Brett Owens, Chief Investment Strategist
Updated: October 6, 2026

It’s an app only Silicon Valley could come up with.

One of its key selling points? It can help users root out the monthly subscriptions they signed up for and forgot about—and cancel them.

I’m talking about Muse, the AI agent Meta Platforms (META) launched last month. While Muse offers a free version (with a usage limit), it also offers—get this—a paid monthly plan.

Which raises the question: If you don’t use it enough, will Muse suggest canceling itself?

Not likely.

But that didn’t stop the (reliably) skittish mainstream crowd from doing what they always seem to when the threat of AI disruption rears its head: sell.

They did it when AI was apparently coming for software stocks.

And they did it when a Substack post from Citrini Research imagined 10% unemployment due to AI.

Here we are again. This time with Muse.

Investors Are Wrong (Twice!) About This Undervalued Insurance Stock

The target this time? Insurance stocks. And one of our favorites in the space—Aflac (AFL)—was caught in the crossfire. It’s down about 3% since Muse hit No. 1 on the AppStore on September 22.

This was, in fact, the second hit the insurer has taken in as many months (the other came from investors’ misread of the company’s second-quarter earnings report).

Neither makes sense, and they’ve opened up a chance for us to grab the stock for around 14% below its 2026 peak.

Let’s work through those two points, starting with that earnings report. Then we’ll get into the AI case the bears missed: Far from being a threat to the company, AI is a trigger I see unleashing faster earnings (and dividend!) growth for Aflac.

Weak Yen Distorts the Profit Picture

The company’s second-quarter earnings, reported in early August, stated that adjusted earnings per share fell 1.7%. That looked bad. But Japan is Aflac’s biggest market (at a bit over half of the company’s revenue), and a weak yen muddled that number.

No matter to the investing herd, who read the headline number and sold. But the constant-currency line—the one we contrarians know to read—showed growth:

The bottom line looked even better, with net earnings vaulting 38%, from $599 million to $825 million. And net earnings per share jumped even more—47%—because Aflac bought back $983 million in shares last quarter.

That’s 1.7% of the company, locked away for good. (Hold that thought, because it points to a “hidden yield” of 8.9% that most investors miss.)

Back to Muse for a second.

The app essentially takes AI from a chatbot to a personal assistant, with the ability to arrange your life for you: book trips, cancel subscriptions, make purchases and, yes, bargain-hunt insurance policies.

That’s weighed on insurance stocks, due to fear it will make it harder for them to hang on to customers. But this is an overreaction, especially when it comes to Aflac.

For one, the bulk of the company’s business comes in the form of health and life insurance offered through employers and paid through paycheck deductions. An AI assistant can’t do much with those.

That’s a simple-to-find fact the crowd has raced right past, and it actually makes the business less vulnerable to AI disruption, not more.

No matter, the herd sold anyway.

What’s being missed in the fuss over Muse is that Aflac is set up to be a long-term AI winner. The company is using AI for things like sorting documents and pre-processing claims—that is, making sure a policy is current and paid up before a claim is processed.

And, for simpler claims—we’re talking stuff like dental visits and eye exams—the company is using AI from top to bottom. As I write this, Aflac has automated about 54% of these claims, and about 85% of its overall claims now come through its mobile app.

That means fewer people need to answer calls and push paper. Which is obviously not great news if you want to work for Aflac. But it is great for us, because it should mean greater cash flow for Aflac, and bigger dividends and share buybacks.

The company is a generous giver of both: Even though the stock yields just 2.2% today, it’s nearly tripled the payout—up 183.7% in the past decade. That means anyone who bought back then is earning a lot more on their initial buy: a sweet 6.9%!

And history tells us this payout is reliable, having been hiked for 43 straight years.

Aflac has also bought back and retired 38.5% of the outstanding shares it had 10 years ago (or more than a third of the company!). Which brings me to that “hidden” yield I brought up a second ago.

It’s called shareholder yield and it’s a measure that looks to include every way a company can reward us, including dividends and buybacks. Buybacks get a bad rap, but they shouldn’t, because they juice returns in the long run, as they make all of a company’s per-share metrics (most importantly earnings per share) grow faster.

That’s helped boost Aflac’s share price, which is up a solid 210% in the last decade.

