After much deliberation I’ve decided to sell the SNOWBALL shares in SUPR for a total profit of £1,181.00.
The SNOWBALL bought too early so anyone buying later should have earned more profit but it has earned 3,099 pounds in dividends and these have earned more dividends as they were re-invested.
If the SNOWBALL was near to withdrawing the earned dividends, I wouldn’t have sold, as it’s one of the safest highest dividends in the Investment Trust world but as it’s trading back to NAV there may be better but more risky opportunities in the market.
GCP Infrastructure (GCP) is now over 15 years old. Investors who subscribed at IPO have already received all of their investment back in dividends alone.
While the NAV has been fairly stable, factoring in both income and capital from launch to the end of December 2025, GCP generated a total NAV return of 187%. Despite this long-term record, GCP’s shares have traded on a wide – and we feel unjustified – discount for several years. That boosts its dividend yield, which is currently 9.1%.
For two years, GCP has been releasing capital from its portfolio to reduce leverage, fund share buybacks, and improve the overall risk/reward profile of the portfolio. The recently announced exchange, which, if completed, will result in a repayment of £47.5m of loans secured against a portfolio of social housing properties, would take the total to about £128m, well on the way to its £150m target. GCP has repaid almost all of its debt, with the small remaining balance expected to be cleared following this repayment. Alongside this, the company has completed share buybacks totalling £24m of its £50m target. In addition, its investment adviser Gravis Capital Management (Gravis) has identified a £200m pipeline of further potential disposals.
Public-sector-backed, long-term cashflows
GCP aims to provide shareholders with sustained, long-term distributions and to preserve capital by generating exposure primarily to UK infrastructure debt or similar assets with predictable long-term cashflows.
Note: 1) last published as at 31 December 2025
Share price and premium/(discount)
Time period 31/01/2021 to 18/02/2026
Source: Bloomberg, Marten & Co
Performance over 5 years
Time period 31/01/2021 to 31/01/2026
Source: Bloomberg, Marten & Co
12 months ended
Share price TR (%)
NAV total return (%)
Earnings1 per share (pence)
Adjusted2 EPS (pence)
Dividend per share (pence)
30/09/2021
(7.9)
7.2
7.08
7.90
7.0
30/09/2022
3.8
15.8
15.88
8.33
7.0
30/09/2023
(25.2)
3.7
3.50
8.58
7.0
30/09/2024
28.2
2.2
2.25
7.09
7.0
30/09/2025
0.9
3.1
2.15
6.73
7.0
Source: Bloomberg, GCP, Marten & Co. Note 1) EPS figures taken from 30 September each year. Note 2) As disclosed by the company.
Company profile – regular, sustainable, long-term income
More information is available on the trust’s website
GCP Infrastructure Investments Limited (GCP) is a Jersey-incorporated, closed-ended investment company whose shares are traded on the main market of the London Stock Exchange. GCP aims to generate a regular, sustainable, long-term income while preserving investors’ capital. The company’s income is derived from loaning money predominantly at fixed rates to entities which derive their revenue – or a substantial portion of it – from UK public-sector-backed cashflows. Wherever it can, it tries to secure an element of inflation protection.
GCP’s portfolio is diversified across a range of different infrastructure subsectors. It includes exposure to renewable energy projects (where revenue is partly subsidy and partly linked to sales of power), PFI/PPP-type assets (whose revenue is predominantly based on the availability of the asset), and specialist supported social housing (where local authorities are renting specially-adapted residential accommodation for tenants with special needs).
The AIFM and investment adviser is Gravis Capital Management Limited (Gravis). Philip Kent is its CEO and the lead fund adviser to GCP.
The board is targeting a full-year dividend of 7.0p per share for the financial year ended 30 September 2026.
In December 2023, GCP announced a new capital allocation policy which prioritised a reduction in its leverage, improved risk-adjusted returns from the portfolio, and return of capital to shareholders through the use of share buybacks.
Opportunities to provide an attractive dividend yield from a relatively low risk portfolio
As the capital allocation policy progresses, GCP’s core proposition of providing an attractive dividend yield from a relatively low-risk portfolio should shine through.
Annualised downward revaluations of just 0.51%
The infrastructure sector is characterised by a relatively low economic sensitivity. It supports essential services, and this helps underpin predictable and reliable cash flows, which tend to be less correlated with wider markets. For GCP, which targets investments in debt rather than project equity, ranking higher up in the capital structure provides additional comfort. The company’s track record since launch reflects that, with annualised downward revaluations of GCP’s investments running at just 0.51% since launch, and we believe that this would have been lower still had ultra-low interest rate policies not distorted markets. GCP’s loans are backed by assets, which benefits its recovery rate in the event of default.
In the environment of higher interest rates that we find ourselves in, it is easier for GCP to achieve its target rate of return while managing down its risk profile. Under the capital allocation policy, the investment adviser has set out to improve the risk profile – by rebalancing the portfolio to be more debt-like and reducing the volatility in the valuation, while targeting exits in the supported living sector and reducing equity-like exposures – rather than chase ever-higher returns.
For the moment, the emphasis is on driving down GCP’s discount. At the current discount, buying back stock offers a better risk-adjusted return than making new investments. However, there should come a point where the balance shifts. The opportunity set available to GCP is considerable and, when the numbers add up, we would expect that most investors would be keen to see GCP make new investments.
