How I turbocharge 9.5% yielding portfolio

Sat Duhra of Henderson Far East Income explains how call options help enhance the investment trust’s income offering, the Asian countries he’s feeling bullish and bearish about, and the portfolio’s exposure to AI and tech stocks.

5th August 2026

by Dave Baxter from interactive investor

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Sat Duhra of Henderson Far East Income explains how call options help enhance the investment trust’s income offering, the Asian countries he’s feeling bullish and bearish about, and the portfolio’s exposure to AI and tech stocks.

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Dave Baxter, senior fund content specialist at interactive investor: Hello and a very warm welcome back to our Insider Interviews series. I’m Dave Baxter here at ii and today our guest is Sat Duhra, portfolio manager on Henderson Far East Income Ord 

HFEL Investment Trust.

Sat, many thanks for joining today. 

Sat Duhra, portfolio manager of Henderson Far East Income: Thank you.

Dave Baxter: So, many people are familiar with the fund, but for those who don’t know it, what makes it stand out? What makes it distinctive? 

Sat Duhra: So, Henderson Far East Income is an income fund investing in the Asia-Pacific region, and the objective is quite straightforward. It’s to grow the dividend per share every year and alongside that see capital returns from our region.

The thing that sets it apart is not only the high yield. Obviously we have a very high yield, we’ve sustained that for a number of years, but it’s actually alongside that seeking some of the best structural growth themes in the region. 

So, when we think about things such as technology supply chains, infrastructure, and financial inclusion, we want to be exposed to those great structural growth themes because Asia after all is the fastest-growing region globally. So, doing that alongside each other is really the redeeming feature of this. 

Dave Baxter: You mentioned that high yield. I think the last time I checked, it was somewhere around the 9.5% territory. It tends to be the highest-yielding equity trust out there. Which stocks and sectors are feeding into that yield? 

Sat Duhra: In some ways the answer is obvious. There’s a number of sectors that you would expect to be high yield, so utilities, telecommunications, financials. These are all really high-yield sectors in our region. That’s something that’s not very well understood, that in our region we can buy stocks that are 5%, 6%, 7%, 8%, 9% yield stocks in those sectors. And those sectors are actually growing as well. 

So, the financials, for example, through wealth management, opening new branches and so on, are growing very fast. And then utilities are doing really well, infrastructure has been built out, that kind of thing. So, these are stocks with high yield, but also good growth.

Now, alongside that, we have a number of very exciting growth stories, mainly in the technology space. They don’t really have much of a yield at this point, partly because performance has been so strong in recent years. There we use an option overlay. So, we write options on the more volatile part of the portfolio, predominantly technology stocks at this point. That will generate a huge amount of premium at this point. The level of volatility is just increasing. So, the premium being generated is really high at this point. In fact, some of the highest levels we’ve ever seen. So, it’s balancing those two things, using the option strategy to get growth exposure, but having a core of very defensive, high-quality names in there as well.

Dave Baxter: This is always a big ask, but for those who don’t know about them, can you explain in layman’s terms what the options overlay is and what you’re doing with the other side of that trade? 

Sat Duhra: Yeah, sure. Generally, we write calls, and so it’s a call overwriting strategy. What that means is that when we have a stock that’s performed quite well and we think it’s reaching our target price, we can do a couple of things. We can sell the position, we could reduce it, or we can write a call option on that particular position. 

Now, when that stock reaches a strike price, which normally we set out three months ahead, then effectively we will lose the position beyond that level. However, we get on day one, the premium, and that premium can be quite high, maybe 3% or 4%. It can currently be maybe 7%, 8% or 9%. Those are some of the levels we’re seeing now.

So, you get the premium, and that’s income for us. However, you can keep the stock, enjoy the upside, but if it goes beyond the strike price, then you give up that position. 

Now, I think something people would say is, well, then you’re going to lose your best-performing stocks. Well, we only do it on a small part of that position. So, we maybe do a fifth of that position and as it moves out, we maybe do a bit more, so we don’t expose the whole position to that, so we don’t lose a position completely.

It’s quite a generally well accepted way of creating income for income funds nowadays. And it’s gained more and more popularity as the years have gone on. So, call overwriting has become quite a nice way of enhancing income for income funds. 

Dave Baxter: To simplify, I guess it’s boosting your income, but it is limiting the potential gains you can make on certain bits of the portfolio. I did want to return to the point about the high level of yield. Are there a few examples of stocks that are offering those really interesting yields at the minute? 

Sat Duhra: One thing that really stands out when we’re talking about these great themes is, for example, Singapore banks. These banks have performed really well in recent times, but also in the last year they’ve done a really good job.

What they’re doing is taking advantage of this huge deposit flow into Singapore. So, wealth management is a really strong driver of performance for those names. Alongside that, they’re doing buybacks, they’re increasing dividends, they have strong capital positions and they have pretty steady margins and low credit call. I mean, they pretty much tick all the boxes.

