Situation normal

Strategy

A turbulent few years for UK REIT share prices contrasts with steady rental growth.

Alan Ray

Disclaimer

This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.

‘Normal market conditions’ is a phrase that is often used but rarely with any real meaning. A bit like that annoying but incredibly useful phrase ‘it is what it is’, the line can have its uses in conversation when accompanied by a kind of shoulder-shrugging body language, acting as a shortcut for what might otherwise be a much longer discourse. But as a written phrase that seems to hint at a rigorous legal definition, we think it’s much less useful.

To illustrate this, we would start by making the slightly bold claim that the last five or six years in commercial property have been entirely normal. How can we say this, given the wild rollercoaster ride of REIT share prices since 2020? Well, let’s start by thinking about some of the fundamental characteristics of property as an investment. One of these is that property is an interest-rate-sensitive asset class. This is an asset class that is all about the income, and so when the risk-free rate changes, property values are highly likely to change too. Further, like almost any other asset class one cares to name, prices can be influenced by supply and demand. The insertion of the word ‘almost’ in that previous sentence is, for the record, a way of covering ourselves, as ‘supply and demand’ seems like a universal truth we can apply to any asset class. Perhaps meme coins are the exception, though.

So, looking at interest rates first. At the start of this decade, interest rates fell to the floor. What happened? Property values went up about 20%, and this happened even though there was a global pandemic that seemed, at the time, to be upending everything we knew. Then, as inflation began to bite, interest rates rose quite rapidly, starting in 2022. What happened? Property valuations promptly fell back down to more or less where they’d started. This seemed painful and protracted at the time, but looking back, the peak to trough took only about two years. At this point, interest rates began to ease, and guess what? In 2024, property values began, ever so slightly, to increase. Today, it’s hard to find anyone who thinks interest rates are returning to 2020’s levels, but still, they have eased off, and property has responded, with share prices of REITs often back to where they were before 2022. So, the last few years have provided confirmation that property is, indeed, an interest-rate-sensitive asset class. So far, so normal.

UK COMMERCIAL PROPERTY PEER GROUP SHARE PREICE TOTAL RETURN

Source: Morningstar
Past performance is not a reliable indicator of future results

Now let’s think about supply and demand. To simplify things a bit, let’s not drill into every single sector of property but take two examples, starting with the catch-all ‘industrial’, which covers a multitude of uses from, ahem, industrial, all the way through to supply chains and logistics. This is the largest sector in commercial property and tells us a lot about the UK economy. Industrial assets are, essentially, metal boxes with lots of flexible space and which are, ideally, well connected to transport and power infrastructure. At the start of the decade, supply was relatively tight, but bearable. The UK, in common with many other developed markets, had been gradually rewiring itself around the online economy, and as we know, the online economy needs an awful lot of bricks and mortar logistics to function smoothly, meaning demand for these simple structures grew steadily. This, however, came on the back of a long period of investor indifference, with yields on industrial assets often in double digits, and values well below replacement cost. In other words, it was cheaper to buy a building than to build a new one. New supply was, and still is, also hampered by planning, and because, as is so often the case in property, location matters. Not many developers are willing to take the speculative ‘build them, and they’ll come approach’. So, while demand was, and still is, positive, speculative oversupply has not occurred.

In 2020, that process of rewiring suddenly accelerated as the pandemic took hold. Brits are particularly enthusiastic in their embrace of the online, and demand for ‘industrial’ buildings spiked. And of course, the pandemic shone a light on the fragility of supply chains. Thus, as interest rates fell and the investment case rose, so did values for industrial assets. All the way up to that peak in mid-2022 and then back down again once the rate cycle turned. However, since the trough, this sector has performed well, driven by rental growth. Supply chain fragility was highlighted during the pandemic, but with the world moving from the era of globalisation, it has become more than a passing concern, and many corporates are focused on more robust supply chains. Sadly, at the time of writing, this could not be a more topical issue, with the Strait of Hormuz closed to shipping for reasons we are all too familiar with. Once again, while we struggle to know what ‘normal market conditions’ are, we can expect the property’s response to this to be ‘normal’, with demand continuing for assets in this sector.

