Investment Trust Dividends
I’ve sold112 shares in HFEL for a ‘profit’ of £300 as the share is at the higher risk in the SNOWBALL, Mr. Market may take back the profit and some.
Current profit for the share £526.00, whilst remembering that a profit is not a profit until the underlying security has been sold and the cash sits in your account.
Investors Alley <info@investorsalley.com>
| A stock can climb for months without paying you a dime.That’s the problem I want to help you solve.I’ve been researching funds designed to generate income from stocks… even when the companies themselves pay little or nothing in dividends (like Tesla or Apple).I call them “Paycheck ETFs.”Whether your retirement income goal is $3,000 or $5,000 a month, see how you could help fund that goal on less than you think.The fund managers use options to collect payments that can help fund distributions to shareholders.You buy the ETF through your brokerage account. The managers handle the trades.There’s a trade-off: you can miss out on some potential gains…But if your goal is money to spend in retirement, this is an approach worth understanding.Because “How high can my stocks go?” is only half the question.The other half?“How much income could my savings help me collect?” |
Tim Plaehn
 Back Up the Truck On This 7.8% Dividend as Rates Rise by Michael Foster, Investment Strategist This latest shift toward interest rate hikes has sent income investors into a tizzy. That’s great for us, because they’re tossing out one terrific fund kicking out a 7.8% dividend that’s grown. This smartly run corporate-bond fund is now on the table for 11.9% below the value of its portfolio. That not only positions this fund (a closed-end fund, or CEF, to be exact) for future upside-it helps cushion its portfolio, letting us collect its 7.8% payout in peace as the Fed raises rates. I know that may sound strange: Usually higher rates are bad for bonds, especially for funds chock full of bonds that pay out “old” rates that may be lower than the “new” interest rates likely to come. But here we are. Let me explain my thinking here, then we’ll dive into the dynamics fueling this growing 7.8% payout. Strong Economy = Greater Safety for This Discounted Dividend With the latest hike, the Fed raised the upper end of its rate target by a quarter of a point, bringing it to 4%. That, of course, is meant to slow down borrowing in an attempt to keep inflation in check.  But let’s be clear about something here: Inflation, while stubbornly above 2%, hasn’t tracked much higher than 3% since its peak at the start of the Iran conflict. The inflation gains we’ve seen lately have a lot more to do with that situation, and how it’s driven up oil prices, than with runaway inflation due to systemic problems in the economy as a whole. That’s key, because it suggests we’re not in a 2022-style situation, where inflation roared to 9%. Instead, once the conflict ends (and it will at some point), inflation will likely shrink back to somewhere around the Fed’s 2% target. So what we’re really seeing is the effect of higher oil prices on the one hand but also a strong economy on the other, especially due to high AI investments. So the Fed is doing what it should be: Trying to maintain strong economic growth without allowing it to become a bubble. That economic strength is backed up by other numbers, like low corporate-default rates and strong household income gains and spending, with median US household income up 2.6% in 2025, to a record high of $87,460.  These strengths have, of course, propelled stocks in recent years. But they’ve also helped bonds. Indeed, they’re part of the reason why the corporate-bond default rate has stayed low, even after interest rates have gone up. This is a godsend for debt investors: They get higher rates on the bonds they invest in, and they get fewer defaults, despite those higher rates. Which brings me back to that overly discounted 7.8%-paying fund. Higher Rates Could Mean More Hikes for This 7.8%-PayerThe fund in question is the PIMCO Dynamic Income Strategy (PDX), a holding of my CEF Insider service and one of the many PIMCO funds managing corporate bonds. Before we go further, I want to stress how important the PIMCO brand is: The company manages over $2.3 trillion in assets and is one of the world’s most prominent bond investors. That means it gets early access to the best new issues. This is why PDX (and indeed many PIMCO bond funds) has crushed the go-to corporate-bond index fund, the