While that’s going on, Singapore is attracting a lot of funds. The government and regulators are trying to encourage more investment into that market. So, that money has gone into some of the banks as well. There’s a sector that pays high yield. Some of them pay 4%, 5% or 6% yield, but they also have a great structural theme behind that, which is all about financial inclusion, wealth management, insurance products and so on. So that’s performing very strongly at this point. 

Dave Baxter: You do have decent exposure to some of those exciting growth stocks that actually have pretty low dividend yields, so think names like MediaTek, SK hynix Inc ADR 

SKHY

and Taiwan Semiconductor Manufacturing Co Ltd ADR 

TSM

Given that, how do you balance the income and the growth considerations in the fund? 

Sat Duhra: Yeah, that’s a very relevant question for what we do because at the end of 2023, we repositioned the portfolio. I took over the management of the fund as the lead manager at that point, and we decided that we had too much invested in deep value cyclical names, which optically looked great because they were on very low price/earnings (PEs) and had very high yields, but they were essentially value traps.

This is where we really changed the way we managed this. We then moved into areas such as technology and we also moved into India. We moved to a number of areas where there was real growth for years ahead in those particular sectors and markets. That was a key thing, balancing that capital growth alongside the income.

So, we didn’t sacrifice the income of the portfolio, and you can see over the last couple of years that we have still increased the dividend per share (DPS) year on year. In fact, we’re getting on to 19 years consecutive DPS increases.

But alongside that, you’ve also seen that the share price has been moving up. We’ve been tracking the benchmark on the way up, and the reason we’ve achieved that really is through a lot of these technology names. So, if we had not done that, we would have really been pretty stable. So, that helped us to move the share price higher because net asset value (NAV) was moving up, and that’s really through these kind of names.

Now, the option strategy allows us to do that. It allows us to buy those names and generate income on that. Some of those names you’ve mentioned, MediaTek, TSMC, we do write options on all these names. So, we get the upside, but we also get income as well. So, it’s balancing those two things.

When we’re more positive on growth names, we can add a bit more to that, use the option strategy more, and when we want to turn more defensive, we can take that down and add more to the Singapore banks, the utilities and those kinds of things, and manage those two parts of the portfolio.

Dave Baxter: In the last year or so, Asian shares have rallied really aggressively on the back of this big AI excitement. What’s your outlook there and how are you navigating that situation? 

Sat Duhra: We do have some meaningful exposure to the AI theme. Again, as you’ve mentioned, those technology names, Hynix, MediaTek, TSMC, and so on, are all exposed to that. 

Now, if you think about when we bought those stocks, it was well before we got a lot of this hype around the AI story, it was some time back. 

When we brought these names, we were looking at valuation, we were look at potential for income growth. The DPS has been increasing on these names. But also the exposure to things such as autos, the semiconductors that are used in the auto industry, smartphones, PCs, those kinds of things. It was not just predicated on AI. 

So, the AI came along and obviously boosted the performance of these stocks and is a genuinely strong theme for these companies because while the US companies are investing heavily and you’re seeing they are raising debt, their free cash flows is turning, in some cases, negative, the beneficiaries of that profitability is all in Asia. So, the likes of Hynix and Samsung Electronics Co Ltd DR 

SMSN

are going to be some of the most profitable companies in the world. The earnings have really exploded.

They’re actually not very expensive stocks because the earnings have kept pace with the move in the share price, or maybe the other way around. So, that’s something that makes these things so very attractive. We do like them, but we are managing that risk because there is, for example, a lot of leveraged exchange-traded funds (ETFs) in Korea, a lot of retail participation in these names, so you do have to be a bit careful in some of that. 

Our exposure is much broader. We like financials, we like infrastructure, we like technology, but we have a much broader base of exposure in terms of country and sector than maybe our peers and the index. 

Dave Baxter: Let’s drill down now into regions and countries. Where in Asia are you most bullish and where are you exercising a bit more caution? 

Sat Duhra: An easy way to answer is to look at North and South Asia, because North Asia traditionally has worked very well for us in terms of valuation, income generation,  growth and dividends, but also it is the beneficiary of technology. 

Those key technology players are in South Korea, they’re in Taiwan, they are in China, but a lot of the dividend growth is coming through in those areas as well. Hong Kong is doing really well in terms of providing dividends from property, telcos, that kind of thing. North Asia also has less policy risk and, to a degree, less currency risk compared to South Asia.

The problem with South Asia is that it is very much driven by the consumer. So, these are more consumption-led economies. You think about India, the Philippines, Indonesia, that kind of thing. Also their currency has been very poor. Part of that reason is that inflation has been, maybe not out of control, but certainly higher than we expected. That’s because fuel and food is a big part of their CPI-like basket. So, fuel prices have gone up, food prices have gone up, fertiliser prices have gone up, that kind of thing.

There’s also been some risk around government policy as well in the likes of Indonesia and India. So, those things have [meant] a lot of foreign outflow from investors, currency risk, government policy, inflation, and a weak consumer. 

We have less in South Asia for those reasons and a lot more in North Asia. North Asia has outperformed South Asia, too. So, we still don’t see a reason to change that balance.