It is clear that cash-strapped governments need to look to the private sector to help fund replacements for crumbling post-war infrastructure, achieve decarbonisation goals, and digitalise economies. GCP can and should have a role to play in this.
Market backdrop
Interest rates
As Figure 1 shows, UK interest rates have fallen across the board since the end of July 2025 (around the time that we last published on GCP). Concerns about UK government finances appear to have been allayed by the recent budget. Against this backdrop, the Bank of England cut its base rate to 3.75% in December 2025, and we could see a further reduction in a matter of weeks as four of nine members of its Monetary Policy Committee voted in favour of cutting the base rate to 3.5% at the last meeting on 4 February 2026.
Figure 1: Shift in UK yield curve since end July 2025
Source: Bloomberg
For GCP, the more important shift is in the medium-to-long-term interest rates. At the end of December 2025, the average life of the portfolio was 11 years and the weighted average yield on the portfolio was 8%.
Inflation
UK inflation has moderated, but in recent months CPI seems to have settled in the 3.0%–4.0% range. A number of economists are predicting that the rate will fall sharply over coming months, which would strengthen the case for further interest rate cuts. At the end of December 2025, 49% of GCP’s portfolio had some form of inflation protection. This provides a degree of cushioning if inflation does prove stickier than expected. Figure 14 on page 10 shows the estimated sensitivity of GCP’s NAV to changes in inflation assumptions.
Figure 2: UK inflation – CPI and RPI
Source: ONS, Marten & Co
UK infrastructure plan
In June 2025, the UK government published its 10-year strategy for economic, housing, and social infrastructure. The plan outlined £725bn of government funding for infrastructure over the next decade, but also promised to create opportunities to unlock other types of new investment into infrastructure, to maximise public investment. Whilst the numbers and the timeframes can be taken with a pinch of salt, it does underscore the need for UK infrastructure investment, and the inability of the government to fund this off its own balance sheet.
Cost disclosures
The issue of misleading cost disclosure, which had been a factor in the emergence of GCP’s discount, has been partially resolved. The FCA’s new rules on consumer composite investments should prove less of a deterrent for investors evaluating investment companies. However, there is still a need to reform MiFID regulations as wealth managers, for example, are still obliged to give their customers misleading information. The FCA is reviewing the situation. Gravis was heavily involved in the campaign for cost disclosure reform.
Asset allocation
As of 31 December 2025, there were 47 investments in GCP’s portfolio, down from 48 at the end of June 2025. The average annualised portfolio yield over the financial year was 8.0% (7.9%), and the portfolio had a weighted average life of 11 years (unchanged).
Figure 3: Split of the portfolio at 31 December 2025
Source: GCP Infrastructure Investments
Since end June 2025, the exposure to PPP/PFI has risen by 2 percentage points, while biomass, gas peaking, hydro-electric, and supported living are all up by 1 percentage point. At the other end of the scale, Solar is down 3 percentage points, while onshore wind and anaerobic digestion are both down by 1 percentage point.
Figure 4: Sector allocation at 31 December 2025
Source: GCP Infrastructure Investments
Figure 5: Security allocation at 31 December 2025
Source: GCP Infrastructure Investments
Since the end of June 2025, GCP’s equity exposure has fallen further from 5% to 4% of the portfolio. This was one of the aims of the capital recycling programme, as was a plan to reduce the exposure to social housing, which will take a big step forward with the recently announced exchange of contracts.
Figure 6: GCP sources of income as at 31 December 2025
Source: GCP Infrastructure Investments
Top 10 investments
Figure 7: GCP’s 10 largest investments as at 31 December 2025
% of total assets 31/12/25
Cashflow type
Project type
Cardale PFI
14.3
Unitary charge
PFI/PPP (18 underlying assets)
Gravis Solar 1
9.2
ROC/FiT
Commercial solar
GCP Programme Funding S14
5.7
ROC/RHI/Merchant
Biomass
GCP Programme Funding S10
5.5
Lease
Supported Living
GCP Bridge Holdings
5.3
ROC/PPA
PPE – Energy-from-waste / Energy efficiency
GCP Biomass 2
4.7
ROC/PPA
Biomass
GCP Social Housing 1 B
4.4
Lease
Supported living
Gravis Asset Holdings H
3.9
ROC/RHI
Onshore wind
GCP Green Energy 1
3.7
ROC/PPA
Commercial solar/onshore wind
GCP Rooftop Solar Finance
3.6
FiT
Rooftop solar
Source: GCP Infrastructure Investment
We long been conscious that the list of GCP’s holdings offers limited insight into what the underlying characteristics of the portfolio. To address this, GCP recently made an investor portal available – Carapace – which allows registered users to explore the portfolio in greater depth.
We would encourage interested readers to request access to the site via GCP’s website.
Figure 8: Top 10 revenue counterparties as at 30 September 2025
Firm
% of total portfolio
Ecotricity Limited
10
Npower Limited
7
Viridian Energy Supply
7
Statkraft Markets GmbH
6
Bespoke Supportive Tenancies Limited
6
Good Energy Limited
4
Gloucestershire County Council
4
Engie Power Limited
4
Power NI Energy Limited
4
Smartestenergy Limited
3
Source: GCP Infrastructure Investments
Figure 9: Top 10 project service providers as at 30 September 2025
Firm
% of total portfolio
WPO UK Services Limited
19
PSH Operations Limited
13
Solar Maintenance Services Limited
10
A Shade Greener Maintenance
10
Vestas Celtic Wind Technology Limited
7
Cobalt Energy Limited
5
Veolia ES (UK) Limited
5
Urbaser Limited
4
Gloucestershire County Council
4
Burmeister and Wain
3
Source: GCP Infrastructure Investments
Recent investment activity
No new investments were made during GCP’s 2025 financial year, although the company did make £24.7m of follow-on investments to support existing borrowers. By the time of the publication of the annual report in mid-December, GCP had made an additional £1.7m of follow-on investments.
