Investment Trust Dividends
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Warren Buffett once called these stocks’ dividend growth “as certain as birthdays.” Here’s how they’re doing.
Story by William Dahl
In his 2022 annual letter to Berkshire Hathaway shareholders, Warren Buffett had no shortage of good news to tout. Since he took the helm of Berkshire in 1964, the conglomerate had notched a 3,787,464% gain, compared to 24,708% for the S&P 500 — enough to turn every $1 initially invested into $37,875.
Yet the first number he brought up, apart from calling his capital allocation decisions in his 58-year tenure “so-so,” was to cite two investments that he said were central to Berkshire’s success.
These two companies, each of which Berkshire coincidentally had invested $1.3 billion into, now paid annual dividends amounting to almost half of Berkshire’s initial investment. This yield on cost was, Buffett predicted, highly likely to grow thanks to dividend hikes.
A line of hundred dollar bills seemingly sprout from the ground.© Getty Images
Of course, this was more than three years ago. What were the two dividend stocks that Buffett felt deserved a special mention? And was his confidence in them well-placed?
Buffett established his position in soft drink giant Coca-Cola (NYSE: KO) over a seven-year period, buying his 400 millionth share in August 1994.
He hasn’t bought a share since, but neither has he sold. And there’s a good reason.
In 1994, Berkshire was receiving $75 million a year in dividends from Coca-Cola. During the next 28 years, as the dividend increased each year, that number swelled to $704 million in 2022.
Today, Coca-Cola shares yield 2.8%. But while the $1.3 billion Buffett paid for his investment remains fixed, the annual dividend’s continued growth pushed his yield on cost up to almost 50%. That’s a remarkable feat considering that the S&P 500 has averaged annual returns of 10.5% during the past 70 years.
And since Buffett’s 2022 letter, the dividend had been boosted each year as he predicted. Those 400 million shares now pay Berkshire $206 million a year in dividends, at least until this March, when the company’s next quarterly dividend will go out after its expected 64th annual dividend increase.
Today, American Express shares yield less than 1%, as a 191% gain in share price during the last five years has pushed the yield down. But to Buffett, I suspect his yield on cost is far more important. Annual dividends, which totaled $302 million in 2022, have now grown to $577 million, or almost half of Buffett’s initial investment.
Coca-Cola’s management doesn’t release dividend forecasts. However, with more than 50 years of dividend growth to its name, it has won the title of Dividend King, which barely one in 1,000 companies have achieved. Because management will be loathe to give that up, it’s very likely to announce yet another dividend hike next month, especially since it achieved robust earnings growth of 30% year over year last quarter.
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In the case of American Express, the company increased its annual card fees for the 29th consecutive quarter in Q3, and we’ll see if the trend persists in its Q4 earnings call scheduled for Jan. 30. With earnings up 19% year over year, the company should have no difficulty raising its dividend, especially considering how its $2.3 billion in share repurchases means that the company will be mailing checks on fewer shares
With fundamentals and track records like these, you can see why Buffett highlighted Coca-Cola and American Express as examples of “the secret sauce” behind Berkshire’s stunning success. And as in 2022, their payouts look highly likely to rise in the years ahead.
If you haven’t got 40 years to your retirement, investing in shares that yield 1.8%, will not pay for that cruise you promised yourself, so you will have to take a higher risk and buy shares that have a higher starting yield.
Story by Holly Mead
Activist investors takeover concept investment trust© Getty Images
Investment trusts are popular among DIY investors but activist investor Saba Capital Management may have rattled some nerves as it starts the new year with a bang.
Already it has initiated a second attempt to oust the board of Edinburgh Worldwide, but the proposals were rejected. It has also revealed a 5.3% stake in GCP Infrastructure, and seemingly got its way on converting Smithson to an open-ended fund.
Saba, a New York-based hedge fund group, launched its unprecedented campaign in December 2024 and is only gaining momentum. It has proposed to replace boards, narrow discounts and shake-up strategies.