Dave Baxter: Which specific countries in North Asia are you especially exposed to? 

Sat Duhra: Our biggest weights would be in order, Taiwan, South Korea, and China. It’s not that we are especially positive on the macro in those places. For example, in. China, we think there’s some real risks in terms of macro. However, the stock market doesn’t necessarily reflect the underlying economy in some cases.

If you think about India, for example, it’s a very narrow market if you take out Reliance Industries Ltd GDR – 144A 

RIGD

,you take out some of the private sector banks and the IT service names. There’s not that much else left there, but that’s not really the economy. 

The same in China, you see these big players like Tencent Holdings Ltd 

700

Alibaba Group Holding Ltd ADR 

BABA

and so on, but the real economy is more industrial and it’s less represented in the indices. So, there can be a mismatch in terms of the real economy and stock market indices. That means there’s a lot of opportunity in this market.

In China, we really like the high-yield state-owned enterprises, for example, they’re performing well. Some of the bank stocks have doubled since 2023, insurance companies and so on. You know they’re doing very well, they’re paying very high dividends.

One of our best performers in the last 12 to 18 months has been an aluminium company in China, which had an 11% yield and doubled over a year. These are companies that are being ignored by the market. So, we look for these kind of stocks. 

In Korea, obviously, we have the memory names that you mentioned. They are doing very well, and we have exposure to that. But there’s a whole raft of corporate reform that’s been very positive for a number of other sectors in Korea as well that have increased dividends. And Taiwan, we think there’s really good value technology now with the yield as well. So, there’s a lot of opportunities within that. 

Dave Baxter: And how are you feeling on India? You’ve mentioned some of the headwinds there. I guess also another interesting premise on India that I’ve seen thrown around slightly is the idea that maybe it doesn’t have any really obvious AI plays. So, it’s kind of missed out on some of this surge that we’ve already discussed. 

Sat Duhra: That’s certainly true because what we’ve seen in the past, as China’s done well, for example, money comes out of India to fund China positions. I think some of that’s going on now. Money has come out of India to fund Korea maybe and Taiwan.

But having said that, there’s been a lot of foreign outflow from Korea as well. India saw about $20 billion (£15 billion) outflow from foreigners last year, and it’s a very high number this year as well, so people don’t like that market at this point. It is partly to do with the AI story because that’s sucking money out of South Asia and it’s going into North Asia. So, some of that is going on. 

But India’s had its own issues. The macro is not great. Gross domestic product (GDP) growth has been pretty weak. Normal GDP has been coming off. And so even though the real GDP numbers look OK, it’s the GDP deflator that’s creating that number. So, I think there’s a little bit of a mismatch between what’s really going on, on the ground.

If you look at employment prospects, we look at FDI (foreign direct investment), we look at industrial production, none of these things look that great, and profitability… I mean, IT services, which is a big constituent of the Indian indices, has been really smashed by the AI story because there’s a real threat there, and so those stocks have done very poorly. 

Dave Baxter: Names like Infosys Ltd ADR 

INFY

that kind of thing?

Sat Duhra: And TCS and so on. I think there’s been a bit of a risk around that. We like some of the utility names. Maybe we’ll be looking at those, maybe that could be interesting for us, but at this point we have zero weight in India and it has certainly been beneficial from a performance point of view over the last 12 to 18 months. 

Dave Baxter: I’d be interested to know now how focused the portfolio is on the strong demographics in Asia and the idea of the enriched consumer. I suppose that used to be the real bedrock of Asia and emerging market investing, but it seems like it’s been a bit lost in the noise around AI as of late. 

Sat Duhra: I have to say on the consumer, you’re right. In years gone by, it has been a very strong story for Asia, particularly in South Asia. In countries such as India and the Philippines, the consumer’s been very strong, and those consumer companies historically have performed very well. Even in Korea, for example, we talk about cosmetics and that kind of thing, the demand from China and so on. However, it’s just not working anymore.

One of the reasons is that many of these consumer companies are in South Asia, and what happened after Covid is that the household balance sheet just never got repaired. People went through a really tough time in South Asia in terms of their household balance sheet, and they are financially not as strong as they were. 

This is one of the reasons why consumers are still weak in South Asia. They haven’t had the support from the government. They are kind of in some of these markets, such as Thailand, Indonesia and India, getting cash handouts, but it’s not enough. So, the consumer is still under a lot of pressure and that means that the consumer stories just don’t have that momentum or the growth that they used to. 

As you say, the AI story has certainly crowded out the consumer names as well. People are saying, well, why would you stick around consumer names when some of these stocks are up 50%, 100% in a month? So, the money has flowed out of these names, but there is a fundamental weakness in the consumer in many of these markets. Therefore, we don’t think that particular sector is very attractive at this point. 

What we like is some of the names in China, for example. We have a company called Midea Group Co Ltd Ordinary Shares – Class H 

300

, which people may recognise. If you go on to the Currys 

CURY

 website, you might see washing machines and fridges made by Midea. They also do air conditioning units [which] have been flying off the shelf. But it also has a robotics business, which they might list. That company is doing very well. It’s also giving great dividends. 