Aflac Stock Gets a “Buyback Boost”

In addition, those buybacks fuel dividend growth, as they leave Aflac with fewer shares on which to pay dividends. It’s no coincidence that Aflac’s dividend growth (in purple below) has taken off as its share count (in orange) has dropped:

Fewer Shares Mean Faster Payout Growth

That tees up shareholder yield: It’s the number we contrarian income investors really want to know—and nobody talks about it!

To calculate it, take the amount spent on buybacks and dividends in the last 12 months, deduct share issuances, then divide that by the company’s market cap. Aflac makes this easy for us: In its second-quarter earnings presentation, it broke this all down nicely:

Source: Aflac second-quarter 2026 earnings presentation

In the last four quarters, Aflac spent about $5 billion on dividends and buybacks, with a lean toward buybacks. (Which is okay by us, given the stock is 14% off its 2026 high.)

With a $56-billion market cap (or the value of all outstanding shares), we can say that Aflac has an 8.9% shareholder yield—a bit more than four times the current dividend yield of 2.2%.

Let me close with another fast mention of AI, because the tech ties back in here: As AI cuts Aflac’s costs and helps it tap new growth areas, I expect the company’s shareholder-friendly management team to share more of that wealth with us—and boost the firm’s shareholder yield as they do. We’re here for it!

5 Soaring Dividends the AI Panic Has Left for Dead

My Dividend Magnet strategy naturally sets us up to profit from “AI disruptions” like this because it rests on one simple principle:

A stock’s share price tracks its dividend higher over time. 

That makes our strategy clear: Buy a company with a consistently growing payout—especially when it’s out of favor. Then hold and “ride along” as that soaring payout pulls the stock higher, setting us u for price gains alongside our growing dividend.

You can see it in action with Aflac, whose dividend has acted like a “floor” under past pullbacks:

Aflac’s Dividend Growth: The Cure for AI Disruption

Summary

• In January, consensus was to sell BDCs and buy REITs for impending rate cuts; today, it’s inverted into panic-selling REITs over Treasury rate spikes, creating a textbook contrarian buying window.
• According to Blackstone, new commercial construction across multifamily, industrial, and office assets has plunged to near 12-year lows due to high financing hurdles and a rise in construction costs.
• Leases signed during the zero-interest-rate era often had fixed or capped annual escalators. As they expire, landlords can now reset rents to market levels, capturing years of pent-up market rent increases.
• While a 30-year Treasury yielding +5% offers a rigid, non-growing coupon, a high-quality REIT yielding 5% to 8% compounds cash flow over time as rolling leases re-price into positive spreads.
• Look past short-term borrowing cost noise; accumulate high-quality REITs at discounted multiples to capture high starting yields backed by embedded, contractual rent resets.

Co-authored with Luuk Wierenga

The market is often very reactive to the news of the day. A lot of investors will be buying or selling based on whatever is in the headlines at the moment. Why, just in January, people were telling us to sell all our BDCs because interest rates were coming down. Sectors like real estate were off to a strong start in 2026 as investors rushed into companies that are perceived to benefit from lower interest rates.

Today, the script has flipped. Now everyone is running around declaring that Treasury rates are going higher, and they are selling REITs. Over the past three months, we’ve seen a decline in REITs alongside a rise in Treasury Rates.

The market is as equally convinced that rates will go up as it was convinced in January that they would be coming down. The latest weak jobs report casts doubt that the Fed will hike its target rate in October, but as the Magic 8-Ball famously said: “The future is uncertain”.

What is certain is that we are seeing an opportunity to buy REITs at cheaper valuations than we’ve seen in a while. While the market is focused on rates, there are also positive factors that will drive more earnings growth in the future. Ultimately, REITs’ growing AFFO is what pays for our dividends. And when it comes to dividends, more is always better in my book.

How Inflation Creates Future Rent Growth

High inflation is leading to higher interest rates in order to bring inflation back down. Higher interest rates are usually a bad sign for REITs, since borrowing costs go up and therefore interest expenses go up. Since REITs are leveraged vehicles, this can often have a negative impact on their bottom line.

But there is positive news as well, which we’ve already talked about: lack of new construction.

Today we will talk about another big contributor to future AFFO growth that is made possible due to the higher interest rate environment: positive re-leasing spreads.

Re-leasing spreads show you the difference between the rent paid under an expiring lease and the rent agreed upon when the lease is renewed or leased to another tenant. The higher the re-leasing spreads, the higher the contribution to revenue and, therefore, ultimately AFFO growth.