Figure 10: Outflows (investments) 12 months to end September 2025
Source: Gravis Capital Partners
Figure 11: Inflows (repayments) 12 months to end September 2025
Source: Gravis Capital Partners
Reflecting the progress made on the capital recycling programme, inflows comfortably exceeded outflows. Over FY25, GCP received £48.5m from scheduled repayments of principal and a further £27.7m of unscheduled prepayments of principal. After the period end and up to mid-December, GCP received an additional £4.4 of cash inflows.
The recent deal in supported housing
On 2 February 2026, GCP announced that certain borrowers had exchanged contracts for the disposal of properties that are leased to registered providers of supported social housing. The proceeds of such disposals, if completed, will repay £47.5m of loans and, allowing for deferred amounts, will generate day one cash proceeds of £43m.
The disposal was in line with the valuation of those loans in GCP’s end September 2025 NAV.
We understand that the loans being repaid include most of those that comprise most of GCP Programme Funding 1 Ltd Series 1, GCP Social Housing 1 Ltd D and two thirds of GCP Social Housing 1 Ltd B. About a third of the loans in that vehicle relate to accommodation leased to MySpace, which was not included in the sale.
We understand that further exits from this part of the portfolio are likely over the course of the rest of the year.
Capital recycling
The investment adviser has identified a substantial pipeline of potential disposals that will reshape the portfolio and free up capital to complete the capital recycling programme.
At 30 September 2025 (before the most recent transaction), the disposal pipeline included portfolios of 33 and 55 supported living assets, a large onshore wind farm, a portfolio of operational and ready-to-build solar assets, a portfolio of gas-to-grid anaerobic digestion plants, and the equity interest in a biomass plant. In addition, there is scope to refinance a portfolio of ground-mounted solar projects, as well as a biomass project.
If executed in full, the disposal programme would reduce the weighted average life of loans in the portfolio from 11 to eight years. However, it would also translate into an increase in the weighted average annualised yield on the portfolio from 8.0% to 8.3%.
Figure 12 summarises the key assumptions that underpin the cash flow forecasts for renewable assets in which the company is invested, and the range of assumptions that the investment adviser observes in the market. GCP’s investment adviser traditionally takes a conversative approach, with the chart highlighting alternative, more aggressive valuation assumptions that could be taken.
The net effect of this is that, were GCP to assume the most conservative assumptions in every category, the end-September NAV of 101.40p would have been reduced to 98.64p. By contrast, were GCP to assume the least conservative assumptions in each category, the NAV would have been 109.27p.
Figure 12: Valuation assumptions as at 30 September 2025
Source: GCP Infrastructure Investments
Sensitivities
The investment adviser also provides a sensitivity analysis for its forecast cash flows. Figures 13 and 14 show the impact of changes in power prices and changes in its base case inflation forecast.
The sensitivity to power prices has fallen once again (in the note we published in January 2025, a 10% fall in prices would have meant a 9.1p fall in the NAV, by August 2025, that figure was 4.7p, and now that figure is 4.0p.
Figure 13: Impact of change in forecast electricity prices
Source: GCP Infrastructure Investments
Figure 14: NAV impact associated with a movement in inflation
Source: GCP Infrastructure Investments
Performance
GCP continues to deliver steady progress in its NAV total return. As in past notes, we have compared GCP’s returns to those of sterling corporate bonds which have some similar risk characteristics to GCP’s investment approach. As Figure 16 shows, GCP has delivered returns well-ahead of sterling corporate bonds over the past five years.
Figure 15: GCP NAV total return
Source: Bloomberg, Marten & Co
Figure 16: GCP NAV total return performance relative to sterling corporate bond performance
Source: Bloomberg, Marten & Co
For shareholders, the main problem has been the widening of the discount that occurred over 2022. Fortunately, more recently the discount has been narrowing again to the benefit of shareholder returns.
Figure 17: Cumulative total return performance over periods ending 31 December 2025
3 months (%)
6 months(%)
1 year(%)
3 years (%)
5 years (%)
GCP share price
5.2
6.0
15.5
(4.0)
2.5
GCP NAV
0.0
1.0
1.5
6.9
34.9
Sterling corporate bonds
2.8
3.6
7.1
19.6
(6.6)
Source: Bloomberg, Marten & Co
Drivers of recent performance
Financial year ended 30 September 2025
Figures 18 and 19 show the factors affecting GCP’s performance over the 12-month period ended 30 September 2025.
Figure 18: Cumulative total return performance over periods ending 31 December 2025
Impact (£m)
Impact (pence)
Inflation forecast
6.8
0.81
O&M budget update
3.1
0.37
Ofgem audits resolved
2.5
0.30
Other
3.7
0.44
Total
16.1
1.92
Source: GCP Infrastructure Investments
The largest positive contributor to the NAV return came from an upward revision of inflation forecasts. Cost savings within GCP’s operations and maintenance budget also helped. In addition, a longstanding issue relating to subsidy entitlements for certain solar projects – which had been under review by Ofgem – has been resolved.
