Investment Trust Dividends
Note the difference dividends make to the TR.
GRS without taking big risks with your hard earned.
When markets fell you may have been fearful of trading as prices could have kept falling but if you traded the enhanced yield you would have been lucky.
How lucky would depend on the choices you made and if you had cash to invest.
Low risk LWDB has outperformed high risk SMT but it could be different the next time markets crash, not if but when. GL
By Trustnet Learn,
Warren Buffett has built his legacy not by attempting to predict short-term market movements but by investing in high-quality businesses with durable competitive advantages and holding them for the long term. He has repeatedly stated that trying to time the market is a fool’s errand and that even the most experienced investors struggle to do so consistently. Instead of attempting to buy at the lowest point and sell at the highest, Buffett advocates for a strategy of steady, disciplined investing that allows the power of compounding to work in an investor’s favour.
Market timing – the practice of attempting to buy stocks when prices are low and sell when they are high – may seem like a logical approach, but in reality, it is extremely difficult, if not impossible, to execute with precision. Economic cycles, geopolitical events and investor sentiment drive market fluctuations, often in unpredictable ways. Buffett warns that even professionals fail to accurately predict market cycles and the risk of making poor decisions based on short-term noise far outweighs the potential benefits of timing trades correctly.
Rather than trying to outguess the market, Buffett believes that investors should identify strong businesses, invest at reasonable prices and stay invested through market cycles. This philosophy has allowed him to outperform the market over decades and it offers valuable lessons for individual investors looking to build long-term wealth.
BUFFETT’S ARGUMENTS AGAINST MARKET TIMING
Short-term fluctuations are unpredictable: Even experts fail to time markets accurately
One of Buffett’s core beliefs is that no one can predict short-term market movements with consistency. The stock market is influenced by countless factors, including economic data, corporate earnings, geopolitical developments, interest rates and investor sentiment. These elements interact in complex ways, making it nearly impossible to forecast short-term price changes.
Buffett has frequently criticised the financial media and market commentators who attempt to predict market trends. He argues that their forecasts are often incorrect and can lead investors astray. Even professional fund managers, with access to extensive research and sophisticated models, often struggle to time the market effectively.
To illustrate this point, Buffett points to his own experience. Despite decades of investing success, he has never attempted to time the market. Instead, he remains focused on evaluating businesses based on their long-term prospects rather than reacting to daily price movements. His approach underscores a fundamental truth: investing is about buying great businesses, not predicting short-term price swings.
The risk of missing the best days: How staying invested yields better long-term results
One of the greatest dangers of market timing is missing the best days in the market. Investors who try to jump in and out of stocks based on short-term predictions often find themselves on the sidelines during the strongest rallies. Since markets tend to rebound quickly after downturns, being out of the market even for a few key days can significantly reduce long-term returns.
Historical data supports this point. Studies have shown that missing just a handful of the best-performing days in the stock market over a 20- or 30-year period can dramatically reduce an investor’s overall returns. For example, if an investor had been fully invested in the S&P 500 over the past 30 years, they would have earned an average annual return of around 10%. However, missing just the 10 best days in the market during that period would have cut returns nearly in half.
Buffett’s wisdom is clear: the best way to benefit from long-term market growth is to remain consistently invested, rather than trying to jump in and out based on market forecasts. He advises investors to ignore short-term volatility and trust in the power of compounding over time.
Compounding works best over time: The longer you stay in, the greater your returns
Buffett’s investment success is largely built on the principle of compounding returns. Compounding occurs when an investor earns returns on both their initial investment and the accumulated gains from previous years. Over long periods, compounding leads to exponential growth.
However, compounding only works effectively if investors remain invested for long enough. Those who attempt to time the market often interrupt the compounding process, missing out on the gradual accumulation of wealth. Buffett likens investing to planting a tree – the sooner you plant it and the longer you let it grow, the larger and stronger it becomes.
Buffett’s own track record is a testament to the power of compounding. By holding investments for decades rather than months or years, he has allowed companies like Coca-Cola, American Express and Apple to compound in value, generating massive long-term gains.
For individual investors, the key takeaway is that time in the market is more important than timing the market. The longer an investor stays invested, the more they benefit from the exponential growth of compounding returns.
HOW INVESTORS CAN FOLLOW BUFFETT’S APPROACH
Focus on buying great businesses rather than predicting market cycles
Buffett’s strategy revolves around identifying strong companies with durable competitive advantages and holding them for the long term. Instead of trying to predict when markets will rise or fall, he focuses on:
By prioritising business quality over market timing, investors can build a resilient portfolio that delivers strong returns over decades.