While some experts have questioned Saba’s motives, others say some kind of intervention was overdue: boards had become complacent, with discounts too wide, performance lacklustre, and fees uncompetitive.
Could Saba pursue more close-ended funds ?
Saba, run by former Deutsche Bank trader Boaz Weinstein, has stakes in 46 of the 305 UK-listed investment trusts, with positions of at least 10% in 16 of them. Its biggest stakes are in Herald Investment Trust (30.7% as of mid-January) and Edinburgh Worldwide (30.1%).
But it is not the only activist in town. Allspring has stakes in 46 investment trusts, and 1607 Capital Partners in 40, according to wealth manager AJ Bell. Plenty more are operating on a smaller scale.
A wide discount is often likely to pique an activist’s interest. Investment trusts trade at two prices: the net asset value (NAV) is the value of its underlying assets divided by the number of shares, and the share price, which is what investors actually pay to buy and sell shares.
When the share price is higher than the NAV, the trust is trading at a premium. When it is below the NAV, it is trading at a discount. At a 10% discount to NAV, investors can effectively purchase 100p worth of assets for 90p. If the discount closes, they make a profit – this is often the main goal of an activist.
There may be reason to worry about trust discounts. Look out for trusts that have persistently underperformed their peers and are trading on a wider discount than their sector average. For example, the average discount in the Global sector is 8%, but Lindsell Train’s is 21.3%. Over three years, the trust has returned -27.7% versus a sector average of 37.9%, Trustnet data sh
Consider sectors, too. Just three of the 19 trusts in the UK Equity Income sector have beaten the market over ten years. This could make the group a target as investors may be more likely to ditch underperforming active investments in favour of passive ones that track the market.
Dan Coatsworth, head of markets at AJ Bell, suggests Scottish American as potentially vulnerable; an underperformer trading at a 9.2% discount, significantly wider than the 3.1% average for its Global Equity Income sector. Coatsworth says: “The trust is managed by Baillie Gifford, which runs various other trusts already subject to campaigns by Saba. The activist might feel compelled to turn the screws on Baillie Gifford given the latest Edinburgh Worldwide defeat.”
Some infrastructure trusts are being targeted because their assets are in demand but the sector is not popular with investment trust users.
Thomas McMahon, head of investment companies research at Kepler Partners, says: “In this scenario, a better return can be made by selling the assets or buying back large amounts of stock, rather than investing in the portfolio. Sometimes external activists can see this more clearly, while the manager may have their head in the sand.”
Watch for notifications. A trust must alert the stock exchange if their holding in a company passes 3%, and then each time that stake moves up or down by 100 basis points. That should mean the arrival of an activist doesn’t come as a surprise.
This can be more difficult to gauge if the shares are owned through other vehicles or derivatives, says McMahon, but investment boards and market commentators can help decipher these holdings.
While the arrival of an activist can cause a stir, it isn’t necessarily a sell signal. Depending on their motivations, activist investors can be a force for good.
James Carthew, co-founder of Quoted Data, says: “When you have a strategy that isn’t working and investors are selling but the board isn’t taking action, then someone pushing for change can be a good thing.”
He points to Alliance Trust as one example. After the activist Elliott appeared on its register, major changes were made to the running of the trust, which eventually merged with Witan. “That was a catalyst for positive change,” says Carthew.
Even if an activist’s proposals are not passed, their presence can jolt a board into action. That can be seen in the industry’s behaviour since Saba emerged. The average discount has narrowed from 15% at the end of 2024 to 12% today, according to the Association of Investment Companies (AIC), an industry body.
Annabel Brodie-Smith, communications director at the AIC, says: “Boards have been taking steps to protect themselves. Last year saw a record 27 deals, including mergers, acquisitions and liquidations. It was also a record year for share buybacks and fee changes.“
But Saba has been accused of trying to make a quick buck, rather than pushing for meaningful changes in the long-term interests of shareholders. Carthew says: “Normally activists don’t buy enormous stakes and try to force things to happen. They buy smaller stakes, suggest ideas and take other shareholders along with them.”