Reassessment of likely curtailment of output at Northern Irish wind assets
(3.4)
(0.41)
Power price move
(2.0)
(0.24)
Other
(1.1)
(0.13)
Total
(66.3)
(7.92)
Source: GCP Infrastructure Investments
On the downside, there was a hit to the NAV that resulted from a reduction in the assumed long-term availability forecast of a portfolio of anaerobic digestion plants.
Although the investment adviser has been working to reduce the portfolio’s sensitivity to power prices and output, lower than forecast generation was an issue over this period. Also, even though gilt yields have been trending down recently, back in Q4 2024 they were rising. That would have been a factor in the decision to increase discount rates.
Factors affecting GCP’s Q4 2025 performance
Over Q4 2025, the most significant influence on the NAV was a further reduction in power price forecasts, which took 0.5p off the NAV. This is an issue that has plagued renewable energy companies and whilst disappointing to see, it is encouraging that the hit to GCP’s NAV was relatively minor. Actual generation was a positive contributor to the NAV. The only other meaningful negative (-0.53p) was the UK government’s puzzling decision to impose changes to the way that subsidies are calculated by replacing RPI with CPI in the calculation. This occurred despite overwhelming opposition, and we fear it will raise the cost of financing the UK’s infrastructure programme as investors factor in an additional risk premium to contracts.
Up-to-date information on GCP and its peers is available on the QuotedData website
Peer group
GCP sits within the AIC’s infrastructure sector. Within this peer group its closest comparator is Sequoia Economic Infrastructure, which – like GCP – invests primarily in infrastructure debt, but using a much broader definition of what constitutes infrastructure. As we have done in previous notes, we have included some information on the renewable energy sector as GCP’s underlying asset exposures are biased to this area.
Figure 20: GCP peer group comparisons
Discount (%)
Yield (%)
Market cap (£m)
NAV 1-year (%)
NAV 3-years (%)
NAV 5 years (%)
GCP
(23.0)
9.1
643
2.1
2.5
6.3
Sequoia Economic Infrastructure
(11.9)
8.4
1,224
5.6
7.1
5.1
Median of other infrastructure peers
(18.5)
3.8
804
12.1
8.0
8.3
Median of renewable energy sector
(40.1)
11.3
293
(2.5)
(2.1)
5.2
Source: QuotedData website as at 19 February 2026
GCP’s five-year returns look reasonable versus its immediate and renewable energy peers and the relative resilience of its debt portfolio versus the equity portfolios of companies in the renewable energy sector is apparent. Sequoia has less renewable exposure than GCP.
Quarterly dividend
Dividends are declared and paid quarterly. Shareholders are able to elect to take their dividend as scrip (in shares rather than cash). For its new financial year, GCP’s target dividend remains stable at 7.0p in line with its previous four financial years.
Premium/(discount)
Over the 12 months ended 31 December 2025, GCP’s shares have traded on an average discount of 28.1%, and as wide as 35.1% and as narrow as 21.3%. As of publishing, the discount stood at 23.0%.
The widening of the discount was initially triggered by the sharp rise in interest rates aimed at choking off inflation. This was compounded by selling from funds of funds and wealth managers, prompted by the misleading cost disclosure rules we discussed on page 5. Since then, progress with disposals and buybacks under the capital allocation programme should have contributed to a reduction in the discount as should cuts to interest rates over the last few quarters and the – albeit partial – resolution to the cost disclosure issue. However, we do not believe that these positives are yet fully reflected in the discount, which should continue to narrow from here.
In pursuit of its capital recycling programme, GCP bought back £22.8m worth of shares over the course of its financial year ended 30 September 2025. Since then, well over 3m more shares have been repurchased. In total, since the programme was announced, 34,610,234 shares have been repurchased.
Figure 21: GCP discount over five years ending 31 January 2026
Source: Bloomberg, Marten & Co
Structure
Fees and costs
The investment adviser receives an investment advisory fee of 0.9% a year of the NAV net of cash. This fee is calculated and payable quarterly in arrears. There is no performance fee. The investment adviser is also entitled to an arrangement fee of up to 1% (at its discretion) of the cost of each new investment made by GCP. Gravis will charge the arrangement fee to borrowers rather than to the company. To the extent that any arrangement fee negotiated by the investment adviser with a borrower exceeds 1%, the benefit of any such excess shall be paid to the company. The investment adviser also receives a fee of £70,000 (subject to RPI adjustments) a year for acting as AIFM, which was £92,000 for the 2025 financial year.
The investment advisory agreement may be terminated by either party on 24 months’ written notice.
Capital structure and life
As of 18 February 2026, GCP has 884,797,669 ordinary shares outstanding, of which 51,595,253 are held in treasury. The number of shares with voting rights is 833,202,416.
GCP is an evergreen company with no fixed life and no regular continuation vote. The company’s financial year end is 30 September and AGMs are held in February.
Gearing
Structural gearing of investments is permitted up to a maximum of 20% of NAV immediately following drawdown of the relevant debt. However, GCP has been targeting debt reduction, and at the end of December 2025 it had net gearing of just 1.2%.
Aberdeen Equity Income Trust PLC ex-dividend date Alliance Witan PLC ex-dividend date Brunner Investment Trust PLC ex-dividend date North Atlantic Smaller Cos Inv Trust PLC ex-dividend date Regional Reit Inv Trust PLC ex-dividend date
XD Dates may not be a complete list of xd’s so as usual it’s best to
The latest answer to wide discounts raises questions of its own.