So, those kinds of brands in China that are going international, obviously we’ve seen that with electric vehicle (EV) brands, but that’s a nice area to be in rather than South Asia consumers. 

Dave Baxter: Well, Sat, thank you for your time. 

Sat Duhra: Thank you.

Those who want to look past the UK have plenty of options.

19th August 2026

by Dave Baxter from interactive investor

The humble UK equity income fund has done well by investors lately, with some decent returns made and some good payouts still available. 

But diversification is still a virtue, and other equity regions can also offer a decent level of income.

• Invest with ii: Open a Low Cost SIPP | What is a SIPP | Interactive investor Offers

Global income funds (whose top holdings we recently analysed) are one option, but so are portfolios with a more granular approach.

Here, we set out some of those names focused on a specific market that have made big recent payouts – and how the options available differ.

To give a rough sense of the dividends delivered, we have screened for the funds in a given region that would have paid out the most so far this year, had you invested a £10,000 lump sum in late December 2025.

This is just a snapshot of how different funds have fared, but does give us a sense of what’s on offer.

Asia and the emerging markets

The UK market is known for its impressive dividend yields, and it’s Asia and the emerging markets that have competed best on this front. 

Plenty of funds offer chunky yields – and have also generated some stellar returns in the last year thanks to an artificial intelligence (AI)-led market rally.

If we look at those funds with higher payouts in 2026 we are immediately met with a familiar name.

Henderson Far East Income Ord 

HFEL

stands out with a payout of almost £780 – and certainly has a fanbase thanks to its almost 10% share price dividend yield.

The trust’s shares tend to trade on a small premium to net asset value (NAV) and it’s consistently among the most popular investment trusts among ii customers (as judged by real-time buys).

Fund	Dividend payout (£)	One-year return (%)	Five-year return (%)
Henderson Far East Income Ord HFEL	781.7	23.3	41.4
Aberdeen Asian Income Fund Limited AAIF0.	758.71	39.6	80.7
JPMorgan Asia Growth & Income Ord JAGI	541.76	52.4	61.5
Schroder Asian Income Maximiser Z Inc (B52QVQ3)	492.36	33.7	66.8
Guinness Asian Equity Income Y GBP Dist (BDHSRF1)	396.35	11.4	46.7
BlackRock Frontiers Ord BRFI	379.23	17.3	96.5

Note: Dividend payout is YTD in 2026, based on £10,000 lump sum invested in late December 2025. Source: FE Analytics, 18/08/26. Past performance is not a guide to future performance.

As we’ve written before, the trust is not without its failings. 

It tends to lag its rivals in the Association of Investment Companies (AIC) Asia Pacific Equity Income sector pretty notably by total returns, meaning investors are sacrificing a good chunk of overall performance in the name of bigger dividends.

Having said that, many funds in the region are currently beholden to the fortunes of names like Taiwan Semiconductor Manufacturing Co Ltd ADR 

TSM

that have a huge presence in the market.

Henderson Far East Income’s manager has argued that he is taking a more defensive approach and is less reliant on the AI trade for returns.

This argument was supported by the fund’s performance in a recent sell-off for such stocks.

As the table shows, rivals Aberdeen Asian Income Fund Limited 

AAIF

 and JPMorgan Asia Growth & Income Ord 

JAGI

have had a much stronger showing in the last 12 months. 

But that has likely come from greater exposure to the three stocks dominating the market, and potentially most exposed to a pullback.

Henderson Far East Income had 14.7% of its portfolio invested in TSMC, Samsung Electronics Co Ltd DR 

SMSN

 and SK hynix Inc ADR 

SKHY at the end of June. 

That figure came to around 34% for Aberdeen Asian Income, and to 34% for JPMorgan Asia Growth & Income (if at the end of July for the latter).

Note that different forms of income investing are on display here.

The JPMorgan trust uses an enhanced dividend policy, paying out a set proportion of NAV over a year and being less reliant on companies paying it dividends.

Meanwhile, both Schroder Asian Income Maximiser Z Inc (B52QVQ3) and Henderson Far East Income write covered call options, giving other investors the right to the gains on a stock above a certain price, for a fee. 

That means they generate extra income but do sacrifice some capital gains in rising markets.

For those who are interested, we also include BlackRock Frontiers Ord 

BRFI

which invests in riskier “frontier” markets but has generated some good returns in recent years. 

It is paying out some income, which might sweeten the deal for investors.

The markets it has the most money invested in are the United Arab Emirates, Saudi Arabia and Kazakhstan.

Europe

Another region with some decent dividends is Europe.

Here, one of JPMorgan’s trusts stands out again thanks to its enhanced dividend policy, while also having generated some good total returns.