Ignore short-term noise and media speculation
Buffett often warns investors against paying too much attention to financial news and market speculation. Media headlines frequently focus on short-term market movements, economic uncertainty or geopolitical risks – all of which can create fear and lead investors to make impulsive decisions.
Buffett advises that investors tune out the noise and instead concentrate on the underlying strength of their investments. He has famously stated: “The stock market is designed to transfer money from the active to the patient.” This means that those who react emotionally to news and market fluctuations often make poor decisions, while those who remain patient and disciplined tend to succeed.
A practical way to apply this lesson is to review investments periodically, rather than obsessing over daily price changes. Checking stock prices too frequently can lead to overtrading and emotional decision-making. Instead, investors should focus on fundamentals and long-term growth.
Invest consistently and let time do the work
One of the best ways to overcome the temptation of market timing is to invest consistently. Buffett recommends a dollar-cost averaging strategy, which involves investing a fixed amount at regular intervals, regardless of market conditions.
This approach helps investors:
Buffett has even recommended this approach to everyday investors, suggesting that most people simply invest in a low-cost S&P 500 index fund regularly. This strategy ensures participation in long-term market growth without the risk of mistiming trades.
Buffett’s wisdom on market timing is simple: it doesn’t work and it isn’t necessary for investment success. Instead of trying to predict market movements, investors should focus on buying strong businesses, holding them for the long term and letting compounding do the work.
This Trustnet Learn article was written with assistance from artificial intelligence (AI). For more information, please visit our AI Statement.
The good news is if you only have modest savings, compounding takes time to make a noticeable difference, you stand to make more in the last few years than you do in all the early years.
You decided to trade the breakout, the yield at 500p was around 6%. If the breakout failed you would still collect the dividend. Your analysis worked and you would currently be up 30% in less than a year. You would be watching the market to be ready to take part profits, maybe reducing the share holding back to your initial stake.
Performance and portfolio
Merchants delivered a NAV total return of 5.4% over the six-month period, compared with 7.5% for the FTSE All-Share Index. Absolute returns were positive, though relative performance lagged the benchmark and some peers. This was largely due to the narrowness of market leadership: as in the US, certain groups of companies drove the market higher.
Some of these leading stocks did not align with our Manager’s long-term value approach. Instead, greater emphasis has been placed on attractively valued domestic cyclicals, which have underperformed in the recent low-growth environment. While this positioning has weighed on short-term results, we remain convinced that it provides the best foundation for long-term returns. The Board has reviewed the Manager’s strategy in detail and continues to support this disciplined, value-focused approach.
Portfolio activity reflected evolving opportunities, with an unusually high number of new investments compared with a typical half-year. Selective purchases were made where valuations and income prospects were attractive, while holdings with more limited capital growth potential were reduced.
The share price return of 1.5% reflected a widening discount to NAV, in line with a broader trend across UK investment trusts as international investors reduced exposure to UK equities. The Board, together with advisers and the Manager, monitors this closely and retains the option of share buybacks if appropriate. Meanwhile, we remain active in shareholder engagement and marketing to improve awareness and demand.
Earnings and dividends
Total income from the portfolio was £28.8m, 2.5% higher than the £28.1m generated in the first half of last year. Earnings per share rose by 3.5% to 17.7p (2024: 17.1p). This strong income performance provides confidence both in the sustainability of the dividend and in rebuilding revenue reserves.
With the final dividend for the 2025 financial year now approved, Merchants has increased its dividend for 43 consecutive years – earning the Company “Dividend Hero” status from the AIC. The Board has declared a second interim dividend of 7.3p per share, payable on 20 November 2025 to shareholders on the register at 10 October 2025. This brings the total dividend for the first half of the current financial year to 14.6p, compared with 14.5p last year – a year-on-year increase of 0.7%.
One to consider for your Snowball, when Mr. Market gives you the opportunity.
BACK TO THE FUTURE
Or how to get rich without taking big risks with your hard earned.
You knew that CTY had paid an increasing dividend for over 40 years. The share was sold off during the covid crisis as some shares cut their dividend forecasts but you knew that CTY had reserves to pay their dividend in crisis times and you knew that CTY had only had to use their reserves to pay their dividend, in 40 years plus, twice.