16th February 2026
by Dave Baxter from interactive investor
Investment trust boards keen to vanquish a share price discount (or a pesky activist) have tried plenty of measures in recent years, and not always with great success.
This might explain why a more drastic gambit is gaining in popularity: ceasing to be an investment trust altogether.
The move, which follows a similar shift by Middlefield Canadian Income last year, converts it to a vehicle that trades at net asset value (NAV), eliminating the discount in one fell swoop and giving investors an uplift.
But if this is one way to slay a discount, investors should remember that there is still a trade-off. In the worst instances, making the switch could wipe out some of the traits that justified a trust’s place in your portfolio.
Where it does work
We’ve previously observed that the Smithson conversion doesn’t seem to sacrifice too much in terms of characteristics associated with the trust structure.
The team didn’t use gearing to attempt to juice returns and the portfolio itself seemed pretty liquid, meaning the closed-ended structure isn’t needed to house the assets.
With its global “smaller company” remit, the median market capitalisation for a holding in the fund still comes to a whopping £6.1 billion.
Meanwhile, the fund doesn’t have really big position sizes, an area where trusts can be flexible but most open-ended funds cannot.
Turning to last week’s two candidates, it doesn’t seem that the Diverse Income trust would have that big a shift either.
The trust doesn’t use gearing, has small position sizes and already has substantial overlap with the open-ended fund run by the same team, Premier Miton UK Multi Cap Income B Inc.
As the table shows, there’s only a slim difference between the two when it comes to performance. They also have very similar dividend yields.
Not so different after all?
Fund
One-year total return (%)
Five-year
10-year
Diverse Income
28.6
37.9
97.9
Premier Miton UK Multi Cap Income
27.9
34.7
98.3
Source: FE Analytics, 13/02/2026. Past performance is not a guide to future performance.
It’s perhaps a good rule of thumb that a trust could feasibly make the switch, were it to already operate in a similar manner to an open-ended fund.
That means investing in relatively liquid shares, not using gearing and not having enormous position sizes. But let’s not assume this silver bullet will apply in all cases.
From dividends to big bets: what we give up
Trade-offs still exist. With the Diverse Income example, it’s worth noting that as an open-ended fund it would have to pay out all dividends it received each year, rather than being able to hold some back and build a “reserve” if needed in leaner years.
This can help trusts protect their payouts in periods of dividend cuts and keep upping the amount they distribute to shareholders over the years.
In this case, Association of Investment Company (AIC) data shows that Diverse Income has grown its dividend by an average of 4% annually over five years. It is a “next generation dividend hero”, having raised payouts for 13 consecutive years.
In Diverse Income’s annual report last year (to 31 May 2025) the board acknowledged the structural advantage of the revenue reserves.
As it put it: “In 2020-21, when many portfolio companies cut their dividends as a result of the pandemic leading to a decline in the trust’s annual revenue, this temporary setback was countered by drawing upon reserves built up in prior years, enabling the trust to continue to pay increased dividends. Since that date, the trust’s revenue has fully recovered, and its annual revenue and dividends have continued to grow.”
Bigger issues
The drawbacks of a switch are, of course, more obvious when trusts make good use of their structural traits in the first place.
This definitely applies to European Opportunities: it makes generous use of gearing, recently accounting for 15% of NAV, and would lose this opportunity to amplify returns in an open-ended vehicle.
The fund is also well known for its big bets, with the top holding having at times accounted for 15% (or more) of the portfolio.
This has admittedly been a double-edged sword: Darwall’s two massive holdings of recent years eventually turned disastrous, in the form of Novo Nordisk AS Class B NOV
and, even worse, German payments processor Wirecard, which collapsed in 2020 amid fraud allegations.
But investors may well still back a manager who can show such conviction.
Other differences
Diverse Income is not alone in having an open-ended “sibling”.
While some of these “sibling” pairs are pretty similar, the differences can illustrate how jumping from a trust structure to open-ended won’t always be feasible, were the trusts to need such an option one day.
An obvious issue here is the penchant the Baillie Gifford trusts have for private companies, something an open-ended fund would be unable to hold.
Some of these issues might simply be marginal for investors. But they do make a difference, and are worth considering before throwing in the towel on investment trust status.
Investors have continued to throw money into tech-heavy funds in the face of recent wobbles for the sector.
The Magnificent Seven stocks are having a trying start to the year as investors fret about the sheer level of spending now expected on artificial intelligence (AI) ventures. Every single Magnificent Seven member is down year to date as of 13 February, with Microsoft Corp
and Microsoft into our bestselling shares tables this month, investors also appear to have doubled down on funds with big exposure to such stocks as well as the broader “tech” space.
This week’s list nevertheless points to plenty of differences of opinion on this front.
It’s hard to ignore the continued presence of the US-light, value-focused Artemis Global Income I Acc at the top of the table, for one, while investors are looking for returns outside the US via its outperforming stablemate Artemis SmartGARP European Eq I Acc GBP.
continues to draw people in, likely thanks to its high yield and wide share price discount to net asset value (NAV). But it’s notable that software sell-off victim HgCapital Trust Ord HGT0 has disappeared from the list, as have commodity funds such as BlackRock World Mining Trust Ord BRWM
Funds and trusts section written by Dave Baxter, senior fund content specialist at ii.