State Street SPDR Bloomberg High Yield Bond ETF (JNK), over the long haul. PDX’s Well-Connected Managers Give It an Edge  In addition, as you can see above, PDX has returned around 116% since its launch in 2019. That’s a big move for a bond fund, and another sign of management’s skill. In addition, the fund has not only maintained that 7.8% dividend-it’s grown it, while offering multiple special dividends along the way. This Dividend Is Much More Than “Just” a 7.8% Yield  Source: Income Calendar First, even though it’s a little tough to see in the chart above, PDX’s regular payouts have risen 33% since its IPO in 2019. That’s impressive enough on its own for a high yielder like this. But also look at those spikes in late 2024 and late 2025: Those are special dividends the fund has paid out, thanks to its excess income due to, you guessed it, higher-yielding corporate bonds issued after the rate hikes of the prior two years. More special payouts are likely, as the rate hikes we’re now experiencing give management more opportunities to buy higher-yielding bonds. Meantime, that 11.9% discount to NAV helps cushion the portfolio by virtue of the fact that it’s so unusual for a PIMCO fund. Due to the company’s sterling reputation, most of its funds trade at a premium. What’s more, the fund’s discount has gotten wider lately, despite its strong total return these past seven years: Bond Bears Trash a Perfectly Good Fund  I suspect this latest widening is due to the conservative retail investors who dominate the CEF market. They simply hear the words “bond selloff” and cut back on all bond funds, including durable payers like PDX. Something else they’re forgetting: PDX’s discount can’t last forever, since the fund comes to term in 2031, at which point it will be liquidated at par. So that discount works in our favor the longer we hold. Their loss is our gain. Especially when you consider that the fund can cover its dividend simply by purchasing the average high-yield bond, which yields around 7.4% today. That’s higher than PDX’s yield when calculated on NAV, not the 11.9%-discounted market price: 6.9%. That 6.9%, in other words, is what management needs to earn in the market to cover PDX’s 7.8% payout to us. Next up, leverage: As I write this, PDX borrows against 22% of its portfolio. That’s modest for a CEF: high enough to meaningfully boost returns, but not so high as to cause excessive damage in a downturn. That sets the stage for more hikes to PDX’s regular payout and puts more special dividends on the table. And at an 11.9% discount, we can see that investors have not priced any of this in. That’s our cue! |
The UK income trust is performing well but has an unusual structure. We take a deep dive into its portfolio and positioning
Published on September 4, 2026
UK equity income trust Law Debenture (LWDB) has had a strong 2026 so far, returning around 21 per cent – well ahead of the 12 per cent delivered by its benchmark, the FTSE All-Share.
Its longer-term performance looks even more impressive: over three and five years, it is the second-best-performing trust in the 17-strong UK equity income sector and takes the top spot over a decade with returns of 267 per cent.
A consistent approach has been key to this result. James Henderson has been involved in running the trust for over 30 years and was joined by Laura Foll as joint portfolio manager in 2019.
In July, the trust announced that Henderson will be retiring next June, leaving Foll at the helm. Such a high-profile departure would typically spark concerns about style drift, but analysts seem to think it is unwarranted this time because Foll and the veteran manager have worked side-by-side for many years.
We take a deeper look at Law Debenture’s approach and speak to Foll about how the managers are positioning the portfolio.
The pair adopts a moderately contrarian approach to find well-managed companies at low valuations. They seek to avoid concentration, maintaining around 140 holdings. “This is not a shortlist, high-conviction portfolio. It’s about having a long list of companies that we think are, on balance, too cheap,” Foll tells the IC.
This means they do not take big bets on individual stocks, and instead aim to invest across a broad range of assets. The top 10 holdings make up just 25.9 per cent of the portfolio. “We’re deliberately not taking too much stock-specific risk. We want [the portfolio] to be diverse rather than having big chunky holdings in any particular name,” explains Foll.
