If you align the Bank Rate (2016–2025) with the SUPR stock price (2017–2026):
Period
Bank Rate Trend
SUPR Price Reaction
2016–2020
Flat near 0.5%, then drops to ~0%
SUPR stable and gradually rising
2021–2023
Rapid increase from ~0% to >5%
SUPR peaks early 2022, then collapses sharply
2024–2025
Gradual decline from ~5% to ~3.5%
SUPR stabilizes and begins modest recovery
📊 Interpretation
The inverse relationship is striking: as the Bank Rate surged, SUPR’s price fell dramatically.
This reflects interest rate sensitivity typical of REITs — higher rates raise borrowing costs and reduce property valuations.
When rates began easing in 2024–2025, SUPR showed tentative recovery, suggesting investor optimism returning with lower yields.
Markets look ahead, the expectation is that interest rates will rise because of the oil price. Not a given but it’s the glorious uncertainty of owning stocks and shares.
Current yield 7.5%, a buy for the SNOWBALL but could you get 8% ?
Kyle Caldwell names the passive strategies that have caught the eye by outperforming many fund managers over the past five years
13th May 2026 13:42
by Kyle Caldwell from interactive investor
Some stock markets prove to be a tough nut for active managers to crack.
The S&P 500 index, for example, is notoriously difficult for fund managers to consistently beat, given that it is the most widely researched and followed index.
By the same token, active fund managers who invest in small companies tend to have a greater percentage of outperformers. Smaller stocks tend to be more volatile and less well researched than large companies, which gives active managers a better chance of beating a benchmark that simply owns stocks according to their size.
Below, we name passive strategies that have caught the eye by outperforming many fund managers over the past five years.
L&G Global 100 Index Trust
Over multiple time periods – one, three and five years – L&G Global 100 Index Trust has produced top-quartile performance in the Investment Association’s (IA) global fund sector, according to FE Fundinfo. As at 12 May 2026, the fund’s five-year returns show a gain of 128.6% versus 50.8% for the global sector average.
The key reason for the outperformance is the make-up of the S&P 100 index that the L&G Global 100 Index Trust tracks.
The index holds multinational blue-chip companies of major importance in global equity markets. Companies included in the underlying index are screened for global exposure, sector representation, liquidity and size. Stocks with relatively larger sizes and higher liquidity are preferred.
In common with most indices, the S&P 100 is market-cap weighted, ranking companies by their size and share price success.
The market cap of a company is the total number of shares in existence multiplied by the price of those shares. If a company’s share price goes up relative to other members of the index, it will represent a higher percentage of the index.
The end result for L&G Global 100 Index Trust is that this index has significant weightings in US technology behemoths that have delivered exceptional performance for most of the past decade.
As at the end of March, L&G Global 100 Index Trust had around 40% of its assets in four US tech stocks: NVIDIA Corp
Investors need to question whether the outperformance of Big Tech can continue, as well as if they are comfortable with those stock weightings.
Other global trackers topping the charts
Over the past five years or so the performance of global and US stock markets has been heavily influenced by a small number of very large stocks – primarily the US tech giants.
This has made the period a challenging environment for active fund managers – particularly those who hold less exposure than the index in these companies, the likes of Amazon, Apple, Alphabet Inc Class A GOOGLand Microsoft.
In the US, there’s been similar levels of outperformance for passive strategies that track the ups and downs of the S&P 500 index. Over five years, the iShares Core S&P 500 ETF GBPH Dist GSPX
have both returned around 100% versus 72.2% for the IA North America sector.
Over other time periods (three months, six months, one year and three years), the duo have outpaced the sector average. Both charge just 0.07% a year.
As you would expect, the same stocks are held, with the top 10 biggest positions being Nvidia, Apple, Microsoft, Amazon, Alphabet (two share classes held), Broadcom Inc AVGO
Over one, three and five years Vanguard FTSE UK Equity Income Index, has had the upper hand over the IA UK equity income sector average, up 31.6%, 64% and 92.4% against 15.2%, 35.7% and 47.1%.
The index it follows – the FTSE UK Equity Income index – consists of shares “that are expected to pay dividends that generally are higher than average”.
Therefore, its performance and income generation is heavily influenced by the biggest FTSE 100-listed dividend stocks. Its top 10 holdings account for around half the portfolio, while financials account for a quarter of assets. In total, 110 stocks are held, and the top three positions currently are BP BP.
Last, but by no means least, the Vanguard LifeStrategy fund range has consistently outperformed most actively managed multi-asset funds since it launched over a decade ago.
Vanguard’s ready-made portfolios hold a collection of its own index funds and ETFs. Each of the five LifeStrategy funds holds a different proportion of shares, ranging from 20% to 100%, with the remainder in bonds. Three of the funds; the 20% Equity, 60% Equity and 80% Equity versions form part of interactive investor’s Quick-start Funds range that offers a simple starting point for investors.
In 2022, the five funds in the range didn’t perform in line with their risk level, as the 20% version produced the biggest losses, followed by the 40%, 60%, 80% and 100% options. This was due to sharp interest rate rises, which caused bond prices to fall, meaning the LifeStrategy funds with greater exposure to bonds saw their performances suffer more.
Over five years, three of the five funds in the range have outperformed their most relevant IA fund sector.
Source: FE Analytics. Data to 12 May 2026. Past performance is not a guide to future performance.
The low costs, with each fund having an ongoing charges figure (OCF) of only 0.2%, make it challenging for actively managed multi-asset funds to beat them. A typical OCF for an actively managed multi-asset fund is around 1%, while multi-manager funds, which invest in other funds, tend to be even more expensive, typically around 1.2% to 1.5%.