If you bought at 316p the dividend was 19p yield was 6%, the dividend is now 21.3p, you will receive the 6% plus yield for
One problem would be there were other dividend hero shares that were paying a higher yield as the prices fell but
With dividends included you have achieved the
The current yield is 3.8%, as the price rises the yield falls, you could take out your capital and invest in another higher yielding share and still earn 3.8% on a share that sits in your account at zero, zilch, cost.
Plus you would be earning say 8% on your new share, a yield of 12%.
NOTE
I was requested to include more memes for those where English is not their first language, keep everything crossed for another market crash, which becomes more certain as markets continue to rise, when is the known unknown, until then
Jon Smith highlights a REIT he thinks could be set for a long-term comeback as more people return to office working. It also comes with a generous yield.
Posted by Jon Smith
Published 4 February
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Real estate investment trusts (REITs) are companies that focus on property. By managing and leasing sites, income can be generated, making them attractive options for dividend investors. Ones that have been beaten down recently can be undervalued, with one high-yielding option catching my eye.
I’m talking about the Regional REIT (LSE:RGL). It focuses on regional office properties, mainly commercial buildings outside London’s M25. It owns and manages a portfolio of these and aims to generate income and capital growth from rents and asset value increases.
Over the past year, the stock ‘s fallen 12%, which is broadly in line with the portfolio’s net asset value (NAV) decline. In theory, these should correlate well with each other, although I note that the stock trades at a long-term discount to the NAV. This typically indicates weak sentiment towards the company, but in years to come it should reduce to be closer to the NAV.
The drop in the NAV reflects the decline in value in the commercial property market. However, I don’t see this as a big risk going forward. Several of my friends are slowly being forced back to working three or four days a week in the office. In a few years’ time, I think most traditional businesses will be back with staff in the office every day as standard. Based on this reasoning, I think the REIT’s long-term outlook’s positive.
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.
Historically, Regional REIT’s paid income out quarterly. From looking at the dividend per share over the past year, the rise in dividend yield has come partly from the payout increasing, as well as the stock falling.
Aside from the yield, the main thing I look at is the dividend cover. It’s currently 1, which means earnings per share can completely cover the dividend. This is a good sign, as the business isn’t paying shareholders more than it can actually afford. One risk is that if it falls below par, then it’ll start eating into retained earnings, which isn’t great.
Another factor I check for REIT dividends is rent collection. In the latest quarterly update, this stood at 97.7%. I want this to be as close to 100% as possible, so that the company can maximise the revenue potential.
Back in November, the company said: “Leasing momentum has been negatively impacted by the uncertainty stemming from the broader economic environment and specifically by the inconsistent messaging from the UK Government regarding the forthcoming budget“.
This has now passed, and I don’t feel it was as bad as many expected. Of course, it’s a risk going forward, but I think the next report should detail more management certainty about the UK economy for 2026, helping the stock. Overall, I think it’s a good income share for investors to consider.
Looking for the best dividend stocks to buy in 2026 ? These top real estate investment trusts (REITs) might merit serious attention, says Royston Wild.
Posted by Royston Wild
Published 4 February
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.
Real estate investment trusts (REITs) can be an excellent way to target a long and lasting passive income. Dividends aren’t guaranteed, but they have qualities than can make them better income choices than most other UK shares.
Under REIT rules, companies must pay at least 90% of annual rental earnings out in dividends. This still leaves payouts sensitive to profits performance, but it also provides a higher level of income visibility for investors than most other stocks.
Despite ongoing uncertainties from Trump’s tariffs to global conflicts, Mark Rogers and his team believe many UK shares still trade at substantial discounts, offering savvy investors plenty of potential opportunities to learn about.
So what are the hottest REITs to buy right now. In my opinion, three of the hottest to consider are:
Each of these property powerhouses offers a forward dividend yield of at least 10%. Want to know what makes them true dividend heroes?
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.
Schroder European Real Estate Investment Trust holds a top-class portfolio of properties in continental hotspots. We’re talking about highly desirable cities with strong economies and infrastructure. Think Paris, Berlin, and Hamburg, to name a few of its locations.
It’s a winning strategy that leads to reliable rent collection and strong occupancy (portfolio occupancy was 97%, latest financials show). The trust’s exposure to different sectors like logistics, office, retail, and data centres also gives it strength.
The forward dividend yield here is 8.1%. I think it’s a top trust to consider, even though adverse currency movements could take a bite out of earnings.