On this front, Law Debenture differs from rival Temple Bar (TMPL), which is the best-performing UK equity income trust over five years and has benefited from taking bigger contrarian bets.
Law Debenture is unique in that 15 per cent of its net asset value (NAV) comprises an independent professional services (IPS) business it owns.
This provides third-party financial services, such as pension trusteeship, and the profits it generates are redistributed as dividends to Law Debenture shareholders. Martyn King, an analyst at Edison, describes it as “a very important part of the trust’s overall performance” as the business has funded roughly a third of the dividends the trust has paid in the past 10 years.
This makes for a dependable income stream. “I basically know that at the start of any calendar year, when I turn up on day one, a third of the income is pretty much in the bag,” says Foll. This, in turn, affords the managers flexibility to invest in stocks not paying dividends that are not traditionally found in other UK equity income portfolios.
That’s not to say the trust eschews the usual UK income payers altogether. A look under the bonnet reveals HSBC (HSBA), Shell (SHEL), GSK (GSK) and Rio Tinto (RIO) among the five largest holdings.
The Oracle of Omaha has never stopped looking ahead.
By John Bromels– Sep 21, 2026
I turned 50 years old last week: Living proof that age and maturity don’t always go hand in hand.
I can think of only a few things that have stayed the same over those 50 years. I’ve had red hair the entire time. Washington’s portrait is still on the dollar bill. And, for that entire half-century, Warren Buffett was Chairman of Berkshire Hathaway
But on Friday — the day after my birthday — Buffett released a farewell letter, announcing he was stepping down from that position, effective immediately. I don’t believe the two events are related.
As usual, though, the “Oracle of Omaha” added some sage wisdom to his letter, including the most devastating four words of investment wisdom I’ve ever heard.
Here’s what he said and what it means for investors.
Warren Buffett. Image source: The Motley Fool.
Buffett is nearly twice my age.
“Recently, I celebrated my 96th birthday with family and friends, including one of my great-grandchildren, who had just turned one,” he wrote in his letter. “He’s moving a bit faster than I am these days.”
Buffett then revealed that he was stepping out of the “Chairman” role he’s held since 1970, and into the role of “Chairman Emeritus.” His son Howard Buffett — who has been on Berkshire Hathaway’s board for 33 years — has succeeded him as Chairman.
But then Buffett gave the four devastating words that should be a wake-up call to all investors:
“Father Time always wins.”
On the one hand, Buffett’s statement refers to the inevitability of aging. But those four words also sum up his thoughts about investing.
Image source: Getty Images.
Father Time does always win. That’s true both in life and in the stock market.
Buffett’s “buy and hold” strategy used time and compound interest to gradually turn small positions into massive wealth engines. The strategy made him a billionaire and Berkshire a trillion-dollar company.
And he wasn’t shy about proclaiming it, either. “If you aren’t willing to own a stock for ten years,” he said in 1996, “don’t even think about owning it for ten minutes.”
That’s another thing that hasn’t changed in 50 years: the U.S. stock market has always gone up. Since I was born, the S&P 500 has risen 2,100%. But with the compounding power of reinvested dividends, its total return has been 4,530%. No wonder Buffett famously said, “Our favorite holding period is forever.
Buffett doesn’t end his farewell letter with, “Father Time always wins.” Instead, he goes on to say, “[Father Time] has, however, been generous with me. He has given me the opportunity to see Berkshire reach a point where I am more confident than ever about what lies ahead.”
It’s impossible to look at the history of the S&P 500 and not be confident about where the market is headed over the long term. Even with major market crashes like the dot-com bust and the Great Depression, those who stayed invested in stocks still generated incredible returns over time, faring much better on average than those who jumped in and out.
So, even without Buffett in the Chairman’s seat at Berkshire, his advice — and his buy-and-hold philosophy — are still winners, thanks to Father Time.
MGCI’s yield should rise if interest rates are hiked.