From a global recession to stagflation, we offer dynamic and robust portfolios to cover all eventualities
Published on May 14, 2026
by Julian Hofmann
Table of contents
Why scenarios beat predictions
What to do with your portfolio at a time of uncertainty is the hardest question in investing, and the honest answer is that it depends on which world you find yourself in. Pretending otherwise at a time when a single social media post can erase (or restore) billions of market value in an afternoon would be wilfully blind.
The current period of rapidly changing market conditions would tax the portfolio management skills of even the most experienced investor. The core problem is that markets are not really pricing in a single outcome in which investors can have much confidence.
Instead, they are oscillating between several incompatible ones: a negotiated de-escalation of trade tariffs; a protracted stand-off in the Middle East; a potential escalation in eastern Europe; a US dollar decline; and a higher-for-longer interest rate environment that punishes long-term positions. Each of these outcomes is possible, but we cannot anticipate them all at once. For retail investors, this is a paralysing problem, and it is tempting to do nothing and hope the fog lifts.
But sitting still may not prove foolproof, either. The past three years have been characterised by higher interest rates, an AI-driven US stock market boom and a general assumption that inflation would stay at manageable levels. A portfolio that worked well through that period is, by default, a bet on the specific combination of economic and investment conditions that prevailed during that time. Can anyone now champion these assumptions with confidence?
If not, the uncomfortable question is: what is your current portfolio relying on, and would you have consciously chosen this stance at the outset? The useful response to elevated uncertainty is not to attempt predictions, but to understand which scenario your existing allocation is implicitly positioned for, and to ask whether one or two modest adjustments might improve its resilience.
Why scenarios beat predictions
Volatility is an unavoidable part of investing, but the current backdrop feels more destabilised than at any time since the end of the cold war.
The World Uncertainty Index, constructed by Hites Ahir and Davide Furceri of the IMF together with Stanford’s Nicholas Bloom, demonstrates the turbulence of the past decade, with major spikes around Brexit, the Covid-19 pandemic and the second Donald Trump presidency (see chart below).
In fact, it is entirely possible that the so-called ‘Great Moderation’ from 1990 to 2008 was the exception to the rule, and that a permanent state of uncertainty and instability is in fact the new ‘normal’. In which case, preparing conceptually for several different scenarios should be a key mental discipline for investors.
Achieving sustained insight means assessing risk dispassionately. Investors have traditionally relied on smoke signals from the bond market to forecast trouble ahead. However, part of the current problem is that this market may no longer be transmitting reliable information, due to surging sovereign debt loads pushing yields higher for structural, rather than purely economic, reasons.
For example, in its latest Fiscal Monitor report, the IMF estimates that global public debt was just under 94 per cent of world GDP in 2025 and is on course to reach 100 per cent by 2029, with the accumulation driven largely by the world’s major economies.
Indeed, the market historian Russell Napier argues that investors cannot rely on the signals from bond yields for the next 15 years or so. His reasoning is that government debt levels are now so high that they require inflation to erode them. He thinks the ‘financial repression’ investors experienced after 2008, whereby interest rates were kept lower than the rate of inflation, is now an embedded part of the financial system.
Investors do not need to accept every implication that Napier draws to take the underlying point seriously: if sovereign bond yields no longer transmit a reliable price signal, a portfolio built on assumptions to the contrary is taking a position that is not consciously chosen.
This reinforces the theoretical point that is less often stated but still important. A portfolio built for one economic outcome is, by definition, an unhedged bet on that outcome materialising.
Generally, the assumed correlations between asset classes bear weight: equities rise, bonds cushion, the ‘60/40’ equity/bond portfolio works as envisioned. However, in abnormal times, those correlations invert without warning and investors discover, usually too late, that they were never really diversified at all.
Investors’ Chronicle
The Five Portfolio Scenarios
Portfolio one: Stagflation
Inflation is sticky, growth stalls, and the two halves of a balanced portfolio fail
This is the scenario that often arrives in the wake of an external crisis (such as an oil shock that does not easily unwind). It leads to rising wage demands at the same time as output stumbles. What is so damaging about stagflation is that inflation does not need to return to double-digit levels to do serious damage: it simply needs to stay above target while activity weakens.
When inflation is high and rising, the negative correlation between equities and government bonds turns positive, meaning both suffer and the 60/40 portfolio no longer works.
In this scenario, inflation-linked gilts provide more ballast than conventional gilts, although they too can be caught out if base rates rise faster than markets expect. Another option would be selectively chosen infrastructure and resources funds. Indeed, this is when energy and broad commodities exposure earns its keep, despite being uncomfortable to hold in any other scenario.
On the equities side, the choice narrows to those companies that can pass cost inflation on to customers without losing them, which is a far smaller universe than generally advertised. This increases the case for holding stalwarts such as AstraZeneca (AZN) or Unilever (ULVR) that anchor a portfolio, precisely because these companies can still increase earnings when turnover is flat.
The history of the 1970s stagflationary period shows that it was brutal, but not uniformly so. The pain was certainly concentrated: the FT30 (the precursor to the FTSE 100) lost roughly three-quarters of its value between May 1972 and December 1974, a worse absolute fall than the UK market suffered during either world war or the Great Depression.
Gilts suffered in real terms, with UK inflation hitting 25 per cent in 1975 and savers watching the purchasing power of fixed coupons evaporate. The winners were the assets the typical British investor of the time either could not access or actively distrusted.
Gold rose from $35 an ounce when the US abandoned the gold peg in 1971 to around $850 by January 1980, comfortably outpacing inflation. Broad commodity baskets, as measured by the S&P GSCI index, returned more than 580 per cent over the decade.