When inflation runs hot, the following happens: a lot of the current leases were signed years ago, and these leases contain annual rent escalators. Many of those are fixed, with a few examples like VICI Properties (VICI) and W. P. Carey (WPC). Both are REITs that have some sort of CPI-linked rent clauses embedded, which provide some protection against inflation. Yet sometimes, these clauses fail to keep up with market rent because CPI measures all inflation, not just rent inflation. Additionally, these clauses often have a cap; for example, rent might go up a maximum of 3%/year, so if CPI is 3.5%, rent only goes up 3%. After several years of high inflation, this can add up.

Meanwhile, expensive financing with higher construction costs makes it harder to develop new properties. It’s just harder to make a good return on these investments when it is very expensive to develop new properties in the first place.

When REITs have lease contracts that roll over, they have an opportunity to benefit from years of accumulated market rent growth. They couldn’t harvest it because of the current lease contract, but when these leases expire, re-leasing spreads can go up tremendously to compensate for both lack of new supply (competitive advantage) as well as years of inflationary effects that weren’t included in the previous leases.

Real World Examples

Just take a look at Kilroy Realty Corporation (KRC). Management talked about the fact that year-over-year leasing volumes increased by a whopping 40% in the first six months of 2026. When you exclude leases signed on spaces that had been vacant for over 12 months, Q2 cash rental rates went up a staggering 15.6%:

“During the second quarter, we executed approximately 376,000 square feet of new and renewal leases, bringing year-to-date leasing volume to roughly 944,000 square feet, an increase of more than 40% versus the first 6 months of 2025. For all comparable leases signed during the quarter, GAAP rental rates were up 21% and cash rents were up 6.1%. And when excluding leases signed on spaces vacant for longer than 12 months, re-leasing spreads improved further to 27.3% and 15.6% on a GAAP and cash basis, respectively.” – KRC Q2 conference call

Lack of new supply benefits landlords’ bargaining power. We saw several years of elevated vacancy, especially in spaces like offices. This discouraged new construction, and it also encouraged activity like converting office space to something else. In other cases, properties simply weren’t maintained as the owners were unable or unwilling to invest in maintaining a vacant property. The longer real estate is left without proper maintenance, the more expensive it is to rehab it. REITs that have the capital to keep their vacant space in shape to rent have the ability to bring that space to market.

For KRC, for the first time in nearly two years, both GAAP and cash re-leasing spreads were both positive – indicating (like we’ve discussed a lot in recent times) that the office market is recovering: Source

The fact that management is saying that the market is experiencing FOMO (Fear Of Missing Out), is the final strong indicator that the market can turn bullish very rapidly:

“There’s definitely some degree of FOMO in the market. I think we’ve seen that on the new lease side for a while, where people who were new tenants looking for new space were acting pretty decisively and prioritizing things like we’ve talked about move-in ready space and space that they thought could accommodate future growth objectives.”

The Market Will Catch Up Eventually

It is very straightforward: eventually many REITs will experience more growth because of re-leasing spreads going up and a lack of new supply coming to the market, which in turn will favor current REIT portfolios’ valuations. Blackstone discussed this in its latest Q2 2026 BREIT stockholders’ letter, noting that new supply was scarce as new construction starts and deliveries in multifamily and industrial are near 12-year lows. BREIT notes that construction costs have risen 50% over the past six years.

It’s really simple: higher rates are hurting REIT valuations now. It makes perfect sense, since refinancing becomes more expensive and REITs use a lot of debt; therefore, interest expenses go up. Additionally, many REIT investors invest for the dividends, and Treasury yields are now a more competitive option for investors to choose.

Yes, you can invest in 30-year Treasuries and get a +5% yield for 30 years. That might make a REIT with a yield of 5-6% look less attractive. Yet there is a key difference: REIT dividends can grow, and Treasury coupons are flat. Future rent growth will be a lot higher due to the factors that we discussed in this article. Higher rates make it harder to fund new construction, while inflation continues to push market rents higher.

As older leases come due for renegotiation, we expect re-leasing spreads to continue going up. While the market focuses on today’s higher interest expenses, long-term-oriented dividend investors can scoop up cheap shares of a multitude of REITs while they wait until the embedded rent growth quietly builds inside existing REIT portfolios.

Buy for a decent yield today, and hold for the faster dividend growth that will be coming in the future. It is a fantastic time to be buying income stocks, and it is a fantastic time to be buying REITs.