To determine whether an activist has shareholders’ best interests at heart, look at their track record to see what they have done before. Read their proposals and the response from the investment trust board to get a feel for both sides.
Weigh up their motivations against your own and don’t get distracted by a potential short-term gain. Look at CQS Natural Resources, says Carthew: the trust announced a tender offer last May, giving investors the option to sell at NAV. Its discount had already narrowed from 15% to 5%, but many investors exited. But the share price has since doubled, giving those who stayed a far more significant gain.
Consider why you hold the trust. If your original reasons for investing still stand, don’t get side-tracked, and be sure to vote on any proposals. Brodie-Smith says: “Remember that investment trusts are not for a quick buck, they provide a long-term approach to investing, and many offer consistent and rising income over time.”
With so much drama surrounding the industry, some investors could be tempted to eschew trusts altogether. Carthew believes that would be a mistake. Activists are a normal and healthy part of the market and, while they create a lot of noise, they are a relatively small piece of the pie.
Investing in potential activist targets could even be a good strategy, says McMahon, if their goal is to unlock value. Coatsworth adds: “Boards have realised that trusts cannot limp along and hope for the best – when something isn’t working, the alternatives must be explored.”
Maybe a Trust that pays you a dividend ? Just in case Mr. Market doesn’t care about your research
Can regular investment in income stocks be the rocket fuel for someone’s dreams of building wealth? Christopher Ruane explains why it may be.
Posted by Christopher Ruane
Published 2 February
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.
Every week, FTSE 100 income stocks pay out well over a billion pounds on average to shareholders as dividends.
That is just the FTSE 100. Lots of smaller British companies also pay out hefty amounts in dividends.
So, could someone aim to build serious wealth over the long term simply by investing in carefully chosen UK income stocks?
I think the answer is yes, for three main reasons.
The first reason is the benefit of long-term regular investment.
Even with relatively modest amounts, drip feeding money into an investment over the long term can mean things soon add up.
A second factor is how much the dividends can add on top of the money invested. Dividends are never guaranteed, but they can be substantial.
If they last, then someone who buys one share in a company today could potentially be earning dividends from it for decades – perhaps as long as they live, if they hang onto it.
A third factor is what is known as compounding. That means dividends being reinvested and so in turn earning more dividends.
Billionaire Warren Buffett compares an income stock compounding to pushing a snowball downhill. As it rolls, the snowball gets exponentially larger because snow picks up more snow and so on. In the stock market, that snow can be dividend income!
Over a long period of 20 years, you may not be able to re-invest the dividends at 7% but with compounding and with the table the interest is only added at the end of the year, where your dividends will be buying more dividends every month.
As an example, say someone starts with nothing today then invests £500 a month and compounds their portfolio at 5% a month.
5% is well above the current FTSE 100 yield of 2.9%, but there are plenty of blue-chip UK income stocks that offer a yield of 5% or higher.
At the end of the 35-year period, the portfolio should be worth over £554,000.
So the investor would be over half way to becoming a millionaire, on the back of investing £500 a month.
Dunedin Income Fund
11 December 2025
Third Interim Dividend
· Third interim dividend of 4.25p per share.
· Total dividend for the year to 31 January 2026 of at least 19.10p per share, representing an increase of 34.5% compared to the previous year.
· Notional dividend yield of 6.0% on NAV and a share price dividend yield of 6.4%.
On 9 September 2025, the Board announced that it would significantly increase dividend distributions to shareholders and, for the year ending 31 January 2026, the Board has already stated its intention that the Company’s dividend will be increased to a minimum of 6.0% of the NAV as at 31 July 2025, offering an attractive yield compared to cash, the FTSE All-Share Index and peers in the UK Equity Income sector. This amounts to a total dividend for the year of at least 19.10p per share, an increase of 34.5% compared to the total dividend of 14.20p for the year ended 31 January 2025. Based on the share price of 297.0p as at 10 December 2025, this represents a notional dividend yield of 6.4%.