Overview
M&G Credit Income (MGCI) owns a highly diversified portfolio of fixed income assets and offers a very high yield (7.7% at the time of writing) without taking the risks that would typically be required to achieve it, and without the use of structural gearing. The trust invests across all segments of the public and private debt markets, taking advantage of M&G’s deep resources to exploit the extra yield that can be earned in complex and illiquid securities, all within a closed-ended wrapper which facilitates this while providing the end investor daily liquidity.
Many of the specialist areas it invests in offer floating rate coupons, meaning that as interest rates rise, the income the trust receives rises too. With central banks currently under pressure to raise rates, and 78% of the portfolio offering as floating rate coupon, this could be a particularly attractive feature. And as the trust’s dividend policy is to pay 4% of NAV plus SONIA (an interbank rate which tracks the base rate) each year, the dividends paid by the trust will rise if rates are indeed hiked.
One of the key objectives of the trust is to deliver this high yield along with low NAV volatility. To that end, the manager Adam English takes a defensive approach to sector and stock selection and a relative value approach when it comes to making investments. Over the past two years the portfolio has been very defensively positioned, with Adam unimpressed by the spreads being offered for credit risk. Nonetheless, the trust paid its high dividends, aided by the flexibility of the mandate. Over 2026, however, Adam has made significant investments in new private debt assets, which has seen the proportion held privately rise. This should hopefully feed through into higher portfolio income, although MGCI has also continued to see strong inflows which are initially parked in higher quality, liquid assets. The trust has been on a premium for most of the past two years, and this stood at 2% at the time of writing.
The board has consequently announced a placing and retail offer of new shares to be issued at a 1.5% premium, with the fundraising to close on 20/10/2026.
Analyst’s View
We think M&G’s combination of high yield and defensive positioning should appeal to lots of income-seeking investors, which explains the premium rating for most of the past two years. In particular, the ability to avoid taking duration risk is attractive with the prospect of rate hikes on the horizon, and some analysts expecting structurally higher rates in the current cycle. Perhaps more importantly, investing in assets of high credit quality is particularly appealing given how expensive public corporate bond and high yield markets are. Given these markets are cyclical, tight spreads imply the potential for significant losses at some point, even if it is not clear what will see this multi-year environment end. An economic slowdown or recession accompanied by higher interest rates could be one way, if it leads to default rates ticking up and credit selling off, and MGCI should appeal to cautious investors concerned about this possibility. We note that MGCI delivered steady NAV performance through the volatility seen in Q1 when the war in the Gulf broke out.
Of course, the primary appeal is the potential to receive a higher income if rates do rise, along with this defensive portfolio performance. MGCI’s yield is paid quarterly, without the use of structural gearing. The spread of 400bps over SONIA should be attractive in relative terms even if rates fall. We note the recent investments in private debt have helped the portfolio income rise, and Adam is confident that, with spreads at historic tights, there will be opportunities in the coming years to invest at much wider yields and for portfolio income to exceed the dividend target in a later stage of the cycle.
Kepler
When the price is above the cloud, the market is shining on your share.
When the price is below the cloud it’s raining on your parade.
When the price is in the cloud the direction is the known unknown.
Currently the uptrend is in place.
Thursday 24 September
BlackRock Energy & Resources Inc Trust PLC ex-dividend date
Chelverton UK Dividend Trust PLC ex-dividend date
City of London Investment Group PLC ex-dividend dat
HgCapital Trust PLC ex-dividend date
Living REIT PLC ex-dividend date
Lowland Investment Co PLC ex-dividend date
Mercantile Investment Trust PLC ex-dividend date
Patria Private Equity Trust PLC ex-dividend date
Personal Group Holdings PLC ex-dividend date
Real Estate Credit Investments Ltd ex-dividend date
Michael Foster, Investment Strategist
Updated: September 14, 2026
Usually in this space, we dig into 8%+ paying closed-end funds (CEFs) set to hand us strong returns and large income streams.