Portfolio two: Soft landing
The Federal Reserve cuts rates once or twice, tariff damage is absorbed, earnings hold up
This was the consensus scenario at the start of 2026, so by definition the one most open to disappointment. A soft landing would require consumer prices not to climb too much due to tariffs or supply shocks and trade negotiations to grind their way to bilateral deals, while central banks deliver two or three more base rate cuts.
The temptation in this scenario is to assume that what worked over the past three years will continue to work. The main weakness in this assumption is that returns have been driven by a handful of US megacap technology shares trading at high multiples.
For example, the S&P 500 is on a forward price/earnings (PE) ratio of roughly 21 times, according to FactSet, above its 10-year average of around 19, and that headline figure flatters the picture as the largest constituents trade considerably higher.
A soft landing may not mark the return to an indiscriminate risk-on environment; instead it may mean the conditions under which neglected value shares come back into focus. Currently, that points towards European equities, where the Stoxx Europe 600 trades on a more forgiving forward multiple of around 14.5, according to FactSet.
The case for holding the UK in a soft-landing scenario is sharper still. The FTSE 100, on a forward PE ratio of 12.6 with a dividend yield over 3 per cent, has trailed the S&P 500 consistently over the past decade. The gap has narrowed over the past 18 months, but is still wide enough that even a modest mean reversion would have a material effect.
The FTSE 250 is the more interesting prospect for those willing to take domestic risk. The mid-cap index continued to lag its larger counterpart last year (see chart below), and on a FactSet forward PE ratio of around 12 against a long-run average closer to 15, it sits at a relative discount to its own performance.
The bond side of the portfolio benefits gently rather than dramatically in this scenario. Central bank policy that delivers modest rate cuts will pull gilt prices up by enough to deliver a respectable total return.
Investment-grade corporate bonds benefit from the same dynamic, with spreads relative to government debt compressing as recession risk fades. The running yields on offer at the start of 2026 – sterling corporate bond funds were distributing around 5 per cent – provide a cushion that did not exist for most of the past decade.
Cash is the loser here in this scenario, in relative terms. The 4 per cent cash yield that competes credibly with equity risk in a ‘higher-for-longer’ interest rate scenario starts drifting back towards 3 per cent as the rate-cutting cycle proceeds; the common investor mistake is to stay too long in cash on the way down.
The structural hedge worth carrying is a deliberate tilt away from the US. Tracker fund drift (global benchmarks now have 60-70 per cent of assets in the US) has left most UK retail portfolios more US-exposed than the holders would consciously choose if asked, and a soft landing is not a reason to stay there by accident.
Portfolio three: Recession
Tariffs and the Strait of Hormuz closure bite, consumer confidence slumps, earnings disappoint
A recessionary scenario is unusual in that it requires two portfolios at once – a defensive one for the next 18 months and an opportunistic one for the period after. The investors who do badly in recessions are not those who fail to predict them, but those who treat the defensive phase and the subsequent deployment phase as the same problem.
Capital preservation dominates the first phase. Short-duration fixed income earns its keep again, after a decade in which it was barely worth owning. Cash finally pays and defensive sectors, such as consumer staples, utilities and parts of healthcare, do the income work that the textbooks promise they will, with the caveat that valuations within them are now uneven enough to require genuine stockpicking. This is also where conventional gilts become a genuine income option again, as their negative correlation with equities reasserts itself.
Understanding the deployment phase
Recessions produce bargain prices that make 20-year compounding possible, but only for investors with the cash, the discipline and the time horizon to act on them. Holding 10 per cent of your portfolio in instruments that can be deployed quickly is not dramatically strategic, but it allows the next decade’s returns to be earned at sensible prices.
It is worth noting that two assets behave less obviously than the textbooks suggest in a recession scenario.
Gold’s recession record is more mixed than its reputation implies. The metal has tended to perform strongly in inflationary recessions and crisis periods but can drift sideways or fall in conventional downturns, when real yields rise and the US dollar strengthens as a haven asset. A modest position is defensible as a tail-risk hedge, but should not be confused with the recession-proofing role that conventional gilts can perform in its place.
Non-US equities are the other consideration that deserves attention. The most vulnerable market at the start of a sell-off will depend on which sectors are at the centre of the shock in question. But as a general rule, other markets tend to start from cheaper valuations and recover faster.
This makes them the natural home for capital being deployed in the second phase. UK and European mid-caps have historically been among the most rewarding hunting grounds for investors who have the patience to buy throughout the bottom, rather than waiting for confirmation that a recovery has arrived.
Portfolio four: Dollar decline
A structurally weaker dollar changes the total returns on offer from US assets, without anything happening to underlying businesses
This scenario is already partially under way, although less dramatically than much news coverage suggests. The US dollar is meaningfully softer than the 2022-23 cycle, but talk of collapse mistakes a multiyear drift for a rout (see chart below).
The structural point matters more than the precise level of the dollar. As mentioned, UK retail portfolios have become more US-exposed than many holders would consciously choose. This is due to the simple mathematics of letting Wall Street’s outperformance compound inside a default global index allocation.
However, the Investment Association’s full-year 2025 data, published in February, shows the picture beginning to shift. UK retail investors pulled £4.8bn from global equity funds in 2025, with North American equities suffering £2bn of redemptions in the second half alone, while European equity funds attracted net inflows of £761mn, in what could be the first signs of conscious geographical reallocation rather than a passive drift.
The response to the dollar problem takes different forms. Gold has historically been negatively correlated with the currency. But the metal’s soaring price – last year was its strongest annual performance since 1979, driven by sustained central bank buying and sovereign debt anxiety – raises the risk of a reversal even in a scenario where the dollar keeps weakening.
For income investors who want to reduce their currency risk, sterling-denominated bonds now offer a genuine alternative in this scenario. Ten-year gilt yields are above 5 per cent, the highest level this century, and sterling investment-grade corporate bond funds are typically paying around this level, too.