A first interim dividend in respect of the year ending 31 January 2026, of 3.20p per share, was paid on 29 August 2025 and a second interim dividend of 4.25p per share was paid on 28 November 2025.
The Board has today declared a third interim dividend in respect of the year ending 31 January 2026, of 4.25p per share, which will be payable on 27 February 2026 to shareholders on the register on 6 February 2026 with an ex-dividend date 5 February 2026.
The remaining dividend for the financial year is expected to comprise a final dividend of at least 7.40p per share payable in May 2026. A formal dividend announcement will be made in advance of this payment.
It is the Board’s intention to continue with a progressive dividend policy with growth in absolute terms in future years from the increased level, and for future financial years the Board anticipates three equal interim dividend payments followed by a balancing final dividend.
You may be thinking of adding DIG to your Snowball.
If you buy before the xd date, you will earn the dividend of 4.25p, with the final dividend being 7.4p. You could receive another 3 dividends of 4.25p in just over a calendar year, total a yield of around 8%. If the share has made a capital gain you could flip it and buy another high yielder of continue to hold for its dividend.
Thursday 5 February
Aberforth Geared Value & Income Trust PLC ex-dividend date
AEW UK REIT PLC ex-dividend date
Bluefield Solar Income Fund Ltd ex-dividend date
CQS Natural Resources Growth & Income PLC ex-dividend date
CVC Income & Growth Ltd EURO ex-dividend date
CVC Income & Growth Ltd GBP ex-dividend date
Dunedin Income Growth Investment Trust PLC ex-dividend date
Polar Capital Global Healthcare Trust PLC ex-dividend date
Residential Secure Income PLC ex-dividend date
Starwood European Real Estate Finance Ltd ex-dividend date
You may be considering buying BSIF for your Snowball.
The current yield is 12% and the dividend 2.25p.
The first check is to see if the company intends to pay future dividends.
Update on Formal Sale Process
The Strategic Review and Formal Sale Process announced by the Company on 5 November 2025 continues in line with the Board’s expectations. The Company will provide a further update when it issues its interim results in early March 2026 unless there are any material developments in the meantime.
The company is for sale, so future dividends are not guaranteed.
The current discount to NAV is 35%. In the current market it’s unlikely anyone will buy at the NAV but there could be a bid premium, so the SNOWBALL continues to bank the dividends and awaits corporate news.
If you owned the SNOWBALL’s comparator share VWRP, the price is the same as last October, so you have added zero, zilch, nothing to your retirement fund.
The SNOWBALL has earned £3,678 in dividends, which have all been re-invested at a blended yield of 8% plus, earning extra income of £300 for the SNOWBALL.
The FTSE 250’s stuffed full of high-yielding dividend shares, many of which are offering returns close to 10%. James Beard takes a look at three of them.
Posted by James Beard
Published 2 February
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.
Although the FTSE 250‘s full of passive income opportunities, it’s sometimes overlooked by investors. In fact, the index is presently offering a yield higher than the FTSE 100, its more famous cousin.
Here are three members of the UK’s second tier index of listed companies that currently have an amazing combined average yield of 9.6%. I think all are worth considering for those on the lookout for dividend shares.
Despite suffering a torrid time following the pandemic, UK housebuilder Taylor Wimpey (LSE:TW.) is currently paying a dividend of 8.8%. And with the housing market appearing to be recovering slowly — driven primarily by an improvement in mortgage affordability — I think the worst could be over.
In 2025, completions were 636 (6%) higher than a year earlier. And the group was able to raise its average selling price by £16,000 (5%). Despite this, as a reminder of how post-Covid inflation has affected the cost of building materials, operating profit was broadly flat. Its margin fell from 12.2% to 11%.