Why “safe” income strategies are failing right now
How inflation, fluctuating yields and policy chaos are gutting retirement plans
The hidden risk that quietly drains retirement accounts (and how to avoid it)
A contrarian dividend blueprint yielding up to 14.9%—without touching your principal
How to turn $500K into a stable income stream that could last decades
Dear Reader,
You saved. You invested. You followed the “rules.”
And yet here you are—uneasy.
Wondering if you really can afford to retire. Or stay retired.
And who could blame you?
One minute, inflation’s the threat. The next, it’s recession.
And the broader economy? It’s bloated with debt and only getting worse.
We touch new all-time highs, then the market zigzags like a drunk squirrel—making it feel impossible to plan, let alone sleep at night.
So you start looking for stability. Maybe trim a position here. Tap a bit of principal there. Just for now.
But that’s exactly how it begins.
And once you start selling shares to supplement your income, you’re on a slippery slope.
A slow-motion wealth drain most retirees don’t realize they’re in—until it’s too late.
I call it…
The Share Selling “Death Spiral”
Some financial advisors (who are not retired themselves, by the way) say that you can safely withdraw and spend, say, 4% of your retirement portfolio every year. Or whatever percentage they manipulate their spreadsheet to say.
Problem is, in reality, every few years you’re faced with a chart that looks like this.
Apple’s Dividend Was Fine – Its Stock Wasn’t
As you can see, the dividend (orange line above) is fine — growing, even — but you’re selling at a 25% loss!
In other words, you’re forced to sell more shares to supplement your income when they’re depressed.
Remember the benefits of dollar-cost averaging that built your portfolio? You bought regularly, and were able to buy more shares when prices were low?
In this case, you’re forced to sell more shares when prices are low.
When shares rebound, you need an even bigger gain just to get back to your original value.
The Only Reliable Retirement Solution
Instead of ever selling your stocks, you should instead make sure you live on dividends alone so that you never have to touch your capital.
This is easier said than done, and obviously the more money you have, the better off you are. But with yields still pretty low, even rich folks are having a tough time living off of interest today.
And you can actually live better than they can off of a (much) more modest nest egg if you know where to look for lesser-known, meaningful and secure yield.
I’m talking about annual income of 8%, 9% or even 10%+ so that you’re banking $50,000 (and potentially more) each year for every $500,000 you invest.
You and I both know an income stream like that is a very nice head start to a well-funded retirement.
And it’s totally scalable: Got more? Great!
We’ll keep building up your income stream, right along with your additional capital.
And you’ll never have to touch your nest egg capital – which means you won’t have to worry about or running out of money in retirement, or even the day-to-day ups and downs of the stock market.
The only thing you need to concern yourself with is the security of your dividends.
As long as your payouts are safe, who cares if your stock prices swing up or down on a given day?
Most investors know this is the right approach to retirement.
Problem is, they don’t know how to find 8%, and 10% yields to fund their lives.
And when they do find high yields, they’re not sure if these payouts are safe. Will the company or fund have enough cash flow to pay the dividends into the future?
And how sensitive are these payouts to the latest headline, Fed policy change or unrest on the other side of the globe?
We’ll talk specific stocks, funds and yields in a moment.
But first, a bit about myself.
My name is Brett Owens. I first started trading stocks in college, between classes at Cornell.
I graduated cum laude with an industrial engineering degree — which is actually pretty popular with Wall Street recruiters.
But I couldn’t stand the thought of grinding it out in a cubicle for 80 hours a week. So I moved to San Francisco and got into the tech scene.
A buddy and I started up two software companies that serve more than 26,000 business users.
The result was a nice chunk of change coming in … and I had to decide what to do with my money.
I had seen plenty of young “techies” come into sudden cash and burn through their windfall in a year, ending up right back where they started.
That was NOT going to be me. I already had dreams of living off my wealth one day, decades before I retired.
I got plenty of cold calls from brokers wanting to “help” me. But I knew that nobody would care as much about my money as me.
So I went out on my own and invested my startup profits in dividend-paying stocks.
I’ve been hunting down safe, stable and generous yields ever since, growing my wealth with vehicles paying me 8%, 9%, even 10%+ dividends.
Over the past 10+ years, I’ve been writing about the methods I use to generate these high levels of income.
Today I serve as chief investment strategist for Contrarian Income Report — a publication that uncovers secure, high-yielding investments for thousands of investors.
Since inception, my subscribers have enjoyed dividends 5 times (and much more!) the S&P 500 average, plus big annualized gains!
And that brings me to a crucial piece of advice…
The ONE Thing You Must Remember
If I could leave you with just one nugget of investing wisdom today, it would be to NEVER overlook the incredible wealth-building power of dividends.
Few investors realize how important these unglamorous workhorses actually are.
Here’s a perfect example…
If you put $1,000 in the dividend-paying stocks of the S&P 500 back in 1973, you would have had $96,970 by the end of 2024, or 97x your money.
But the same $1,000 in the non-dividend payers would have grown to just $8,990 — 91% less.
That’s why I’m a dividend fan.
The stock market is a fantastic wealth-building machine, but it doesn’t always go straight up!
There have been plenty of 10-year periods where the only money investors made was in dividends.
And that’s what gives us dividend investors such an edge.
When you lock in an 8%+ yield, you’re booking an income stream that’s bigger than the stock market’s long-term average return right off the bat.