Portfolio five: Interest rates stay higher for longer
Rates remain elevated, the cutting cycle is shallow, long bonds are a trap
This is the scenario in which cash genuinely competes with equity risk, which inverts the past decade of investor experience. It does not require a rebound in inflation, just for it to persist above target, leaving central banks unable to cut for fear of stoking further price growth.
It is in this context that the Bank of England and the Federal Reserve have both signalled that the floor for rates during the current cycle may be higher than during the post-2008 period.
The portfolio implications are uncomfortable for anyone whose mental model was set between 2009 and 2021. Cash and money market instruments are a changed asset class because, with a yield of 4 per cent or more, they compensate for a corresponding underperformance in equities, as the discounted rate of future cash flows suffers from higher-for-longer interest rates. Short-duration bonds can also play a role.
The other important asset class in this scenario is long-duration bonds, but only in the sense that investors should be wary of them as long as rates remain higher. These will remain a value trap until a sharp fall in interest rates raises their prices.
The structural hedge here is a modest gold allocation, not because gold competes with cash on yield, but because the higher-for-longer scenario is arguably also the one in which the institutional framework supporting those cash interest rates comes under the most strain. If political pressure for rates to ease increases and central bank credibility starts to fray, inflation expectations can rise, and cash is the asset that suffers first.
The five scenarios are not equally probable, but the test of a portfolio is not whether it passes the most likely scenario, but if it survives all of them at an acceptable cost.
Looking across the framework, two assets earn their place in three of the five future scenarios. Gold works in stagflation, dollar decline and higher-for-longer rates scenarios, and serves as tail-risk insurance in a fourth. Short-duration fixed income does well in recessions, dollar decline and higher-for-longer rates. Neither asset is particularly glamorous. But equities, and their unrivalled potential for long-term compounding, should not be forgotten. The possibility of geographical exposure outside the US market is also a serious option for investors looking for stockpicking options during downturns.
The honest answer to what investors should do remains: it depends on which world emerges. By organising according to scenarios, at least the portfolio that arises is the result of conscious decisions.
Recessions produce bargain prices that make 20-year compounding possible, but only forinvestors with the cash, the discipline and the time horizon to act on them. Holding 10 per cent of your portfolio in instruments that can be deployed quickly is not dramatically strategic, but it allows the next decade’s returns to be earned at sensible prices.
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.
When we see a dividend stock with a forecast yield as high as 10.3%, it can be wise to be suspicious. It often means something has gone wrong with the company, and investors don’t trust the dividend. Dividend cuts and share price falls are often the outcome.
In this case, I’m talking about Greencoat UK Wind (LSE: UKW), and an interesting thing has been happening. Its share price has risen 10% since a 2026 low point in February.
It’s still down more than 20% over the past five years, but it does seem investors are taking a renewed interest in it. Let’s dig a bit deeper.
How does the dividend look?
Delivered a 12th consecutive year of dividend increases with or ahead of inflation
— Lucinda Riches C.B.E.
That quote is from the board chair, at full-year results time in February. It can’t be coincidence that that’s when the share price gains started.
The update also told us the “dividend policy will now be to aim to provide shareholders with an annual dividend that increases in line with CPI inflation“. That means a target of 10.7p per share in 2026, with the company aiming for long-term cover of two times by earnings.
The company made share buybacks of £109m too, and reduced its debt principal by £168m. Does this sound like a dividend stock that’s short of cash? No, I don’t think so, either. The feared cuts might be nothing to worry about after all.
Renewable energy struggles
It’s not all sweetness and light at Greencoat, however. And the main problem seems to be falling asset values, as the desire for renewable energy has waned under a political redirection towards oil.
At FY 2025 results time, Riches also spoke of “significant divestments” during the year. She added that capital plans for 2026 include “further divestments, reducing gearing, continuing share buybacks and a disciplined return to reinvestment“.
The following table shows how dividends have been rising over the past five years, but year-end net asset value per share (NAV) has been falling since 2022.
Year
2021
2022
2023
2024
2025
2026
Dividend
7.19p
7.72p
10p
10p
10.35p
10.7p (est)
NAV
133.5p
167.1p
164.1p
151.2p
133.5p
The company, structured as a real estate investment trust (REIT), has strict debt management policies. That includes a limit on aggregate debt of no more than 40% of gross asset value at the time of drawing. The figure stood at 42% at 31 December — still within covenants, but clearly making investors a bit twitchy.
What should investors look for?
It seems a shame to me that Greencoat, while generating strong cash flow and paying increasing dividends, needs to dispose of some of the very assets its cash depends on.
Still, I expect we’ll see better focus in the future, retaining higher-valued assets. And I have little doubt that renewable energy will return to favour — hopefully before too much longer.
Despite the market’s apparent misgivings, I rate Greencoat UK Wind as a long-term dividend stock definitely worth considering.
The Second Interim Dividend of 2.25 pence per Ordinary Share (May 2025: 2.20 pence per Ordinary Share) will be payable to Shareholders on the register as at 22 May 2026, with an associated ex-dividend date of 21 May 2026 and a payment date on or around 15 June 2026.
Formal Sale Process
The Formal Sale Process continues to progress in line with expectations, and the Board will make further updates when appropriate. There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made.
TRIG
The Renewables Infrastructure Group Limited
Interim Dividend
The Renewables Infrastructure Group Limited (the “Company”) is pleased to announce the first quarterly interim dividend in respect of the three month period to 31 March 2026 of 1.8875 pence per ordinary share (the “Q1 Dividend”). The shares will go ex-dividend on 21 May 2026 and the Q1 Dividend will be paid on 30 June 2026 to shareholders on the register as at the close of business on 22 May 2026.