But with interest rates expected to fall over the coming months, this could help reinforce the early-stage recovery. And despite its recent woes, the group has a healthy balance sheet. Further ahead, the government’s proposed planning reforms should benefit Taylor Wimpey.
The SDCL Energy Efficiency Income Trust (LSE:SEIT) has a current yield of 12.6%. Although it’s been steadily increasing its dividend, the dramatic fall in its share price has been the biggest factor behind this incredible return.
| Financial year | Dividend per share (pence) | Share price (pence) | Yield (%) |
|---|---|---|---|
| 31.3.21 | 5.50 | 111 | 5.0 |
| 31.3.22 | 5.62 | 118 | 4.8 |
| 31.3.23 | 6.00 | 84 | 7.1 |
| 31.3.24 | 6.24 | 59 | 10.6 |
| 31.3.25 | 6.32 | 48 | 13.2 |
Source: London Stock Exchange Group/company reports
The trust now trades at a huge 42% discount to its net asset value (NAV). Part of this is explained by difficulties in valuing unquoted companies. But its relatively high debt has also been a concern. The trust has borrowed more than the 65% of its NAV that’s allowed under its rules. Asset disposals are underway to reduce this.
However, I think companies providing energy efficiency solutions are going to be among the long-term winners. We will get to net zero one day, but it might take longer than some, including shareholders in SDCL, would like. In my opinion, the trust’s been marked down more due to sector-wide concerns than anything specific to its own operations.
Primarily because of its 7.5% yield, Supermarket Income REIT (LSE:SUPR) is my favourite real estate investment trust (REIT). During its last financial year (30 June 2025), it reported 100% occupancy and no bad debts. This is testimony to the quality of the well-known grocery names that occupy its buildings in the UK and France.
Potential challenges include higher interest rates and a cyclical commercial property sector. Investors should also be aware that massive share price growth is unlikely.
But by whatever method we buy our groceries, whether it be online or in-store, there’s always going to be a need for physical shops. And with an average unexpired lease term of 12 years — and the majority of its leases containing provisions for inflation-linked rent increases — the REIT has plenty of visibility over future income levels.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
Although I know there can never be any guarantees with dividends, a £10,000 investment spread equally across all three could yield £963 in year one. In my book, that’s worth considering.
Brett Owens, Chief Investment Strategist
Updated: January 28, 2026
“And what can we do to get better shots?”
Your fulltime income strategist and part-time basketball coach asked his team of fifth and sixth graders for their ideas. Or, at least, tried to.
Then a ball bounced. After coach specifically said hold balls for a second time. This third infraction ended the conversation.
“That’s it—on the line. Start running.”
When coach says run, the players don’t really have a choice. Get moving in practice or lose playing time in the games they all love.
Likewise, when the government tells an industry that there is a cap on their profits, well, they’d better get moving too.
“Fat cat” financial lender stocks have tanked since the Oval Office asked for a 10% national cap on credit card interest rate. This went from a campaign slogan to a formal request to Congress. Ugly reaction from some stocks.
Capital One (COF), for one, shed 9.1% last week. The 10% cap created a hard ceiling on the company’s net interest margin (NIM), installing a much lower ceiling on its business model. What’s in your wallet? Less NIM for you!
The industry CEOs know it’s ugly. Everyone’s favorite financial villain, big boss at JPMorgan (JPM) Jamie Dimon, called the proposal an “economic disaster.” (Jamie always talks his book.) Bank of America (BAC) meanwhile is scrambling to design a “capped” card. Which will voluntarily put a lid on its profits.
Google searches for “credit card limit” are spiking amid the cap chatter. It’s ugly out there in the financial sector. But this has presented a “baby with the bathwater” buying opportunity. Indiscriminate selling gives us opportunity.