Like the Schroder trust, Alternative Income REIT takes a diversified approach to the property market. If anything, things are even more wild and wonderful — they range from hospitals and petrol stations, through to hotels, gyms, and thermal power plants.
Its rent collection is even higher, at 100%. And its tenants are locked down on ultra-long contracts, providing protection from (if not totally eliminating) cyclical pressures on rent collection. The weighted average unexpired lease term for its 23 tenants sits at 17 years.
With more than 92% of rental income linked to inflation, too, Alternative Income is in great shape to grow shareholder payouts. For 2026, the dividend yield is a brilliant 8.5%.
At 10%, Regional REIT is today the highest-yielding property trust on the London stock market. It carries greater risk than the other contenders we’ve looked at, reflecting its narrow exposure to the UK and broader weakness in the office market in which it specialises.
This has caused its share price to slump over the past year (down 10%). But is the bad news now baked into the trust’s share price? I think it might be. As well as having that enormous yield, Regional REIT trades at a 51% discount to its net asset value (NAV).
To my mind, it’s a top recovery share to consider. The REIT retains a high-quality portfolio, and is selling non-core assets to boost occupancy and repair the balance sheet. As for dividends, this year’s predicted payout is covered more than twice over by expected earnings, providing a wide margin of error.
SERE
Schroder European Real Estate Investment Trust PLC – London and Johannesburg-listed property investor – Dutch telecommunications company Koninklijke KPN NV formally terminates its lease at Schroder European Real Estate’s Apeldoorn property. KPN occupies this mixed-use office and data centre property in Netherlands, representing about 19% of the company’s portfolio income and 6% of portfolio value as at September 30, 2025. The lease termination will take effect from December 31, 2026. Early this month, Schroder European Real Estate Investment warned of the risk of maintaining its dividend following the departure of KPN.
Kepler View
As the board notes, alongside broader market factors, two specific factors play a role in Schroder European Real Estate’s (SERE) persistent discount. The largest tenant, KPN, has already provided verbal confirmation and is expected to formally confirm shortly its intention not to renew its lease, which expires in December 2026. We note that this is a large site that, aside from its current use, could be repositioned for residential development. But it’s current mixed use, particularly as a datacentre, are in an area which is seeing strong tenant demand across Europe.
We understand from the manager that there is a strong case to believe that the French tax claim will not be paid, and the board confirms that it has received professional advice on the same basis. Alongside this change, there is now a timetable for when we might expect a resolution, and as the board notes, there is an appeal process should the initial assessment go against SERE.
SERE’s significantly wider than average discount, c. 36% , says to us that the market is taking a wait and see approach on the above issues and while that’s frustrating given that there has been an improvement in sentiment to REITs more generally, with some of SERE’s UK-listed peers turning in very good share price performances over the last year, taking this approach is understandable given the binary nature of both issues. Once the outcome of either or both is known, then SERE’s remaining portfolio, which has maintained a relatively stable valuation and income, could be significantly undervalued by the share price.
One of the most troubled sectors continues to draw investors.
6th February 2026
by Dave Baxter from interactive investor
Our monthly list of bestselling investment trusts tells many a tale, from the enduring popularity of growth funds such as Scottish Mortgage Ord SMT
to the fact that bargain hunters have seized on the (briefly) wilting premium on 3i Group Ord III
But it also shows us that one particularly battered Association of Investment Companies (AIC) sector, Renewable Energy Infrastructure, continues to draw in buyers after a horrific run of performance.
both sit in the top 10 list for January and seem to be a common addition to portfolios, what with their ultra-high dividend yields and wide share price discounts to net asset value (NAV).
But shareholders have been through the wars: rising interest rates (and bond yields) did huge damage to share prices across the sector in 2022.
All manner of problems, from a backlash against renewable energy to low wind speeds in the first half of 2025 and a broader crisis for the investment trust universe, have continued to hurt returns in the following years.