Fund	Dividend payout (£)	One-year return (%)	Five-year return (%)
JPMorgan European Growth & Income Ord JEGI	618.57	25.7	102.8
UBS MSCI EMU Value UCITS ETF EUR dis GBP UB	407.27	23.9	101.2
Montanaro European Income £ Inc (B3Q8KY2)	347.38	4.1	12.2
iShares Euro Dividend ETF EUR Dist GBP IDVY	318.83	21.7	64.7

Note: Dividend payout is YTD in 2026, based on £10,000 lump sum invested in late December 2025. Source: FE Analytics, 18/08/26. Past performance is not a guide to future performance.

Some AI momentum can be seen in the composition of this fund, with semiconductor stock ASML Holding NV 

ASML

accounting for 7.2% of the portfolio. 

Other position sizes are much smaller and some of the top names will be familiar to investors, from Nestle SA 

NESN

 to Siemens AG 

SIE

The fund has a good spread of regional exposures, with its top allocation (to Germany) accounting for a relatively low 18% of the fund.

Not everyone will be a fan of exchange-traded funds (ETFs) as a source of a yield but two names do make the cut here. 

There’s the UBS MSCI EMU Value UCITS ETF EUR dis GBP 

UB17

which might owe its decent payout to a 45% allocation to financials stocks, plus the iShares Euro Dividend ETF EUR Dist GBP 

IDVY

The latter has an even higher allocation to the financials sector, at 54% of the portfolio.

American dreams

The US is not an obvious hunting ground for income investors but one fund has done pretty well on this front. 

The BlackRock American Income Trust Ord 

BRAI

 trust has paid out more than £500 so far this year based on the £10,000 lump sum mentioned earlier.

This is a value fund, benchmarked against the Russell 1000 Value index, and seeks to provide diversification against the Magnificent Seven stocks.

Fund	Dividend payout (£)	One-year return (%)	Five-year return (%)
BlackRock American Income Trust Ord BRAI	502.19	47.8	88.2
First Trust US Equity Income ETF A GBP UINC	240.64	27	68.2
Schroder US Eq Inc Mxmsr Z Inc £ (BYP24Z1)	229.65	17.7	67.5

Note: Dividend payout is YTD in 2026, based on £10,000 lump sum invested in late December 2025. Source: FE Analytics, 18/08/26. Past performance is not a guide to future performance.

It also uses BlackRock’s “Systematic Active Equity” investment process, which in its own words “combines human insight with the power of big data, machine learning and AI”. 

This process involves analysing vast amounts of data and seeking to exploit market inefficiencies and create a diversified portfolio.

In practice, the fund doesn’t stray too far from its value-oriented benchmark and also has plenty of Magnificent Seven exposure. 

Amazon.com Inc 

AMZN

 accounts for 6% of the fund, with Apple Inc 

AAPL

 on 5% and Microsoft Corp MSFT0.56% on 3.8%. 

Other top holdings include Berkshire Hathaway Inc Class B 

BRK.B

 JPMorgan Chase & Co 

JPM and Exxon Mobil Corp (NYSE:XOM).

Note, again, that the likes of income ETFs and “maximiser” funds do generate some income, if much less.

Japan

The Japanese market has continued to generate great returns this year but dividend generation still remains relatively modest, at least from the funds available to UK investors.

Here we see a couple of very different names make the table. There’s Schroder Japan Trust Ord 

SJG

, which nowadays uses an enhanced dividend policy, and Nippon Active Value Ord 

NAVF

Fund	Dividend payout (£)	One-year return (%)	Five-year return (%)
Schroder Japan	292.67	39.9	119.9
Nippon Active Value	269.27	4.5	107.7

Note: Dividend payout is YTD in 2026, based on £10,000 lump sum invested in late December 2025. Source: FE Analytics, 18/08/26. Past performance is not a guide to future performance.

The latter, much likes its rival AVI Japan Opportunity Ord 

AJOT

buys into companies further down the market cap spectrum and agitates for changes that should boost returns. 

With a 7% yield, £15,000 in dividend shares would deliver £1,400 of passive income a year. Mark Hartley looks at one UK share that fits the bill.

Posted by

Mark Hartley

Published 18 August

POLN

You’re reading a free article with opinions that may differ from The Twelfth Magpie’s Premium Investing Services.

When targeting passive income, dividend shares are your friend. The regular payouts from the stocks drip feed cash into your account while you sleep.

If you invest with a Stock and Shares ISA, you can maximise returns. UK residents can invest up to £20,000 a year in an ISA without having to pay any tax on the dividends.

Over 10-20 years, those savings make a huge difference due to the magic of compounding.

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.

But are there really a lot of reliable UK stocks that pay a 7% yield? Yes — but you need to know how to identify them.

Targeting low-risk, high-yielding FTSE shares

The number one question to ask when assessing a high-yield is, why? Companies don’t set yields themselves — it’s a percentage derived from:

• Total annual dividends (set by the company).
• The current share price (set by the market).

The yield changes whenever the price moves (frequently) or when the dividend payout is altered (periodically). If the yield’s high because of an increase, that’s good. If it’s high because the share price tanked, not so good.

However, a dividend hike can still be risky if the company doesn’t have the cash to cover payments. Equally, if a price falls due to a temporary blip, it could be a bargain opportunity.