For as long as the Company’s shares trade at a discount wider than 10% to NAV, the Board does not intend to offer a scrip dividend alternative
All ServicesStock Advisor Plus Fool PortfoliosFool
7 Best ETFs to Buy in May 2026
Exchange-traded funds tend to be less volatile than individual stocks and provide exposure to a broad range of opportunities.
By Matthew DiLallo – Updated May 6, 2026 at 12:34 PM EST | Fact-checked by Frank Bass
Key Points
ETFs offer a diversified investment option, reducing risk compared to individual stocks.
Low expense ratios in ETFs like Vanguard S&P 500 (0.03%) enhance investor returns.
ETFs like the Schwab U.S. Dividend Equity ETF provide exposure to high-yielding stocks with growth potential.
Exchange-traded funds (ETFs) are investment vehicles that trade like a stock but give investors ownership of a broad range of stocks or other assets. ETFs offer investors an appealing alternative to owning individual stocks. They can also be great complements to an investor’s stock portfolio.
An exchange-traded fund, or ETF, allows investors to buy many stocks or bonds at once.
There are all kinds of ETFs available. Some track major indexes, such as the S&P 500 or the Nasdaq Composite. Others give investors exposure to specific regions, such as China or emerging markets. And some ETFs concentrate on certain sectors, such as technology or banking, or specific types of stocks, like dividend or growth stocks.
Image source: The Motley Fool.
In a challenging market environment, ETFs can help reduce the risks of owning an individual stock, as they tend to be less volatile. Although they’re similar in principle to mutual funds, they’re easier to buy and trade than typical mutual funds and tend to have lower fees. If you’re looking for ETFs to invest in, keep reading to see seven of the best.
Top seven ETFs to buy now
There are hundreds of ETFs to choose from. Here are seven of the best ETFs to buy this month.
Vanguard created the index fund. If you’re looking for an S&P 500 index fund, the Vanguard S&P 500 ETF (VOO+0.55%) is hard to beat. It offers an ultra-low expense ratio of just 0.03%, compared to the 0.23% average for similar funds. This lower expense ratio means that, for every $10,000 invested in the fund, investors will pay just $3 in annual fees, versus $23 in a typical competing fund.
The Vanguard S&P 500 ETF is one of the largest and most popular ETFs. It was the largest ETF by assets under management (AUM) in May 2026. The ETF’s combination of low costs and large size makes it an excellent choice for investing in the broader market. Because of its history, diversification, and exposure to blue chip stocks, many investors consider it one of the best ETFs to buy and hold.
The S&P 500 has an excellent track record of delivering returns for investors. Over the last 50 years, the average stock market return, as measured by the S&P 500, has been 8% with dividends reinvested. The Vanguard S&P 500 ETF is a low-cost way to capture the market’s returns.
If you’re looking to gain exposure to big tech stocks, Invesco QQQ Trust (QQQ+1.06%) is an excellent choice. The ETF tracks the Nasdaq-100 index, which includes 100 of the Nasdaq’s largest nonfinancial companies.
The top stocks in the ETF are Nvidia (NVDA+2.33%), Apple (AAPL+1.50%), Microsoft (MSFT-0.63%), Broadcom (AVGO-0.60%), and Amazon (AMZN+1.61%). As one of the best-performing ETFs, it boasts an affordable expense ratio of 0.18%.
As of May 2026, the Invesco QQQ Trust had generated a total return of around 580% over the past decade. A $10,000 investment made in this ETF 10 years ago would be worth more than $67,864 today.
The Nasdaq-100’s focus on innovative technology companies positions it to continue delivering strong total returns, especially as artificial intelligence (AI) accelerates growth in the tech sector in the coming years.
If you want to invest in growth stocks but don’t want to be an active stock picker, the Vanguard Growth ETF (VUG+1.10%) makes that easy. The ETF holds large-cap growth stocks and tracks the CRSP U.S. Large Cap GrowthIndex.
Like Invesco QQQ Trust and Vanguard S&P 500, the Vanguard Growth ETF’s biggest holdings are Nvidia, Apple, and Microsoft. The growth-focused ETF also held many other growth stocks among the roughly 150 companies in the fund as of May 2026. The Vanguard Growth ETF offers a rock-bottom expense ratio of just 0.03%. Its low cost makes it a good deal for anyone looking for a growth stock ETF.
The iShares Core S&P Small-Cap ETF (IJR-0.38%) provides broad exposure to small-cap stocks. Small caps tend to be more volatile than the broader market because they may be less profitable or less financially strong than their large-cap counterparts. As a result, small caps tend to be riskier during a downturn because they may not have the same access to capital.
This ETF helps mute some of that risk by holding a large basket of small-cap stocks. As of May 2026, it held around 640 stocks and had a fairly low concentration of holdings. Its top 10 holdings made roughly 6% of the total. The ETF has a very low expense ratio of 0.06%, making it a low-cost way to add some small-cap exposure to your portfolio.
Dividend stocks are great long-term investments. Over the last 50 years, dividend-paying companies outperformed nondividend payers by more than 2-to-1 (9.2% average annual total return versus 4.2% for nondividend payers). The best performance came from dividend growers and initiators (10.2% versus 6.9% for companies with no change in their dividend policy).
The Schwab U.S. Dividend Equity ETF (SCHD-0.03%) provides exposure to high-yielding U.S. stocks with a history of dividend growth. It tracks the Dow Jones U.S. Dividend 100, which measures the performance of 100 top dividend stocks based on several quality characteristics. Among its 10 largest holdings in early May 2026 were notable dividend payers PepsiCo (PEP-1.70%) and Chevron (CVX-0.04%).