This article was written by

Rida Morwa

Analyst’s Disclosure: I/we have a beneficial long position in the shares of VICI AND KRC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Beyond Saving, Philip Mause, and Hidden Opportunities, all are supporting contributors for High Dividend Opportunities. Any recommendation posted in this article is not indefinite. We closely monitor all of our positions. We issue Buy and Sell alerts on our recommendations, which are exclusive to our members.

3 Buys, 3 Wins. And This 9.2% Payer Is 11% Off Again.

Michael Foster, Investment Strategist
Updated: October 5, 2026

Our favorite 9.5% dividends are on sale, and very few investors realize it.

It’s a striking situation because a payout that size handily beats a 10-year Treasury. Sure, the 10-year pays about 5% now. And it’ll pay you that for a decade, until you get your principal back.

But that’s still only a bit more than half of what these 9.5% payers—called closed-end funds (CEFs)—pay on average. Plus, unlike a Treasury, we can buy these funds’ portfolios for less than they’re actually worth, putting the potential for big upside on the table, too.

In fact, because so many investors are currently dazzled by those Treasury yields, we have a unique chance to buy our favorite CEFs at an unusually deep 7.8% average discount (more on that in a moment).

Before we get into how we’re going to play this field of nearly 400 funds, I want to put one particular CEF in front of you. It’s jumped back on my radar for plenty of reasons, including:

• A high yield (9.2%).
• Sustainable payouts. (This payout has grown over the last 16 years, with special dividends, too.)
• A deep discount (11.3%).
• Strong performance. (We’re talking 13%+ annualized returns here.)

It’s called the Virtus Equity & Convertible Income Fund (NIE), and we know it well at my CEF Insider service. We’ve held it three different times, and it’s delivered positive returns every time.

The latest? A 58% total return in a little over four years, from March 2022 to May 2026. And we collected the fund’s handsome payout over that entire span.

NIE Pays Nearly Twice What Treasuries Do, Trades for 89 Cents on the Dollar

NIE is a tidy “one-stop shop” for stock and fixed-income exposure. It holds blue-chip stocks like Alphabet (GOOGL), Apple (AAPL), Amazon.com (AMZN), and Caterpillar (CAT). It then adds highly liquid, high-yielding convertible bonds and convertible preferred stocks to boost its income. It caps all that with an option-selling strategy to provide a bit of extra cash.

The result is what you see below: a dividend paying that 9.2% yield and that hasn’t been cut since the 2008/2009 financial crisis.

A Time-Tested 9.2% Payout

In fact, the regular payout has grown since then, with regular special dividends (the spikes you see above). And how’s this for performance?

NIE Triples Investors’ Money (and Then Some)

Over the last 10 years, the fund’s total return, based on its market price, has clocked in at a hefty 13.4% annualized.

That leaves it with an income-and-growth record that’s about as spotless as they come: a 13.4% annualized total return, a 9.2% current yield and a dividend that’s grown over the last 16 years.

With all that in mind, how in the heck is NIE trading at an 11.3% discount? Not only is that markdown deep on its own, it’s below the 9.8% the fund has averaged over the last five years.

I’m going to break that down next, because deals like this exist across CEFs.

Before we get to that, though, I know I’ve been throwing the word “discount” around liberally here, so let’s step back and talk about what it means when applied to CEFs.

A CEF “Quirk” That Delivers 9.5% Dividends, “Stock-Like” Price Gains 

When I say “discount” I mean a discount to net asset value, or NAV. It’s the difference between a CEF’s price on the stock market and the per-share net asset value (NAV) of its portfolio.

Unlike stocks and ETFs, CEFs generally have a fixed number of shares for their entire lives. As a result, CEFs can (and often do) trade at different levels in relation to per-share NAV: premiums when above and discounts when below.

That’s our opportunity: We can buy CEFs when they’re heavily discounted, wait until they aren’t, then sell and roll our money into another discounted fund. And we collect CEFs’ large dividends the entire time.

This is the heart of our strategy at CEF Insider. And as I mentioned, CEFs’ discounts have been getting wider.

You can see this in the chart above, with the average discount recently hitting 7.8%, the widest in over a year. That sudden dip is part of a broader historical story that makes this recent markdown even more compelling.