Of course you can’t just buy every ticker symbol out there with a flashy yield, or you’ll get burned pretty fast.
So let’s wipe the false promises of mainstream finance from our minds and start thinking the “No Withdrawal” way…
Step 1: Forget “Buy and Hope” Investing
Most half-million-dollar stashes are piled into “America’s ticker” SPY.
The SPDR S&P 500 ETF (SPY) is the most popular symbol in the land. For many 401(K)’s, this is all there is.
And that’s sad for two reasons.
First, SPY yields just 1.1%. That’s $5,500 per year on $500K invested… poverty level stuff.
Second, consider a hypothetical year when, say, SPY fell 20%, not at all out of the question, given the multiyear run stocks have been on. Just from that alone, your $500K would be slashed to $400K.
SPY was down nearly 20% that year. That is no bueno, because that $500K would have been reduced to $400K.
The last thing we want to do is lose the money we’re getting in dividends (or more) to losses in the share price. Which is why we must protect our capital at all costs.
Step 2: Ditch 60/40, Too
The 60/40 portfolio has been exposed as senseless.
Retirees were sold a bill of goods when promised that a 60% slice of stocks and 40% of bonds would somehow be a “safe mix” that would not drop together.
Oops.
Inflation — plus an aggressive Federal Reserve, plus a (thus far) persistently steady economy — drop-kicked equities and fixed income before they went on a serious bull run in 2023, 2024 and into 2025 (with a brief interruption for the April “tariff tantrum.”)
It just goes to show that bonds are not the haven guaranteed by the 60/40 high priests. They could easily plunge just as hard (or harder) than stocks in the next economic crisis.
Just like they did in 2022 (sorry, we’re only going to spend one second on that disaster of a year). US Treasuries plunged, which resulted in the iShares 20+ Year Treasury Bond ETF (TLT) getting tagged.
Sure, it still paid its dividend. But even including payouts, the fund was down 31% — worse than the S&P 500. Ouch!
When stocks and bonds are dicey, where do we turn? To a better bet.
A strategy to retire on dividends alone that leaves that beautiful pile of cash untouched.
Step 3: Create a “No Withdrawal” Portfolio
My colleague Tom Jacobs and I literally wrote the book on a dividend-powered retirement.
In How to Retire on Dividends: Earn a Safe 8%, Leave Your Principal Intact, we outline our “no withdrawal” approach to retirement:
Save a bunch of money. (“Check.”)
Buy safe dividend stocks with big yields
Enjoy the income while keeping the original principal intact.
To make that nest egg last, and our working life worthwhile, we really need yields in the 7% to 10% range. We typically don’t see these stocks touted on Bloomberg or CNBC, but they are around.
Of course, there are plenty of landmines in the high-yield space. Some of these stocks are cheap for a reason. Which is why we need to be contrarian when looking for income.
We must identify why a yield is incorrectly allowed to be so high. (In other words, we need to figure out why the stock is priced so cheaply!)
As I write, the top 10 payers in my Contrarian Income Report portfolio yield about 11.4% on average.
On every million dollars invested, this dividend collection is spinning off an incredible $114,000 every single year!
And you don’t have to be a millionaire to take advantage of this strategy.
A $750k nest egg would generate $85,500 annually…
$500K could hand you $57,000…
You get the idea.
The important thing is that these yields are safe, which creates stability for the stock (and fund) prices attached to them.
We want our income, with our principal intact.
It’s really the only way to retire comfortably, without having to stare at stock tickers all day, every day.
Now, many blue-chip yields are reliable. They just need to hit the gym and bulk up a bit. Here’s how we take perfectly good, yet modest, dividends and make them into braggarts.
Step 4: Supersize Those Yields
Mastercard (MA) is a near-perfect dividend stock. Its payout is always climbing, having nearly doubled over the last five years. (MA shareholders, you can thank every business that accepts Mastercard for your “pennies on every dollar” rake.)
Tap, tap, tap. Remember cash? Me neither. Another 2020 casualty, with Mastercard making a few dimes or dollars on every plastic transaction.
The cashless trend has been in motion for years. But international growth prospects remain huge. Just a few years ago, 80%+ of transactions in Spain, Italy and even tech-savvy Japan were in cash.
We expect more dividend hikes as more cash turns to plastic. Or skips plastic entirely and goes straight to e-transfers. Mastercard and close cousin Visa (V) nab a nice piece of that action, too.
The only chink in MA’s armor? Everyone knows it is a dynamic dividend stock. So it only yields 0.6%. Investors keep bidding it higher, knowing that the next dividend raise is just around the corner.
So, the compounding of those hikes makes MA a great stock for our kids and grandkids. You and I, however, don’t have the time to wait for 0.6% to grow. And $3,000 on a $500K investment simply won’t get it done.
Let’s instead consider top-notch closed-end fund (CEF) Gabelli Dividend & Income Trust (GDV), managed by legendary value investor Mario Gabelli.
Mastercard is one of Gabelli’s largest holdings. But we income investors would prefer GDV because it boasts a healthy dividend right around 6.4%, paid monthly, nearly 13 times what Mastercard pays (and this is low in CEF-land; other funds, like the next one we’ll talk about, pay nearly double that).
And as I write this, thanks to the conservative folks who buy CEFs, we have a rare opportunity to buy Mario’s portfolio for just 88 cents on the dollar.
Yup, GDV trades at a 12% discount to its net asset value, or NAV. It’s a way to boost MA’s payout and snag a discount, too.