| Renewable trusts come with bumper yields | ||
| Trust | Discount (%) | Dividend yield (%) |
| Aquila European Renewables Ord AERI3.55% | -46.9 | 19 |
| NextEnergy Solar Ord NESF1.52% | -43.1 | 16.5 |
| Foresight Solar Ord FSFL1.82% | -39.8 | 13.3 |
| SDCL Efficiency Income Trust plc. SEIT1.42% | -43.5 | 12.7 |
| Gore Street Energy Storage Fund Ord GSF0.00% | -39.1 | 12.7 |
| Bluefield Solar Income Fund BSIF1.35% | -33.3 | 11.6 |
| Octopus Renewables Infrastructure Ord ORIT1.96% | -40.4 | 11 |
| Renewables Infrastructure Grp TRIG0.86% | -37.7 | 10.9 |
| Foresight Environmental Infra Ord FGEN0.28% | -30.5 | 10.9 |
| US Solar Fund Ord USF0.00% | -48.2 | 10.6 |
| Greencoat UK Wind UKW0.31% | -27.3 | 10.6 |
| Greencoat Renewables GRP1.61% | -30.2 | 9.8 |
| VH Global Energy Infrastructure Ord ENRG0.28% | -34.8 | 8.3 |
| Hydrogen Capital Growth HGEN0.00% | -43 | 0 |
| Ecofin US Renewables Infrastructure Ord RNEW3.26% | -48.8 | 0 |
| Aquila Energy Efficiency Trust Ord AEET0.80% | -45.6 | 0 |
| Gresham House Energy Storage Ord GRID0.00% | -36.8 | 0 |
Source: AIC, 04/02/2026.
The sector took another hit late last year, thanks to the government’s mooted decision to switch the inflation linkage on certain renewable subsidies from the RPI measure of inflation to the lower CPI level. That would limit the revenue that renewable assets (and the trusts that have stakes in them) can generate.
The government confirmed its decision to go ahead with this option last week, although the news did in fact prompt the sector to rally. It’s worth asking what triggered this – and what bargain hunters buying the likes of UKW shares now need to understand.
The sector rallied because the switch from RPI to CPI from April, while unwelcome, seemingly represented the lesser of two evils. The government had also considered temporarily freezing the subsidy level to make way for “a gradual realignment with the CPI”.
As the table below shows, some of the renewable trusts have substantial exposure to certain subsidy schemes and would see their NAV fall on the back of either change.
But the first option (now chosen by the government) is less harmful, with modest hits to NAV. While the damage is lessened, it’s the solar funds that are expected to take the biggest hit.
| Estimated NAV impact of switching from RPI to CPI now vs a temporary freeze | |||
| Trust | Estimate of revenues from affected subsidies (%) | NAV change (%) from switching now | NAV change (%) from a temporary freeze |
| Bluefield Solar Income | 50 | -1.9 | -9.9 |
| Foresight Environmental Infrastructure | 20 | -0.3 | -1.7 |
| Foresight Solar | 49 | -2.2 | -10.9 |
| Greencoat UK Wind | 40 | -1.7 | -6.1 |
| NextEnergy Solar | 45 | -2.9 | -10.3 |
| The Renewables Infrastructure Group | 15 | -0.7 | -2.5 |
Source: JPMorgan.
As mentioned, there’s plenty to draw a bargain hunter in, from wide discounts to high yields.
In theory, we now have plenty of catalysts for a recovery: interest rates have been on a downward trend, high dividend yields mean investors are “paid to wait”, while such payouts are in most cases fully covered by earnings, and corporate action could also drive improvements. That could range from asset sales to mergers and buyouts.
Note, for example, that names such as Harmony Energy Income and Downing Renewables saw bids at decent premiums to share prices in the last year. That could prompt a recovery from depressed valuations.
It’s worth pointing out that not all specialists are keen on the sector at all, with Charles Murphy, senior research analyst at Singer Capital Markets, arguing that the underlying assets could ultimately prove hard to value in future, undermining the investment case.
Meanwhile, investors are seemingly overwhelmed with factors that complicate the picture, from shifts in power prices to bond yield moves and a political environment that looks increasingly hostile to the subsector.
As Hawksmoor’s Dan Cartridge adds, Reform UK is leading in the polls. “They have extreme negative views on the renewables sector,” he says. “That’s an ongoing reason for caution, although the next general election is still quite a long way off.”
Such considerations might understandably put off a potential investor. There are much simpler ways to bag a good yield, be it via a “core” infrastructure trust such as HICL Infrastructure PLC Ord HICL
(on roughly 7%), via equity income or via a UK government bond, whose 10-year instrument offers 4.5%.
With the caveat that some may simply avoid a headache by not investing in the sector at all, trust brokers and analysts did pick out a few names they viewed as appealing.
Murphy, who as mentioned is generally pretty bearish on the sector, nevertheless views Foresight Environmental Infra Ord FGEN
as an interesting fund thanks to the fact that it’s so heavily diversified.