It also follows a steady recovery that’s been brewing since 2024—a good two years now. During that time, CEF discounts have been recovering from their widest point in late 2023 following the 2022 mess (showing that CEF investors tend to move more slowly than stock buyers).

These discounts were steadily recovering until panic caused them to widen sharply in April 2025 (the “tariff tantrum”), then recover and dip again in March 2026, with the Iran war, only to recover yet again.

Now discounts are widening once more and, like the two dips in the last two years, this is a buying opportunity for us.

NIE Is Just the Start

Which brings me back to NIE, with its 9.2% dividend and 11.3% discount.

It’s natural to wonder if a payout that big is sustainable. The answer is yes, and we can tell that by looking at the fund’s NAV. Over the last decade, the fund has delivered a total NAV return of 13.2%. That’s far ahead of its 9.2% yield, and gives the payout strong support.

This makes NIE particularly attractive at an 11.3% discount. Throw in the overly large discounts on CEFs as a whole, and we get a whole hunting ground of 9%+ payers, too.

Why haven’t other investors caught on to this? They’re entranced by the 10-year Treasury’s 5% yield. We’re going to take advantage of that to grab CEF yields nearly double that—at deep discounts, too.

NIE Is a Great Fund. Here Are 20 More (Yielding 10.5% on Average) 

As I said, we love NIE at CEF Insider. Every time we’ve bought, it’s paid off.

The fund’s big discount has moved it back up my watch list. It’s not in our CEF Insider portfolio yet—but it’s only a nose behind the 20 CEFs that are. I’d like to see the fund’s 11.3% discount hold here for a while longer, or even widen a bit more, before we add it again.

Thursday 8 October

AVI Japan Opportunity Trust PLC ex-dividend date
CT Private Equity Trust PLC ex-dividend date
Finsbury Growth & Income Trust PLC ex-dividend date
Impax Environmental Markets PLC ex-dividend date
Law Debenture Corp PLC ex-dividend date
Merchants Trust PLC ex-dividend date
Mid Wynd International Investment Trust PLC ex-dividend date
Parvus Energy Efficiency Trust PLC ex-dividend date
Real Estate Investors PLC ex-dividend date
Schroder European Real Estate Investment Trust PLC ex-dividend date
Strategic Equity Capital PLC ex-dividend date

In this interview, Stephen Inglis, head of Regional REIT’s asset manager, ESR Europe LSPIM, and de facto CEO of RGL, talks about the recently released H126 interim report, with a focus on the strategic progress made during the period. It continues to be a challenging market environment and while the progress that RGL is making is yet to be reflected in EPRA earnings, asset sales are on track to reach more than £55m for the year, debt is falling, portfolio quality is improving and rent levels are increasing. Stephen says that although lettings are taking longer to negotiate, occupier demand for good quality property is robust and that a growing demand-supply imbalance in the market provides a strong tailwind for continuing rental growth. Meanwhile, the full year DPS target of 8.0p was reconfirmed, leaving the shares on a yield of more than 9% and trading at less than half net asset value.

The first half results are very much about the strategic progress you are making. Can you briefly give the background to that strategy.

Stephen Inglis: The company is invested in the office market, which has struggled a little post-Covid, so in 2024 we set out a recovery plan, in effect, to reduce the indebtedness of the business and improve net income – by selling void properties and/or leasing up some of our asset management initiatives, where we’ve refurbished assets and where demand clearly exists.

What progress have you made on disposals in the first half?

Stephen Inglis: In the period, we’ve disposed of £21.5m of assets, mainly vacant or partially vacant, which has had a net effect of £700,000 of savings from those void costs. That’s in line with our £50m to £60m target for the year-end, and we’re hoping to achieve closer to the higher end of that range. That, in turn, has reduced debt by some £22.4m. If we’re on target for the year-end, we’ll reduce LTV from its current level of 38.5% to c 35% by year-end.

What are your plans for the refinancing due next year?

Stephen Inglis: We have a facility due to be redeemed in December 2027, so there’s still some time to go, but as you’d expect, we’re quite well progressed on replacing that debt. We’re in discussions with our current lender, as well as other parties in the market, and we’re looking to achieve some competitive tension between lenders. So yes, we’re well advanced – we’d anticipate having new debt in place by the end of the first quarter of 2027, well in advance of the December 2027 redemption.

Turning to the other side of the strategy, what kind of portfolio are you building and what are the prospects for it?