Long story short: picking dividend shares requires close inspection of what’s going on behind the scenes. 

One example to consider

Big market upsets are usually the result of macro factors that are unpredictable and out of our control. So I always assume a worst-case scenario and then try to identify which companies are best prepared to handle volatility.

What does that look like?

• A healthy balance: low debt, strong cash flow.
• A long track record of consistent dividend payouts.
• A structural competitive advantage, or ‘moat’.
• Earnings that sufficiently cover payouts.

Take Pollen Street Group (LSE: POLN), for example. The company provides specialist financial services in private equity and credit, which is hardly niche but it’s in demand.

It doesn’t have the moat of top dividend stocks such as RELX, Unilever or National Grid, but it does have a yield near 7%.

Net debt sits around £191.6m against £595m in equity – a debt-to-equity ratio of 0.34. That’s healthy. It’s been paying dividends for 10 uninterrupted years, and they account for only 61% of its earnings. That’s sufficient coverage.

Recent results revealed total assets under management (AUM) of around £7.1bn, with fee‑paying AUM of about £5.2bn. Critically, it enjoys high‑quality recurring fee income, which helps support a progressive dividend and regular buybacks. Together, these elements make it a strong contender as a dividend share to consider.

But like any stock, it still faces risks. For example, it’s highly susceptible to shifting markets and facing notable competition from larger rivals in the sector. If creditors lose confidence in the firm’s strategy, its fundraising could dry up, hurting profits and prompting a dividend cut.

The bottom line

No stock’s the perfect choice for a dividend portfolio. A higher yielder like Pollen Street can help increase your average income — but only in small allocations to reduce risk.

POLN current yield around 6%, if the price falls the Trust may be added to the Watch List.

This 12.2% Dividend Has “Paid Back” 97.6% of Our Investment (See How)

Brett Owens, Chief Investment Strategist
Updated: August 18, 2026

Here’s something we never hear about: The wonderful things that can happen when a stock “pays us back” in dividends.

It’s a shame more dividend investors don’t consider this, because it really is the “holy grail” for us contrarian income players!

What do I mean by “pays us back”? One way to think about dividends is as a small slice of corporate cash flows handed over to us as cash. Eventually, that cash will exceed, on a per-share basis, the amount we paid for the stock in the first place.

Once that happens, everything else is, well, gravy.

I bring this up now because one of our long-time Contrarian Income Report holdings is about to hit this mark. Others are hot on its tail.

Below, we’ll talk about this fund, which yields 12.2% today and pays dividends monthly. We’ll also discuss a business development company (BDC) we’ve held for just under five years. Since then, the stock has handed us nearly half of our original buy price in payouts.

Our buy windows on both of these tickers are still open. The sooner you pick them up (or add to an existing position), the faster your dividends will pile up!

This “Bond God” Favorite Covers 97.6% of Our Purchase Price

We bought the DoubleLine Income Solutions Fund (DSL) in April 2016, less than a year after we launched Contrarian Income Report. At the time, it traded at $16.99 a share. Just over 10 years later, we’ve collected $16.59 a share in payouts, or 97.6% of our original buy.

Since DSL pays dividends monthly, four months from now, we’ll be fully “comped”!

Source: Contrarian Income Report

In that span, DSL’s dividend has only moved lower once, in the pandemic-rattled market of 2021. That was smart risk management. And since then, the fund, run by the “Bond God,” Jeffrey Gundlach has kept the divvies flowing, with two healthy special payouts thrown in:

Source: Income Calendar

Fast-forward to today, and DSL is our only remaining holding from those relatively blissful pre-COVID days.

The fund has also posted a 92% total return (with dividends reinvested) since our original buy. That’s far ahead of the go-to index fund for high-yield bonds, the State Street SPDR Bloomberg High-Yield Bond ETF (JNK).

DSL Leads the Bond Pack (Thanks to Its Dividend)

That’s a big move for a bond fund at any time, and especially during a particularly wild time for bonds. It included periods of essentially negative interest rates (during the pandemic) and times of skyrocketing inflation (2022, when the CPI hit 8% and the Fed pushed rates from essentially zero to north of 5%).

Soaring rates are, of course, bad for bonds (rates up, bonds down).

Where does that leave us? Despite Fed Chair Kevin Warsh’s jawboning on higher rates, I still expect lower rates in the longer run as AI use spreads, cutting companies’ costs (including, yes, on hiring) and curbing wage growth.

The bond market agrees—something our suddenly tough-talking Fed chair no doubt knows. Its 10-year breakeven inflation rate (a forecast of where the market sees inflation heading) has been on a steady slide and is hovering around 2.25%. That’s “close enough” to the Fed’s 2% goal.

Lower rates also cut DSL’s borrowing cost. That matters for a fund with 23.5% leverage—a “Goldilocks” level that boosts returns without taking on too much risk if rates suddenly rise.

But look, we don’t pretend to know the future. We’re simply playing the odds. Sometimes the market zigs when we were expecting a zag. And with bonds, the main risk is duration, and being locked into yesterday’s lower-paying issues as rates rise and new, higher-paying bonds are issued.