At the mid-point of 2025, the fund had a 27% allocation to wind power, with 14% in anaerobic crop digestion (where organic materials such as grass are broken down by microorganisms to produce renewable energy), 12% in solar power, 10% in biomass and smaller allocations to areas such as low-carbon transport and energy storage. The trust can have an eclectic mix of assets, with these including a fish farm in Norway.
Hawksmoor’s Cartridge is also a fan of Foresight’s diversification, while pointing to other trusts which have a good spread of assets and “where overall cash-flow profiles are more defensive” – for example with strong solar power generation last year to offset the falls suffered in wind generation. Here, he points to Octopus Renewables Infrastructure Ord ORIT
and the Renewables Infrastructure Grp TRIG
To briefly linger on these names, ORIT unveiled something of a turnaround plan in September where it promised to continue and extend its share buyback programme, look to reduce its debt, sell down some assets and make selective new investments.
TRIG sought to roll into stablemate HICL last year, a plan that ultimately fell apart after it caused a stink among HICL investors. However, this drama may have alerted investors to the existence of TRIG as a possible takeover target.
Meanwhile, Greencoat UK Wind remains popular with the professionals, much as it does with ii customers.
Cartridge notes that it has “a unique funding model that has been successful over a long time”, while Peel Hunt’s Markuz Jaffe adds: “We like Greencoat UK Wind for the pure-play domestic strategy. It remains simple and is perhaps most exposed to the subsidy amendment but is linking [dividends] to inflation even if that’s now CPI rather than RPI.
“It has been a leader in trying to address the discount, via buybacks, changes to management fees and recycling capital to reduce gearing.”
The Peel Hunt team also has an eye on Bluefield Solar Income as a tactical opportunity, with a focus on how its sale process and strategic review is progressing. The trust is expected to give an update when it publishes its interim results in March. Jaffe notes that its peer, Foresight Solar, also looks interesting because of this.
“The portfolio is quite vanilla, it’s on a wide discount and its closest peer is going through a sale process, so there’s reason to expect a catalyst for a material rerating in the shares,” he says.
An improving environment does not guarantee a recovery. Note, for example, that interest rates have already been falling over the last year, with no discernible rebound for most of the trusts in this sector. And investors may want to tread carefully.
Cartridge notes some caution on certain specialist names, for example. He points to ii customer favourite NextEnergy Solar, noting that the dividend yield at the NAV level is “higher than the discount rate, pointing to it being unsustainable” and Bluefield Solar.
When it comes to NESF, it does have one of the highest yields in its sector.
However, the board has been in the midst of a strategic review “exploring all options to close the current discount”. Options discussed include exploring “opportunities to enhance shareholder returns” and upping the level of capital recycling. The findings of the strategic review are due out this year.
As ever, specialist funds tend to carry greater volatility than generalist options and can reward and punish adventurous investors in equal measure.
The battery storage funds have taught us that: the two remaining names, Gore Street Energy Storage Fund Ord GSF
and Gresham House Energy Storage Ord GRID
suffered huge losses in earlier years but staged a fierce comeback in 2025. One factor here was the sale of rival fund Harmony Energy Income.
How much do I need in a Stocks and Shares ISA to earn a £300 monthly passive income?
James Beard considers the passive income potential of a Stocks and Shares ISA
Posted by James Beard
Published 7 February
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.
It’s estimated that approximately 15% of UK adults have a Stocks and Shares ISA. Many of these individuals will be using them to buy dividend shares to help provide a second income. As an added bonus, this cash can be enjoyed tax-free.
So without having to work for it, how much would someone need in an ISA to earn an extra £300 a month ? Let’s take a closer look.
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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
The answer to this question depends on the level of return achieved. For example, the FTSE 100 currently (5 February) has a historic yield of 3.1%. With a return like this, an ISA would have to be worth £116,129 to meet our £300 a month target.
But I reckon it’s possible to achieve a higher return by carefully choosing a diversified selection of high-yielding stocks. The 10 highest on the index are currently offering 6.4%, meaning our portfolio would need to be worth £56,250 to achieve our objective.
Of course, dividends cannot be guaranteed. However, there are plenty of stocks that have a long history of steadily increasing their payouts and offering above-average returns
The plan for the SNOWBALL
The current plan for the SNOWBALL is 10k but hopefully we are on target for £10,441.49.
The dividend journey for the SNOWBALL
2023 £9,422
2024 £10,796
2025 £11,914
It’s better to set an achievable target and then try to beat the target which all depends on Mr. Market.
Remember your Snowball should be different to the
as it should reflect the years you have before retirement.
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