Stephen Inglis: The intention is to reduce the number of assets and hold higher-quality assets within the portfolio, and that’s done in a number of ways: selling down non-core, non-performing assets, and investing more money into those assets where we believe there’s a long-term future in terms of occupancy and rental growth. If we look at the letting side, the leasing market has been subdued – by that, I mean lettings are taking far longer to complete than we’ve ever seen before. Typically it’s now nine to 15 months to complete a letting from the initial viewing, versus six to nine months maximum pre-COVID. So it really has moved quite dramatically.

That being said, there are still tenants relocating, and we let 26 spaces over the course of the first period, generating £1.9m of income across those spaces – and that’s 3% ahead of ERV on average. So we’re still seeing that rental growth story, and I think that’s set to continue. Within that, we achieved one significant letting over the period: a business park with two buildings in Sherwood, Nottingham, totalling just over 146,000 square feet, which we leased to Glenair, an American technology company.

That’s quite an interesting story, in that the building had been identified as surplus from our perspective, and we were actually looking to demolish it to make way for a high-quality industrial unit in that location. However, we were approached by this tenant, who simply couldn’t find ready-made space in the marketplace to meet their requirements. They came to us saying: ‘Look, the fundamentals of this building are suitable for us – the quality of the building in terms of the external fabric is good, there’s a great car-parking ratio, and we’d like to occupy it.’

The difficulty for us was that this would have meant a c £5m investment to refurbish the building to make it fit for Glenair’s occupation. However, the tenant turned around and said, ‘Actually, we’ll do the works and spend the £5m ourselves.’ So, from our point of view, it’s a capital-light letting, achieving a rent that grows to £1.1m in 2027 – a very good result.

But that’s what’s happening in the marketplace: we’re seeing a lack of supply of ready-made space, of that there’s no doubt. We’re always speaking with occupiers who are complaining, literally, that they don’t see enough space available for their use, and that will create a bottleneck in the market for better-quality space – which is what we’re trying to provide through our refurbishment programme.

How important is building a higher-quality portfolio to meeting occupier demand and driving rental growth?

Stephen Inglis: Very important – it’s a simple answer. Nearly all of the interest we have, and most of the requirements in the market, are for Grade A accommodation meeting EPC A or B, so tenants have definitely been driven towards higher-quality space. That was happening even before COVID, but its aftermath has probably accelerated it, with tenants looking for better-quality space to attract talent and make spaces more attractive for existing employees. So that’s definitely been a huge trend in the market.

The other reason is that the government still intends to introduce minimum requirements by 2030 of EPC A and B, so tenants, in readiness for that, are now looking at space and saying: ‘If that doesn’t conform to those standards, then we really don’t want it.’ That has been, and continues to be, a trend.

We focus very much on the ESG credentials of the portfolio, with EPC being an important part of that. Over 61% of our portfolio is currently EPC A or B, and a further 25% is C, where we’ve identified the journey to improving those assets to A or B. It’s worth mentioning, in the context of the market, that only around 20% to 25% of the regional office market currently conforms to EPC A or B, and growth in that has been c 8% per annum – so obviously 8% of 25% isn’t going to make much of a dent in that ongoing requirement.

If you look at the supply-demand dynamics, approximately 81.6% of the regional office market is occupied. Of the c 20% that’s currently vacant, most is unrefurbished and not fit for purpose. So even with steady-state demand, rather than increased demand, we’ve clearly got a bottleneck – and that’s really what’s beginning to drive rental growth in the regional markets. I expect that to accelerate the closer we get to 2030.

What rental growth is the market seeing and what have you been achieving on your own lettings?

Stephen Inglis: We’ve seen consistent rental growth above ERV, and ERV themselves are moving – typically 3.7% in 2025, and 5.3% so far in 2026, above ERV. That translates to 6% to 7% annualised growth, and if that continues, the power of compounding should see substantial rental growth. But to put it in context, spaces we were previously letting at £15 to £18 a square foot are now in the region of £24 to £30 a square foot – that’s putting it in real terms.

What should investors expect in terms of earnings and dividends this year, and over the next two or three years?

Stephen Inglis: Consensus forecast has us paying a dividend of 8p per share. We’ve paid 4p so far in the six months, fully covered, and the board’s policy is that we will only pay fully covered dividends – but we wholly anticipate being able to meet our ambition of an 8p dividend by the year-end.