As I write this, DSL holds about 53% of its portfolio in bonds with durations of 0 to three years, with a further 23.1% at three to five years. That’s a nice balance, letting Gundlach & Co. lock in decent yields while maintaining flexibility.

And since DSL is a closed-end fund (CEF), we can further protect ourselves by demanding a discount. And man, is the Bond God giving us one.

DSL’s Overdone Discount

As I write, DSL trades at a discount to net asset value (NAV, or the value of its underlying portfolio) of 6.7%. That’s below the fund’s five-year average discount of 2.4% and near levels not seen in any sustained way since the end of 2022—annus horribilis for bonds.

That’s more than enough compensation for the minimal duration risk we’re taking on, especially with Gundlach at the helm. We’ll happily take the discount and start (or add to!) our pile of dividends from this exceptional 12.2%-payer.

Ares Is Almost Halfway to “Paying Us Back.” Here’s How It Gets There

Ares Capital (ARCC) is our “BDC bully”—the biggest in the business. It’s also a bully on the dividend front: Since we bought almost five years ago, in September 2021, Ares has handed us $9.41 a share in total dividends, nearly halfway to “comping” our $20.36 purchase price. And if you’d reinvested your payouts, you’d have done just fine, too, with a 57% total return.

If you run a small business, you know it’s a hassle to get a loan from a bank. Enter BDCs, which loan cash to these firms and pass the interest to us as dividends. And its dividend—current yield: 9.5%—is rich, in part because BDCs (much like REITs) must pay at least 90% of their taxable income as dividends by law.

Over our holding period, it’s raised its regular payout twice and delivered a modest special dividend (the longer line in late 2022 below), too:

Source: Income Calendar

It is true that 71% of ARCC’s portfolio is floating-rate, and that’s been a plus as rates have risen and stayed relatively high.

This floating-rate concentration does pose risk as rates fall, but management is doing a nice job of offsetting that risk by originating more loans: At the end of the second quarter, it had loans out to 619 companies, up sharply from 566 a year ago.

And because Ares is the biggest player, it can be picky, only lending to the most creditworthy borrowers.

You can see that in the quality of its loan book: In the second quarter, 59% of ARCC’s loans were of the first lien senior-secured variety. That means it’s first in line to be repaid if any of its borrowers run into difficulty.

And even if rates do come down from here, as we discussed earlier, it’s likely to be a gradual decrease, giving ARCC ample time to adjust.

Finally, there’s AI, which small- and medium-sized businesses are embracing: According to Goldman Sachs (GS), 76% of small businesses are using AI in the US, with 93% of those users saying it’s had a positive impact.

As AI saves costs and boosts business for smaller companies, they’ll grow—and Ares will be ready to supply the loans they’ll need. We’re here for it, too—happy to collect the stock’s 9.5%-yielding payout on our way to a full “dividend payback” on our shares.

The SNOWBALL has bought back FSFL, current profit £621.00.

Foresight Solar, the fund investing in solar and battery storage assets to generate income and deliver long-term growth, is investing in a programme of upgrades designed to improve electricity generation and revenues, strengthen dividend cover and support long-term shareholder returns.

The enhancements, also known as revamping, involve replacing components such as solar panels and inverters with newer, more efficient equipment. The planned works cover nine sites representing more than 150 MW of capacity, about 20% of the UK portfolio, and are scheduled to be finalised by summer 2027.

Once fully implemented, the programme is expected to deliver up to £2.5 million of annual revenue, contributing approximately 0.05x towards the Company’s dividend cover. At the current 8.10 pence per share target, the Investment Manager calculates the dividend will be 1.1x covered in 2026.

Current buy price 71p, equates to a yield of 11%

14070 shares for 10k.

U$ Treasuries

The 30-year yield stretched to 5.32% from 5.29%. Is this a dangerous trend ?

Yes — the trend is dangerous.
Not because of the 3‑basis‑point jump, but because the 30‑year yield is rising for reasons that point to deep structural stress in the U.S. fiscal and inflation outlook. Markets are signalling that long‑term borrowing is becoming riskier, and that has economy‑wide consequences.

The SNOWBALL has sold SMIF ahead of the xd date for a tiny profit of £84.00

Top holdings across age groups.

The goal for the SNOWBALL is to double the income by investing in dividend paying stocks and re-investing those dividends in more dividend paying stocks.

The twenty year goal is a yield of 28% on invested capital, with no further capital being added. The target is to achieve the yield in less than twenty years and we are currently well ahead of target.

Thursday 20 August

Greencoat Renewables PLC ex-dividend date
JPMorgan UK Small Cap Growth & Income PLC ex-dividend date
Lindsell Train Investment Trust PLC ex-dividend date
Personal Assets Trust PLC ex-dividend date
Riverstone Credit Opportunities Income PLC ex-dividend date
Schroder Real Estate Investment Trust Ltd ex-dividend date
Temple Bar Investment Trust PLC ex-dividend date

Given their solid underlying businesses, reliable cash flows, high yields, and healthy growth prospects, these two high-yield Canadian stocks are ideal for your TFSA.