Visa (V), for example, is not a bank. It’s a financial plumbing tollbooth. Yet, it’s off 8% over the last month! Silly investors. They miss the distinction:
Visa doesn’t care if the interest rate is 10% or 30%. To be blunt, they don’t care if the user pays the bill or defaults! They only care that the card is swiped. Visa processed $15 trillion last year—the caps won’t touch that. It’s a misunderstood growth model that features
The real pivot, though, is from “capped” banks to “uncapped” energy. The regulatory hammer is flexing on financials. But Washington is doing just the opposite with energy pipelines. In fact, the administration is peeling back red tape and rolling out the red carpet.
Pipelines are becoming the “boring” cash machines that banks used to be. They charge fixed fees to move natural gas and oil. And the sector is gushing so much free cash flow that they are raising payouts…and unlike the banks, the pipelines earn without having to fight Washington. Energy production is a priority for this administration, and these companies directly benefit with less regulation.
My preferred way to play this trend, which will run through at least 2028, is the Alerian MLP ETF (AMLP). AMLP owns a basket of midstream MLPs (master limited partnerships), the pipeline and infrastructure companies that mint fee-based cash flow. These businesses don’t need $100 or even $80 oil. They merely require traffic.
And traffic is what the US energy system does in 2026. We produce. We refine. We export. Oil is cheap but the pipes are still filling up. Whether prices are high or low, the tolls are getting paid.
And so are we, collecting an 8.1% yield from AMLP!
The fund provides us with a paperwork advantage, too. It is structured as a C-corporation fund, so shareholders receive a 1099. No K-1s, the tax headache many income investors endure when they buy individual MLPs.
AMLP also hikes its payout prodigiously:
AMLP Raises Its Divvie Regularly
What a contrast with banks like Capital One! They are fighting for their fat-cat lives against a 10% cap. Meanwhile, energy pipelines quietly toll the cash flow, free of regulatory scrutiny, paying us 8.1% to hold them.
This is how we live off $500,000…practically forever. By buying elite 8.1% dividends that are favored by the current administration.
Of course, there’s no need to dump a full $500K portfolio into AMLP alone. Diversify!
Octopus Renewables Infrastructure Trust plc
Q4 2025 Dividend Declaration and Increased FY 2026 Dividend Guidance
Q4 2025 Dividend Declaration
The Board of Octopus Renewables Infrastructure Trust plc is pleased to declare an interim dividend in respect of the period from 1 October 2025 to 31 December 2025 of 1.55 pence per Ordinary Share, payable on 27 February 2026 to shareholders on the register as at 13 February 2026 (the “Q4 2025 Dividend”). The ex-dividend date will be 12 February 2026.
The Q4 2025 Dividend is the final of four dividends totalling 6.17 pence per Ordinary share (FY 2024: 6.02 pence per Ordinary Share) for the financial year to 31 December 2025 (“FY 2025”), meeting the Company’s FY 2025 dividend target in full. The dividend was fully covered by cash flows arising from the Company’s operational assets.
A portion of the Company’s dividend is designated as an interest distribution for UK tax purposes. The interest streaming percentage for the Q4 2025 Dividend is 57.1%.
Increased Dividend Guidance for FY 2026
In line with the Company’s progressive dividend policy, the Board of Octopus Renewables Infrastructure Trust plc is pleased to announce a further increase in the target dividend to 6.23p* per Ordinary Share for the financial year from 1 January 2026 to 31 December 2026 (“FY 2026”), an increase of 1.0% over FY 2025’s dividend target. The FY 2026 dividend target is expected to be fully covered by cash flows arising from the Company’s operational assets.
Phil Austin, Chair of Octopus Renewables Infrastructure Trust plc, commented: “The Board is pleased to declare its final interim dividend for the financial year which, combined with the three prior quarters, meets our FY 2025 target of 6.17 pence per Ordinary Share and delivers a yield to shareholders of 11.2% as at Friday’s closing share price.
“We are also pleased to announce, for the fifth consecutive year in a row, an increase in dividend guidance in line with our progressive dividend policy. Importantly, this is expected to be fully covered by operating cash flows.”
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