I think the important thing to recognise in the numbers is that we’ve achieved £1.9m of additional rent, plus the savings in void costs that tenants now cover. However, we do still have an issue with breaks and expiries over the period – that was roughly £1.8m, albeit offset by an additional £700,000 of savings from the sales. So we’re definitely going in the right direction: we’re 2.5% up in the period on actual occupancy.

The EPRA numbers distort the real picture, because refurbished assets come back into the EPRA numbers. So, bizarrely and counterintuitively, EPRA occupancy is slightly down, but real occupancy is actually up 2.5% – again, a step in the right direction.

Looking ahead, we talked about supply and demand earlier – you’d anticipate that renewal rates would improve, because we’re continually spending little and often on those buildings to upgrade them so they meet tenant requirements. The supply out there is limited, so there’s less choice for tenants to relocate. Combined with our leasing activity and improved renewal rates, we’d anticipate that our rental income will grow, and our net rental income will also grow, because we’re getting rid of those void costs through sales and leasing.

With a 9% well-covered yield and the shares trading at around 0.5x book value, what do you see as the catalysts to close that gap?

Stephen Inglis: Starting with why we are where we are: the listed real estate market hasn’t been a popular sector, and all the REITs are currently trading at a discount. We’re trading at a bigger discount than most, and that’s down to two things. One, we raised money a couple of years ago, which had an impact on the share price. And two, we’ve been in the worst sector in terms of valuation and perception – obviously the office sector, post-Covid.

I think that’s been oversold. We’re demonstrating now that there’s a supply-demand imbalance coming, and it’s just a case of when it arrives – I think we’re seeing the early stages of it now, and, as I said earlier, it will improve between now and 2030, which should improve our occupancy, our gross income and our net income. So I think all those things are positive.

The negatives, of course – and I’d be churlish not to mention them – are that we do have the refinancing ahead, and that will be at a higher interest rate, given the cheap debt we all locked into many years ago. That will clearly have a negative impact. And, of course, valuation generally has been unpredictable. That said, if you look at the valuation yields across our portfolio over the last three periods, they’re identical, so we’re seeing a flat valuation market, which would tend to suggest we’ve reached the bottom.

But we’ve also got interest rate pressures in terms of what the Bank of England will do, and, of course, a budget looming – prime minister Andy Burnham’s first budget. So there’s still a lot of uncertainty out there, and that uncertainty preys on investors’ minds. I think that’s why we remain at a fairly depressed share price, against what you mentioned earlier, which I’m wholly in agreement with: that the long-term potential of this portfolio is strong.

(Thank the Bond Panic)

Brett Owens, Chief Investment Strategist

We contrarians love it when the crowd mislabels a stock and tosses it overboard. We really love it when this happens to the same stock twice!

Today we’re going to look at a perfect example: an 8.3%-paying closed-end fund (CEF) most people treat as a bond proxy. But it’s much more than that.

That’s strike one for the mainstream crowd. And it’s the first part of our setup here.

Next, when investors aren’t slapping that label on this fund, they’re mistakenly referring to it as a utility fund.

Strike two!

When a situation like this crops up, we essentially get a deal on top of a deal. In this case, the result is a chance to buy a “beautifully boring” 8.3% dividend (paid monthly, no less) for 95 cents on the dollar.

Source: Income Calendar

The ticker in the chart above gives it away: The CEF in question is the Cohen & Steers Infrastructure Fund (UTF).

Bond Fund? Nope. Utility Fund? Not Exactly

To be fair, UTF does hold some bonds (about 15% of the portfolio). And utilities are about 32% of the fund.

We’re more than okay with that. The bond panic is putting this part of UTF’s portfolio on sale. And the crowd’s tendency to view utilities as simply the stock version of bonds is pulling them down, too.

You can clearly see that in UTF’s discount to net asset value (NAV, or the value of its underlying portfolio), which has plunged to 5% from around 1% in late summer, when bond-market worries really kicked up:

UTF Gets Sucked Into the Bond-Market Panic  

What are mainstream investors missing here? Put simply: one of the best-built portfolios out there for profiting from the AI boom.

UTF’s management has smartly positioned the fund to profit from AI in four “tiers”—each tied to a critical input. Let’s go through UTF’s top-10 holdings and break them out so you can see what I’m getting at here.