The ETF offers a relatively attractive dividend yield. As of May 2026, it had a trailing-12-month yield of 3.4%, triple the 1.1% dividend yield of an S&P 500 index fund. And thanks to its low expense ratio of 0.06%, investors keep more of the ETF’s dividend income. The fund should also deliver price appreciation as the underlying companies grow their earnings and dividends.
Although the S&P 500 is considered a broad-market index, it gives you exposure to only 500 large-cap U.S. stocks. If you want to own all the stocks in the U.S. market, the best way to do it is through a total stock market fund such as the Vanguard Total Stock Market ETF (VTI+0.53%).
As of May 2026, the fund held more than 3,500 companies, including large-, mid-, and small-cap stocks. Because its holdings encompass the S&P 500, its largest positions are the same as for the broad market index.
Vanguard Total Stock Market ETF aims to track the CRSP U.S. Total Stock Market index. Like other Vanguard funds, its low 0.03% expense ratio makes it an affordable way to invest in the entire U.S. stock market through a single ETF.
7. iShares Core MSCI Total International Stock ETF
iShares Trust – iShares Core Msci Total International Stock ETF
Today’s Change
(1.04%) $0.98
Current Price
$95.60
If it’s international markets you want, the iShares Core MSCI Total International Stock ETF (IXUS+1.04%) is a good way to go. The fund derives its holdings from an MSCI global index and subtracts the U.S. listings. It holds about 4,160 stocks, including large-, mid-, and small-cap companies from around the world.
The ETF offers diversified international exposure. Its top five geographies as of May 2026 were:
Japan: 14.6% of the fund’s holdings
United Kingdom: 8.4%
Taiwan: 8.3%
Canada: 8.1%
China: 6.8%
The iShares Core MSCI Total International Stock ETF allows you to invest globally at an affordable expense ratio of 0.07%. It also has an attractive dividend yield of 3.2% based on the last 12 months of dividend payments (as of May 2026).
Tax considerations for ETFs
ETFs tend to be more tax-efficient compared to mutual funds. However, investors still need to keep taxes in mind when holding an ETF in a regular brokerage account.
Investors will pay two types of taxes on ETFs that hold stocks or bonds:
Taxes on income: ETFs that hold dividend-paying stocks must distribute the income from those dividends to investors at least once each year. The IRS taxes Qualified dividends at the lower federal long-term capital gains rates of 0%, 15%, or 20%, while taxing non-qualified dividends and interest income from bonds as ordinary income, up to 37%.
Taxes on capital gains: If you sell an equity or bond ETF, you’ll pay taxes on the gain depending on how long you held the fund and your annual income. ETFs held for more than a year get taxed at the lower federal long-term capital gains rates of 0%, 15%, or 20%. Meanwhile, the IRS taxes funds held less than a year at the short-term capital gains rate, which is the same as your ordinary tax rate (up to 37%).
Types of ETFs
There are several types of ETFs that investors can buy, including:
Broad index funds: Many of the largest ETFs track a broad market index, such as the S&P 500 or the Nasdaq-100. These funds enable investors to gain diversified market exposure through a single low-cost fund.
Sector ETFs: These ETFs focus on stocks in a specific stock market sector, such as technology, energy, or healthcare.
Asset-focused funds: These funds invest in a specific asset class, such as government bonds, dividend stocks, small-cap stocks, or commodities.
Thematic ETFs: Thematic funds invest in themes such as semiconductor stocks, artificial intelligence (AI), international stocks, or clean energy.
How to choose an ETF
You should evaluate the following factors when choosing an ETF:
Whether the investment strategy (i.e., growth, income, or specific theme) fits your needs
How the ETF’s expense ratio compares to similar funds
Its past performance compared to similar funds and its benchmark
Its size and trading volume versus other similar funds.
Whether it uses any leverage
Should you invest in ETFs?
Exchange-traded funds can work for almost any kind of investor, regardless of your investing style or the type of stocks you’re looking to invest in. Hundreds of ETFs offer exposure to a wide range of sectors and investment goals, including dividend and growth strategies. These funds have several benefits, including:
Potentially lower risk and less volatility compared to investing in individual stocks.
A passive investment with a low management fee.
Built-in diversification from day one.
Targeted investment in a trend or theme through a simple investment vehicle.
Liquidity (ETFs trade like stocks).
Very transparent investments.
A possible source of passive income, depending on the ETF’s investment strategy.
However, there are also some drawbacks to investing in ETFs that investors need to consider, including:
The higher management fees of some funds can eat into their returns.
Leverage and other factors can cause some funds to deliver poor long-term performance.
For most investors, holding at least one or two high-quality ETFs makes sense, especially if you want to eliminate some of the work of picking individual stocks. The list above offers a good starting point if you’re looking for the best ETFs to buy.
Tips for Investing in ETFs
Here are some practical tips and strategies for investing in ETFs:
Invest in a low-cost index fund to gain broad exposure to the stock market.
Avoid small ETFs (with assets under management of less than $200 million) due to their greater risk of manipulation and closure.
Look for ETFs with expense ratios well below 1%.
Use ETFs to target themes you believe will deliver long-term outperformance (e.g., AI-focused funds or clean energy ETFs).
Avoid most funds that use leverage to increase returns.
Use ETFs to increase your portfolio diversification (e.g., bond ETFs and international stock ETFs).
A 9.14% dividend yield turns a £100,000 portfolio into a £9,142.86 annual income. And reinvesting at that rate makes the returns go up quickly.
After 10 years, the annual return reaches £20,092.78. In Year 15, it gets to £31,118.36, and after 20 years, it becomes £48,194.04.