Today, we’re going to do something different and discuss a once-great fund that, sadly, is far past its glory days.
Why?
Because this fund highlights one of the dangers of high-yield investing. That would be the risk of getting too comfortable with a large payout—and ignoring the signs telling us it’s time to take our profits and walk away.
That’s not easy for those of us who invest for dividends! Especially when you have an income stream as big as the one this fund offers (a 12.7% annualized yield) rolling in.
The fund in question is the PIMCO High Income Fund (PHK), which has been around since 2003 and, for a long time, was handing investors strong total returns that were made up, in large part, by PHK’s outsized payout.
Take a look at how this fund (whose market price–based return is shown in purple below) outran the benchmark S&P 500 ETF (in orange) over its first decade of existence.
PHK Trounces Stocks
The thing to take note of here is that this is not a stock fund: PHK holds a raft of corporate bonds, municipal bonds, mortgage-backed securities and foreign bonds.
It’s certainly not a straightforward portfolio, but that’s no surprise when you consider that PHK is managed by PIMCO, which has over $2 trillion in assets under management. That makes PIMCO one of the biggest bond investors in the world, so it’s got very particular expertise here.
It’s an advantage we know well at my CEF Insider service, where we’ve held PIMCO funds in the past. In fact, we hold one now: the PIMCO Dynamic Income Strategy Fund (PDX), which has returned around 17% for us since we bought it in March 2025, despite a very challenging market for bonds.
But I digress—back to PHK, which, like many PIMCO funds, has a history of trading at a premium to net asset value (NAV, or the value of its underlying portfolio). That’s because PIMCO’s pedigree in the fixed-income space is no secret among investors.
And as you can see below, in the first few years after PHK’s launch, it bounced around par before breaking out to a big premium following the 2008 financial crisis.
2008 Mess Sent PHK’s Value Soaring
That’s because PHK not only survived that crisis but profited by picking up top-quality bonds at fire-sale prices. This drove PHK’s market price up so far beyond its NAV that it traded at a roughly 87% premium to NAV at one point. That’s right: Investors were so impressed with PHK that they were willing to pay $1.87 for every dollar of the fund’s assets!
The fact that the fund held its payout steady throughout that time certainly helped, as did its habit of paying regular special dividends. Plus, that strong payout history came despite some difficult market conditions: By the early 2010s, interest rates were low, so PHK was one of the few places where a reliable yield could be found.
But all good things must come to an end.
PHK Goes From Dividend Hero to Villain …
After its first decade, PHK struggled to maintain its payouts and, around 12 years post-IPO, cut the payout for the first time. That cut was followed by more, and the dividend now sits 60% below where it was at the time of the fund’s IPO.
This came as the fund’s strong outperformance, on a market-price basis, also came to an end after its 10th birthday, as you can see in purple below.
… As Its Total Return Fell By the Wayside
It’s no surprise that investors kept selling off as its performance got worse, and that big premium shrank to today’s 1.1%. Historically speaking, that sounds like a bargain. But based on PHK’s fundamentals, it’s still too expensive.
PHK Barely Stays in the Green
Over the last year, PHK has posted a 1.8% total return, on a market price basis—less than you’d get from a savings account at your local bank. From that perspective, any premium makes no sense—and it makes even less sense when we consider that the average CEF now trades at a 5.7% discount.
What happened?
In a nutshell, PHK couldn’t build on the timely bond buys it made nearly 20 years ago. When those fire-sale purchases matured, the fund was forced to compete in a less oversold, more rational market. And the short-term magic vanished.
That’s the real takeaway: Just because a CEF is strong today doesn’t mean we should expect it to be so forever. When the fund, or the market, changes, we need to pay extra close attention. In the case of PHK, it was a steady decline in NAV beginning in the early 2010s, compared to that strong performance in the latter part of the previous decade, following the financial crisis.