Where does this discount come from?
CEFs are like their mutual fund cousins, with one exception: they have fixed pools of shares, so they can (and do) trade higher and lower than their NAVs, or “fair” values (the value of their holdings minus any debt).
As contrarians, we can step in when they are temporarily out of favor, like after a pullback, when liquidity is low, and buy them at generous discounts.
GDV holds more blue-chip dividend payers alongside MA, such as American Express (AXP), Microsoft (MSFT) and JPMorgan Chase & Co. (JPM). And with GDV, we have an opportunity to purchase them at a 12% discount.
These high-quality stocks wouldn’t normally qualify for our “retire on $500K” portfolio because everyone in the world knows they are strong long-term investments.
Even though these companies are constantly raising their dividends, constant demand for their shares keeps their prices high (and current yields low). So they never meet our current-yield requirement.
GDV does. The fund pays a monthly dividend that adds up to a nice 6.4% annual yield.
Let me give you one more idea (and this is where that much larger payout comes in): the Eaton Vance Tax-Managed Global Diversified Equity (EXG) is another CEF with a similar blue-chip dividend portfolio.
But EXG generates even more income than GDV by selling covered calls on the shares it owns.
More cash flow means a bigger dividend — and EXG pays an already terrific 8.6%!
So we buy and hold EXG and GDV forever, collecting their monthly dividends merrily along the way? Not quite.
In bull markets, these funds are great. But in bear markets, they’ll chew you up.
Step 5: Protect That Principal!
My CIR readers will fondly recall the 15 months we held GDV and EXG together, collecting monthly dividends plus price gains that added up to 43% total returns.
What was happening in that period, from October 2020 until February 2022? The Federal Reserve was printing money like crazy. Not only did the Fed stoke inflation, but we also enjoyed an asset-price lift.
Starting in 2022, we had the opposite situation. The stock market was topping, and we didn’t want to fight the Fed. We sold high, and by late 2022, both funds were down sharply:
We Sold EXG and GDV Just Before They Plunged
For whatever reason, “market timing” is a taboo phrase among long-term investors. That’s a shame because it’s quite important.
By aligning our dividends with the market backdrop, we can protect our principal from bear markets.
Step 6: Start Here to Retire on $500K
So if the “tried and true” money advice — like the 60/40 portfolio and the 4% rule — has been properly exposed as broken…
Where do we go from here?
Well, imagine your portfolio in just a few days or weeks from now spinning off 8%, 9% and even double-digit dividends with the reliability of a Swiss watch… with many of my recommendations paying every single month no less!
No more worrying how much is coming in next month.
No more worrying about the Fed’s next move. Or the next inflation or jobs report.
For me, the best way to make an abundant passive income is by buying dividend shares. Share prices continue to rally, which means dividend yields are moving in the other direction. Yet there are still stacks of terrific companies with sky-high yields to choose from.
But what about if you’re searching for double-digit dividend yields? No problem. Take the following three stocks: The Renewables Infrastructure Group (LSE:TRIG), Octopus Renewables Infrastructure Trust (LSE:ORIT), and JPMorgan Nasdaq Equity Premium Income ETF (LSE:JEPQ). Each has a forward dividend yield above 10%, and a long record of paying market-beating cash rewards.
And I’m confident they can continue delivering brilliant income streams to investors. Want to know why?
Image source: Getty Images
Tech titan
Exchange-traded funds (ETFs) can be a great way to source a passive income. These can hold a wide variety of assets, helping to protect shareholders from individual shocks and providing a smoother return.
The JPMorgan Nasdaq Equity Premium Income ETF — which has a 10.8% dividend yield — is one such diversified fund to consider. It holds Nasdaq 100 US tech stocks which it then sells covered calls on. When out-of-the-money call options are sold, the income is paid to investors in dividends.
It’s a more complicated way to make income from the stock market. A focus on growth shares also means the fund could drop sharply in value during economic downturns. Yet over time, the ETF has proved a great dividend generator and one I expect to keep outperforming.
Renewable energy giant
Investment trusts that focus on renewable energy are another top income source to consider. This is because interest rate pressures and worries over a slower-than-expected green transition have pushed prices lower, supercharging dividend yields.
Octopus Renewables Infrastructure Trust now carries a 10.5% forward dividend yield. Could it rebound in value soon? I think so, with further Bank of England interest rate cuts on the horizon.
There’s a lot I like about the trust from a dividend perspective. Like other electricity producers, its operations are highly defensive and provide a steady flow of cash that can be returned to shareholders. I also like its wide, Europe-wide geographic footprint — this doesn’t eliminate the threat of weather-related disruptions, but it lessens the danger as localised calm conditions have a smaller impact on total power production.
An income stock I own
The Renewables Infrastructure Group is a renewable energy stock I’ve actually bought for my portfolio. And with a 10.7% forward yield, it’s one I think investors should seriously consider.
Why did I plump for this particular operator, you ask? With more than 80 assets on its books, it has an even wider footprint to protect against isolated operational problems. These are also spread across Europe, but that’s not all — its portfolio comprises onshore and offshore wind farms, solar projects, and battery storage assets, meaning it’s also well diversified by technology.
Lower electricity prices have been a problem of late. I’m confident, though, it will remain a robust passive income generator and that it’s share price will rebound following recent weakness.
My name is Brett Owens. I first started trading stocks in college, between classes at Cornell.