Inflation means £100,000 (or $100,000) is worth less in real terms than it was in 1998. That’s when Charlie Munger identified it as a turning point.
What hasn’t changed, however, is the maths behind the compounding. A 9.14% return does the same thing to £100,000 as it did 28 years ago.
THE TWELTH MAGPIE
The SNOWBALL, year to date
Income £5,189
Current shares xd £1,831
Cash £343
Total £7,363
The current plan
The SNOWBALL is ahead of plan and this year’s fcast has been updated to £11,261, which is the 2030 target.
If you can compound at 7%, you should double your income every ten years, if you can compound at a higher rate, even 1 or 2%, as your shares increase their dividends to allow for inflation, your journey will also be shortened.
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services, soon to be The Twelfth Magpie.
The UK has some terrific shares for dividend investors to consider. And they can generate real passive income – especially inside a tax-efficient Stocks and Shares ISA.
Charlie Munger – Warren Buffett’s right-hand man – used to say that the first $100,000 (or for britons £100,000) was the hardest. But is that still the case?
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.
Passive income opportunities
A lot of dividend stocks look pretty attractive. But a high yield can often be a sign that there’s something to worry about.
Often, but not always. The stock market doesn’t get everything right and it can make mistakes in both directions.
Games Workshop is one example. 10 years ago, the stock came with an 8% dividend yield.
That counts as high. Since then, though, the dividend per share has climbed 700%.
As a result, the stock is up 3,997%. And that means the dividend yield has actually fallen to 2.9% – less than half of where it was.
Source: Fiscal.ai
Is the stock less risky now than it was 10 years ago? Maybe, but I think this shows that not every high dividend yield is a trap.
Where’s the opportunity?
Regional REIT (LSE:RGL) is a really interesting income stock to consider. It’s a real estate investment trust that owns a portfolio of properties based outside the M25.
On the face of it, there are two main issues. It has a lot of debt and a significant part of its asset base isn’t the highest quality in the world.
Both of those are risks and the firm has lowered its dividend recently. But it’s looking to solve one problem with another.
It’s selling some of its weaker assets and using the proceeds to pay down debt. If it works, the result could be a better portfolio with less debt.
What’s not to like about that? And while there are no guarantees, the dividend yield is still 9.14% even after the recent cut.
Regional REIT takes an unusual approach, prioritising scarce supply over strong demand. The risks are obvious, but so is the potential opportunity.
A £100k portfolio
A 9.14% dividend yield turns a £100,000 portfolio into a £9,142.86 annual income. And reinvesting at that rate makes the returns go up quickly.
After 10 years, the annual return reaches £20,092.78. In Year 15, it gets to £31,118.36, and after 20 years, it becomes £48,194.04.
Inflation means £100,000 (or $100,000) is worth less in real terms than it was in 1998. That’s when Charlie Munger identified it as a turning point.
What hasn’t changed, however, is the maths behind the compounding. A 9.14% return does the same thing to £100,000 as it did 28 years ago.
In that sense, I think Munger’s advice still holds true. And it’s especially interesting in a Stocks and Shares ISA with a £20,000 annual contribution limit.
At £100,000, though, the portfolio starts to make a real contribution to the annual growth. That’s why it’s still a key level for investors.
9.14% dividend yield
Going all-in on one stock – any stock – is risky. So Regional REIT isn’t by itself a way to turn a £100,000 portfolio into a £9,142.86 second income.
What it does show, however, is that not every high dividend yield is a trap. And where there’s one opportunity, I think there might be more.
Whitecap Resources (TSX:WCP) stock is a reliable monthly payer (4.5% yield) with record Q1 production (391k boe/d), falling costs, and doubled free cash flow potential amid high oil prices.
Freehold Royalties (TSX:FRU) stock offers a “risk-free” royalty model, dividend yields 6.1%, paid monthly. Its U.S. assets boost liquids for premium pricing. FRU can sustain stable dividends even at $50/bbl oil.
InPlay Oil (TSX:IPO) is a small-cap high-yielder (6.4%) that reported an 80% AFF surge recently, has low-decline assets. Investors may expect an unhedged cash flow boom at $81.50/bbl oil forecast for the rest of 2026.
Three top Canadian energy sector stocks to buy for May, for dividend-oriented investors who intend to buy-and-hold TSX energy stocks as a source of recurring passive income, include monthly dividend powerhouses Whitecap Resources (TSX:WCP) stock, Freehold Royalties (TSX:FRU) stock, and a tiny oil stock that pays a 6.4% yield from its surging distributable cash flow. Here’s why they are good buys in May 2026.
Source: Getty Images
Whitecap Resources stock – The monthly dividend heavyweight
Whitecap Resources (TSX:WCP) stock is an ideal Canadian energy stock to buy for monthly income, especially given its proven dividend track record. The oil stock has never missed a monthly payout since 2021. At May prices, its monthly dividend of $0.061 per share currently yields approximately 4.5% annually. The payout received more cash flow coverage this year as high crude oil prices improve WCP’s cash flow outlook.
WCP reported record first-quarter production growth, increased its production guidance for 2026, generated impressive revenue, saw costs drop by 11% per barrel of oil equivalent (boe), and reported a 12% increase in funds flow to $1 billion as merger synergies with Veren kicked in.
Whitecap Resources stock’s production of 391,416 barrels of oil equivalent per day (boe/d) during the first quarter exceeded management’s targets. High well productivity and improved operational execution, which brought new wells onstream ahead of plans, propelled Whitecap’s superior operating results. This trend may persist into the second half of 2026.
10 stocks for investors to buy right now, available when you join Stock Advisor Canada.
The monthly dividend stock is up 38% year to date. WCP stock could sustain a rally as production grows, revenue and earnings surge, and its free cash flow run-rate doubles. The energy stock is one of the safest energy sector bets for risk-averse dividend investors seeking both capital appreciation and reliable monthly passive income.
