about this since 2024, since April 2024, I think.
And as we’ve seen, there’s been a lot of stops and starts. Even as you say, even if America and Israel are as successful as they want to be, there are still unforeseen consequences of this. And I know that there’s many more things to get into policy-wise and militarily speaking, for that matter. All of the things that you’ve pointed to, by the way, previously, in terms of ground troops coming in, in terms of the blockages, in terms of this coming to pass at all, you’ve been extremely prescient in that.
I would ask if I may, some people would call that prescience a sort of bearishness and then, okay, at some point, you’re going to be right about the bearishness. What would you say to the notion that this is going to mean a bear market and for much longer. What would you say to investors wondering about not pricing in what this means exactly?
James A. Kostohryz: Absolutely, yeah, that was definitely gonna be the second point that I wanted to go over in detail.
Because if I’m correct about this type of timeline that I’m talking about, then we are facing either the likelihood of either a run of the mill recession in the event that the war only lasts for let’s say six to eight weeks and that for some almost miraculous reason, the Iranians decide to open up Hormuz after they’ve, the US and Israel have attained their military objectives and they, the US and Israel basically cease military operations, will the Iranians then say, okay, we’re done with Hormuz and we can all get back to normal.
So in that situation, which would be highly optimistic, we’re still probably talking about the likelihood of a business cycle recession, but it would probably be, let’s say, a one of the mill type of business cycle recession. And I’ll kind of talk about this scenario a little bit more.
But in the second scenario, where we’re talking that the Iranians don’t actually open up Hormuz after this initial period, and that we’re talking about many, many months before the Strait of Hormuz is normalized again, and the possibility of a much, much larger ground war, multinational forces and so forth, there we’re probably talking about a pretty deep global recession. historically, virtually every single time, basically since the 1950s, every single time there’s been a business cycle recession in the United States, there’s been a bear market decline of 20 % or more.
There’s absolutely no reason to think that in this instance, if we end up doing getting a business cycle recession that we won’t actually also have a bear market decline of at least 20%. All the ingredients are there.
The market was actually quite pricey. Some would say overvalued, certainly overvalued historically, but the reality is that the market was certainly in the 90th percentile and above in terms of valuations and therefore is vulnerable to a decline anyway.
And in the context of there being a recession, it would be almost a best case scenario if the market only declined by let’s say 20 to 25%, which would be a pretty, let’s say, benign bear market in the context of bear markets that happened in the context of recession.
Probably in the case of a run of the mill recession, we probably could anticipate something like a 30 some odd percent decline.
Interestingly, that sort of a decline would put us exactly where we were at the bottom of the tariff tantrum, you right after the quote unquote liberation day when the market declined by about 19%. But if you actually trace that decline from the peak of the market down to where that particular line of support is, it gives you a decline of a little over 30%.
If a person thinks, 30%, that’s too much, that’s a big decline. If you think about, we were there at that 30 % only one year ago. In other words, the market would only be retracing about where it was one year ago. In most bear market declines, the market retraces well below its 52-week low. So in this case, if we only went back to our 52-week low, we’d go back to the lows that we got after the tariff tantrum.
And that would actually be a pretty optimistic case scenario. So yes, 30 % decline, I think, would be very realistic if we get into this situation where the war goes on for another six to eight weeks.
One of the things we have to realize is if this war goes on for another six to eight weeks, we’re probably looking at any oil getting up to above $150. If we go to that six to eight week point, oil will probably be closer to $200 by that point.
That would be a tremendous, tremendous shock to the global economy, not just the US economy. The US economy would be suffering not just from the impacts that this would have on the US, but would also, the United States would be suffering from the global impacts of this. It would also be suffering from the recession, excuse me, from the inflation that this is likely to kick off in the United States.
And this in the context of an economy that is somewhat vulnerable right now for various reasons. So I think that in the scenario that we’re talking about, which is let’s say a moderately bearish scenario, one where the world goes on for another 68 weeks, we’re probably looking at about a 30 % decline in the S&P (SP500).
Now, if we go beyond that, if the straight of home is still blocked after that 68 week period, then I think we’re looking at oil prices significantly in excess of $200 probably then moving towards $300 mark, which it could get to if the conflict persists, let’s say two, three months beyond that point.
And then we’re talking about $300 oil. And then we’re talking about really much more of a severe global recession because at that point it’s really not just about oil anymore. It’s going to be a lot of other things that are gonna be coming together.
Because as you know, it’s not just oil that transits through the Strait of Hormuz. It’s a big share of the world’s fertilizers. It’s a big share of the world’s helium. A lot of industrial materials come through the Strait of Hormuz and basically a lot of industries are gonna be completely paralyzed and suffering shortages as a result of this blockage if it goes on.
And so, here we’re talking about a much more severe type of global recession, much more similar to what, for example, the world went through in 1973, 74, when the second biggest disruption in oil history happened, that was the Arab oil embargo.
And I say it was the second most important because this is actually the greatest. This is actually the greatest disruption in the oil market, in the history of the oil market.
What happened when you had the second greatest disruption is that the US went through a bear market decline of about 49%, essentially 50%, and a very brutal recession that lasted for about a year and a half, and a bear market that lasted for about a year and a half.
So I think those are broadly speaking the two scenarios that we’re dealing with, unless we are really surprised and like, know, a rabbit gets pulled out of the hat in next few days.
But again, I’m talking about the more likely scenarios, which are the scenario of a six to eight week period. If, if, if that’s all it’s going to be, then I’m thinking bear market about 30 % down in the S&P.
If we go significantly beyond that and the conflict extends for several more months as a result of a multinational invasion of Iran in order to open the Strait of Hormuz, then we’re going to be talking about more of a 50 % decline in the S&P and a very brutal business cycle and recession in the United States and in the rest of the world.
Rena Sherbill: So I think a moment of pause is good to reflect on everything that you’ve said and also the meaning behind it and the emotion and the feeling behind it for so many, if not directly involved. And as humans, just watching this all unfold, I think it’s all deserving of a moment before we get to the investment side.
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