Tier 1: AI Needs Power. UTF’s Holdings Deliver

AI’s thirst for electricity is no secret. The numbers are everywhere. One example: a recent estimate from the International Energy Agency (IEA) forecasting that by 2030—just over three years from now—data-center power use will double from 2025.

Utilities are, of course, the winners here—our “first tier,” in other words. UTF is well-positioned, starting with top holding NextEra Energy (NEE), whose NextEra Energy Resources subsidiary is the world’s biggest provider of power from wind and solar.

Other utility mainstays, like Duke Energy (DUK), Alliant Energy (LNT) and Pennsylvania-based PPL Corp. (PPL), hold spots here, too. As does NiSource (NI), an Indiana-based gas (hold that thought!) and electricity provider.

All are benefiting from AI’s power demand. And all are down this year, due in part to the bond-market crash.

Tier 2: Natural Gas Providers Step In When Renewables Can’t

Then we’ve got our “second-tier” AI beneficiaries, pipeline operators TC Energy Corp. (TRP) and Enbridge Inc. (ENB), the latter of which we covered a couple weeks ago. Both are at the heart of America’s natural-gas system. (ENB transports 20% of the gas used in the US.)

Renewables are growing, but gas still accounted for the largest slice of US electricity generation in 2025 (41%), according to the US Energy Information Administration (EIA), followed by renewables (24.1%), nuclear (17.7%) and coal (16.6%). That makes it essential to AI. ’Nuff said.

Tier 3: AI’s Physical “Skeleton”

The third tier: American Tower (AMT), a cell-tower owner that collects “rents” under long-term contracts. As data demand rises, so does demand for new towers (and space on existing ones). The company also has a hand in data centers through its acquisition of CoreSite in 2021.

AMT’s data-center revenue jumped 13.4% in the second quarter, to $297 million. That was about 11% of the company’s total.

Tier 4: The 19th-Century Network Keeping AI “On the Rails”

Finally, the fourth tier: the two railway holdings in UTF’s top-10, Union Pacific (UNP) and CSX Corp. (CSX), which ship goods for the data-center buildout. Plus, as AI expands, it’ll boost business profits. When that happens, companies do one thing—expand. That puts more cargo in railcars.

Where does all this leave us? With, like I said, the best portfolio for profiting from AI infrastructure there is.

A 54% Winner On Its Way to “Paying Us Back” in Dividends

There’s something else I want to share about UTF before we go further: The fund has been in our Contrarian Income Report portfolio since 2020. In that time, it’s handed us a tidy 54% total return.

And get this: In that time, UTF has “paid back” nearly half of our buy price in dividends.

Here’s how that breaks down: Back in November 2020, we bought UTF for around $24.70 a share. As of this writing, we’ve collected $10.91 a share in dividends, or around 44% of that purchase price.

The longer we hold, the more we get “paid back.” And once we break over that $24.70 mark, everything else—dividends and upside—is gravy!

UTF’s Other Hidden Edge: Smartly Managed Borrowing

One risk that may come to mind with CEFs is leverage. And yes, UTF uses it: As I write this, the fund borrows against 28% of its portfolio—modest by CEF standards.

But management has been smart about its loans, borrowing 43% of its total at fixed rates and 57% in variable (manageable, given the earnings potential of UTF’s holdings). Both rates are low: 4.4% in variable and just 3.1% for fixed, for a total weighted average of 3.8%. Try getting that from your local bank!

UTF’s leverage is another place where the crowd has it wrong (strike three!). They’re ignoring management’s shrewd moves here—which are another reason for us to buy in.

This 12% Payer Is Right Next to UTF (in the Bargain Bin)

UTF isn’t the only big dividend being unfairly tossed aside. The same thing is happening with another fund I’m recommending now.

This one pays even more (a 12% dividend), and it pays monthly, too. What’s more, this already-outsized payout has been growing—up 8% in the last five years, with two special dividends thrown in:

This ignored income play trades at a 5.7% discount now. A markdown like this has only happened a few times in the fund’s lifetime. The last time it happened, in late 2023, it vanished in less than two weeks.

Income for the year to date £10,368

Income fcast to meet the 2031 target.

The only thing in your plan you have any control over are your dividends.

Mr. Market is reliable until he isn’t.

IF the SNOWBALL’S income continues to outperform, with the current high yields available in the market, the income in another 4 years could be over 20k a year, 20% yield on seed capital.

This is a target only, not a fcast.

As prices fall, yields rise.