Freehold Royalties
Freehold Royalties (TSX:FRU) stock offers a strategically different business model that could be appealing to dividend investors: a royalty company rather than an energy producer. Freehold Royalties stock pays monthly dividends from high-margin earnings generated without assuming the operational risks of oil drilling and crude production. At a 6.1% dividend yield, FRU stock’s high-yield monthly payout should remain a major total return component on the energy stock over the next decade.
FRU stock’s dividend is supported by low-risk royalty income at oil prices as low as US$50 per barrel. During the first quarter, Freehold’s U.S. production continued to improve its liquids weighting from 55% to 65%, providing a 31% pricing premium over Canadian production supported by light oil premium pricing and lower shipping costs to the Gulf Coast.
Huge capex budgets and innovation by FRU’s production partners may widen U.S. assets’ performance gap over the next several years, positioning the dividend stock for a good cash flow harvest – as long as oil prices comply.
The royalty-earning energy stock offers a safer cash flow generating model, which adds valuable diversification to your energy portfolio.
InPlay Oil Corp stock: A high-yield monthly dividend play in a small package
InPlay Oil (TSX:IPO) is a $470 million small-cap Canadian energy stock that is the perfect pick for investors seeking pure monthly dividend exposure in a smaller package. The junior oil and gas producer has declared a monthly cash dividend of $0.09 per share payable on May 29, 2026. The dividend should yield 6.4% annually. The payout was well covered at oil prices around US$60 per barrel in budgeting for 2026.
During the recent earnings (Q1 2026) released in May, management forecasts oil prices to average US$81.50 for the remainder of the year. The IPO stock may harvest boatloads of free cash flow in 2026. The Canadian energy stock has already reported an 80% year-over-year surge in adjusted funds flow (AFF) during the first quarter, despite significant debt-mandated hedges in place that limited its participation in record oil prices earlier this year.
The company has significantly fewer oil-price hedges during the second half of 2026 and all of 2027. It should therefore generate higher cash flow going forward, as long as oil prices stay elevated.
InPlay Oil stock’s low-decline light oil assets in Alberta, which have expanded through a recent acquisition that increased production levels, should provide a stable foundation for recurring dividend payouts, making it an excellent choice for investors who want to diversify across company sizes. The energy stock has generated 128% in total returns during the past 12 months.
The lofty valuations of AI stocks in the past few years have dredged up memories for some of the time before the dotcom bubble burst in 2000.
This burst, which led to steep fall in the MSCI World over a period of two years, was due to overinvestment in internet companies that eventually couldn’t live up to their value despite the internet becoming a part of everyday life. It’s simple to see the similarities to today: even with a general consensus that AI will be a world-changing technology, it’s hard to be clear on the companies which will benefit most.
But a striking phenomenon of the dotcom bubble bursting was the performance of value stocks in the aftermath, which shot up as the rest of the market fell. The past is never a perfect indicator of what will happen to markets in the future, but some investors believe value stocks could deliver the same bumper returns if the AI bubble burst.
Investors can see this through the Fama-French HML Factor Data. This is an educational data measure that shows how value-driven stocks perform in comparison to growth stocks. The chart below shows how dramatically value outperformed growth in the period immediately following the dot-com crash.
What does value really mean?
There is no single definition of what qualifies a stock as ‘value’. Generally, it refers to stocks that are unloved by the market, but if these stocks are worth more than their price will depend on who you ask. This makes it a popular area of the market for fund managers that select their own stocks, because it allows them to use their own strategies to see appeal they think others, or indices, might be missing.
Indices offer value options too, but their performance has differed widely based on criteria. The MSCI World Value index, for example, has lagged behind the standard MSCI World in the past five years, with returns of 65.8% and 76%, respectively. But the MSCI World Enhanced Value Index has beat both with a 101.65% return.
How are these value metrics so different? MSCI World Value Index chooses its holdings based on book value (essentially the value of a company’s assets) divided by share price, dividend yields, and 12-month forward earnings multiples. It then gets a score to sort it between value and growth. But a stock can fall in both of these baskets which means the returns of this index aren’t always so different from the broader market.
MSCI World Enhanced Value, on the other hand, uses different metrics, has stricter criteria, and an all-in or all- out approach for if stocks qualify. This creates a smaller qualifying group and a much different return than the standard MSCI World.
This stricter criteria meant that on a longer- term view, including in the early 2000s, the enhanced value strategy won out. However, in times that were strong for growth, such as the 2010s, this index lagged behind.
Balancing growth and value
Value stocks don’t come without risk, and some are cheap for a reason. By relying them on completely, investors would likely have missed out on some of the most impressive market performers in recent years, such as Nvidia and Alphabet. For this reason, many investors choose to use a blend. Indices like the MSCI World are, by nature, weighted more heavily towards growth. So having a separate portfolio weighting that is aimed specifically at value can be a way to even out this risk.
Some value stocks will present a smoother ride than broader equity markets, as many measures of value include stocks that pay high levels of dividends, which tend to be more mature businesses. But other value stocks are discounted severely because the company has had a difficult period. This does involve risk, but it can still be a diversifier to other parts of your portfolio.
Value investments can be hard to sniff out, because it involves deep analysis of why they are trading more cheaply in the first place, as well as what their potential is for the future. There’s always a possibility of buying a stock that looks good value at the time, but keeps sinking instead of recovering. Some prefer to leave it up to the experts and invest through funds. The table shows the best performing value funds of the past 10 years offered on AJ Bell’s platform. Note that these funds will each have different metrics to constitute value, and past returns don’t guarantee future performance.