Posted by

Rajiv Nanjapla

Published August 16

ENBSRU.UN Key Points

• Investing in a TFSA with quality dividend stocks like Enbridge and SmartCentres can provide tax-free returns and long-term wealth growth, focusing on assets with strong cash flows, reliable payouts, and robust growth potential.
• Enbridge’s extensive energy infrastructure and SmartCentres’ strategic retail and office properties offer high yields with resilience against economic volatility, making them ideal candidates for building wealth in a TFSA.

A Tax-Free Savings Account (TFSA) is an excellent vehicle for long-term wealth creation, allowing investors to earn tax-free returns on eligible investments within their available contribution room. However, investors should be selective when choosing TFSA investments, as selling stocks at a loss can permanently reduce their contribution room. Therefore, focusing on quality dividend stocks with well-established businesses, reliable cash flows, strong payout track records, and solid growth prospects can be an effective strategy for long-term wealth building.

Against this backdrop, here are two high-yield dividend stocks that could be excellent additions to a TFSA. Let’s take a closer look at these investment opportunities.

Enbridge

Enbridge (TSX:ENB) is an attractive dividend stock for a TFSA, supported by its diversified asset base, reliable cash flows, strong dividend track record, and solid growth prospects. The company operates approximately 200 revenue-generating energy infrastructure assets, with around 98% of its earnings coming from regulated assets and long-term take-or-pay contracts. Moreover, about 80% of its earnings are protected by inflation-indexed mechanisms, helping reduce its exposure to economic volatility and commodity price fluctuations.

This resilient business model has enabled Enbridge to pay dividends for more than 70 years and increase its payout for 31 consecutive years. With a quarterly dividend of $0.97 per share, the stock currently offers an attractive yield of 5.43%.

Looking ahead, rising oil and natural gas production across North America should continue to drive demand for Enbridge’s infrastructure. The company is advancing its $41 billion secured capital program, with projects expected to come online through the end of this decade. These investments could support annualized adjusted EPS (earnings per share) and cash flow growth of approximately 5% through 2030, providing a solid foundation for continued dividend growth and making Enbridge an appealing long-term TFSA investment.

SmartCentres Real Estate Investment Trust

Another high-yield dividend stock that would be an excellent addition to a TFSA is SmartCentres Real Estate Investment Trust (TSX:SRU.UN), which owns and operates approximately 201 strategically located, income-producing retail and office properties across Canada. The REIT benefits from a strong tenant base, with 95% of its tenants having a national or regional presence and 80% providing essential services. This solid tenant base supports a healthy occupancy rate and resilient cash flows across economic cycles.

Consistent lease renewals, healthy rental growth, and ongoing lease-up activities have further supported the REIT’s cash flows and dividend payments. Its monthly distribution of $0.15417 per unit currently yields 6.46%.

Looking ahead, demand for retail space should remain healthy, supported by economic growth and limited new supply due to rising construction costs. SmartCentres is expanding its portfolio through several development projects, including a 200,000-square-foot Canadian Tire store in Toronto. The REIT expects to complete the project in the fourth quarter of this year. The REIT has also acquired a 17-acre parcel in Winnipeg for approximately $10.1 million and is developing two additional self-storage facilities in British Columbia, which are expected to come online next year.

Overall, SmartCentres has approximately 0.8 million square feet of properties under construction and another 87 million square feet in various stages of planning and development. Given its resilient cash flows, attractive yield, and substantial development pipeline, SmartCentres could be an excellent long-term TFSA investment.

AIRE closed at 74p, when the share opens today, you will not be able to trade at that price and book the profit of £558.

If AEW makes a bid, it might be possible to book a similar profit.

GLENSTONE’S ALREADY NEGLIGIBLE SHAREHOLDER ACCEPTANCES FALL FURTHER

The Board of AIRE (“AIRE Board”) notes yesterday’s announcement by Glenstone REIT plc (“Glenstone”) regarding the acceptance level for its unsolicited final* cash offer for AIRE (the “Glenstone Offer”).

ACCEPTANCES FROM INDEPENDENT AIRE SHAREHOLDERS FALL FURTHER TO LESS THAN 0.025%

After 35 days, excluding the AIRE Shares held by Glenstone and its concert parties and the 1,900,000 AIRE Shares subject to Adam Smith’s irrevocable undertaking, Glenstone has only received valid acceptances in respect of only 17,849 AIRE Shares, rather than the 19,849 acceptances previously announced. This represents a negligible proportion of AIRE’s issued share capital, representing less than 0.025 per cent.

After five weeks, Glenstone has therefore secured negligible net acceptance of its Offer from AIRE Shareholders other than its own director.

The AIRE Board’s view continues to be that the Glenstone Offer fundamentally undervalues the Company and as a result, the AIRE Board continues to recommend that AIRE Shareholders:

DO NOT ACCEPT GLENSTONE’S OFFER

The Glencore bid looks like a dead deal. The SNOWBALL will have to keep watching and waiting.