Michael Foster, Investment Strategist
Updated: September 21, 2026
One thing we love to find as income investors? A situation where a double-digit dividend is coming our way—at an undeserved double-digit discount.
Every now and then, a situation like that can get truly extreme. These are the times when we really want to take a closer look.
This is the kind of setup we have with a closed-end fund (CEF) called FS Credit Opportunities Corp. (FSCO) right now.
I’ll cut right to the vitals. As I write this, FSCO yields 13.7%.
The discount? It sits at 27%.
In other words, this fund is now on the table for just 73 cents on the dollar. As recently as last year, it traded above par. It also stands out next to the 6.3% average discount among CEFs tracked by my CEF Insider service.
However, I see that discount narrowing again in the months ahead, for a reason that may surprise you: the elevated odds of another stock-market drop.
Why do I say that? The reasons likely won’t surprise you. They start with the Iran conflict, which has sent crude back above $100 a barrel while the Strait of Hormuz remains effectively closed. And now we’re hearing calls to slow AI research, which could, in turn, drag on investment.
To be clear, I see stocks recovering from any pullback and going on to produce long-term gains, as they always have. But these concerns are weighing the market down, even if the long-term story remains bullish.
That brings me to bonds, which I see becoming more attractive to investors as stocks wobble—especially corporate bonds. That’s because corporate bonds are facing a much different situation than stocks.
That story begins on the government-bond side, where, as I know I don’t have to say, we’ve seen yields rise. Last week, for example, the yield on the 10-year Treasury note hit 5%, a high not seen since 2007.
Corporate-bond yields have been pulled up with yields on government bonds, raising the prospect of higher income. Meantime, corporate America’s fundamentals are a lot different than those of Uncle Sam’s debt-burdened books.
Earnings growth, for one, remains solid, and indeed in plenty of cases record-breaking. As a result, the risk of defaults among corporate bonds is low—in my view, lower than the market thinks. That’s a plus for FSCO, in particular, because of the kind of debt the fund holds.
Source: Future Standard
Unlike many corporate bonds, which fall in price as yields rise, first-lien loans (which make up the bulk of FSCO’s portfolio) carry floating rates, something that makes them more valuable in an environment like this one, as their income streams rise.
As a result, FSCO’s market price has been rising slightly (see purple line below) in the last few months, even as the stock market has stumbled. At the same time, FSCO’s NAV (see orange line below) has more or less moved sideways.
Investors Bid Up FSCO, Narrowing Its (Still-Wide) Discount
This suggests stronger sentiment around the fund, and it’s narrowed the discount slightly. But even so, FSCO’s markdown remains around that 27% mark.
Why does this situation exist? One issue is the dividend, which was reduced a few months ago but has since seen a slight increase.
The cut was because FSCO has been suffering a hangover from last year’s private-credit worries. But private-credit valuations have now mostly recovered.
In other words, FSCO’s discount reflects 2025 sentiments, even though we’re deep into 2026—and are starting to look at what the story of next year’s market will be.
Already, we’re getting a hint of that narrative, and it’s starting to look like it will include higher bond yields, along with Fed rate hikes. But at the same time, we’re also likely to see stronger debt coverage from highly profitable firms that still have a lot of room to incorporate AI into their businesses.
And while higher interest rates do impact leverage, which FSCO uses, the fund’s ability to see its investment yields rise with interest rates also means that these higher leverage costs aren’t likely to affect net income.
That’s because the fund’s incoming investment income has been rising, even as borrowing costs go up. This is one of the perks of running a senior-loan fund in a rising-rate environment.
This is all bullish for FSCO, but the fund has another advantage, as well.
In addition to a high yield and strong historical fundamentals, FSCO is well-diversified across a variety of industries and, crucially, is not overexposed to the crowded tech sector.
As a result, we’re left with a fund whose recent history has left it looking oversold. And a 13.7% income stream (especially one that looks like it’s recovering) isn’t something that stays oversold for long.
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