Meanwhile, the script for offices was also being rewritten in 2020, and there have been several revisions to the script since. But ultimately, and not really all that surprisingly, the number of people working in offices has recovered. True, working patterns are different, and Mondays and Fridays can be a bit quiet on the trains, but people are still sitting at a desk, drinking two or three cups of indifferent coffee and occasionally even talking to each other. Although many of them aren’t quite sure what that mysterious device called a desk phone is for. The situation is more complex in the office space, and as we’ll come on to look at, some REITs have done well from repurposing offices for retail or even student accommodation, with Picton Property Income (PCTN) having some notable successes. This has also helped to keep a lid on speculative development, with much less certainty about what kind of office tenants will want. Overall, offices have also experienced an interest-rate-sensitive valuation cycle, a lack of new supply and the removal of some supply due to repurposing.

Again, while we don’t really know what ‘normal market conditions’ means for the office sector, we do know that, with some supply removed and the discovery that people still work in offices, the right offices in the right locations are still seeing rental growth. So again, behaving as one might expect given the circumstances.

M&A: Is this normal?

One of the defining characteristics of the last few years is just how many REITs have undergone some form of M&A. There have been some ‘take privates’ or gradual sales of assets and a return of cash to shareholders, but a characteristic of this cycle has been the number of REITs that have merged. This is notable because a merger doesn’t always provide an immediate uplift in the share price all the way back to net asset value, and neither does it provide a swift exit opportunity. One of the things this tells us is that investors are interested in ‘scale’, and we’ll come to look at that in a moment. But it also tells us a few other things. First, it says that investors have not abandoned property as an asset class. The large discounts that developed in 2022 might have implied otherwise, but the fact that many of the same assets remain listed today, even if the name above the door has changed, says that investors still see a future. Second, it’s yet another demonstration that the sector is behaving normally. One of the great advantages of the REIT structure, in contrast to open-ended property funds, is that the shares are tradeable. As a seller, one might not like the price at the bottom of the cycle, but at least there is one. And that means that, if prices stay low for a while, M&A activity can start to occur, providing an alternative exit or, at least, a catalyst for discounts to eventually narrow. Third, it tells us that REIT management teams feel confident about property as an asset class. Much of the M&A over the last few years has favoured the internally-managed REIT, where management are employees of the company rather than, as many readers will be more familiar, the investment trust style external management. One key difference is that internal management teams are incentivised more by earnings growth and less by assets under management than their external counterparts, so they are less likely to take on a merger if the result is a dilution to earnings.

And so, once again, what we sometimes describe as an ‘extraordinary pace’ of M&A in recent years is, taking a step back, quite a normal and expected response from the REIT sector.

Scale matters

Parking property for a moment, Investment trust sector followers will know that ‘scale’ has become an ever more important factor across the sector, with several mergers, or more accurately ‘combinations’ of investment trusts citing scale as the principal reason for the transaction. While this is often fair enough, we take a slightly cautious view, as consolidation also leads to a lack of choice and competition, and the constituents of many sub-sectors of the investment trust universe are, by number at least, quite small. Like ‘sustainability’, which we will look at further on, in property terms, it’s easier to see why ‘scale’ matters. Across the spectrum of commercial property, individual assets can cost tens or even hundreds of millions of pounds, and to be truly diversified across different types of tenants, sectors and locations, a REIT really needs access to several £bn. There are many REITs that have gone down the sector-specialist route, and this can make a great deal of sense for investors with a strong sense of an individual sector’s characteristics. But the broad diversification that an investor seeking more steady returns and a dependable income might find more desirable, can be much better achieved at scale.

One of the biggest winners from consolidation is LondonMetric (LMP). In the rollercoaster of M&A, LMP even, and we promise this is the first and last time we say this, acquired its own rollercoaster through its merger with LXi REIT, owner of Alton Towers. LXi is just one of several REITs that have merged into LMP, and with a market cap of about £4.6bn and a dividend yield of over 6%, LMP offers enough scale to satisfy even the most demanding investor, while giving LMP the firepower to access assets that a smaller REIT would struggle to buy.

Sustainability also matters

One thing we have learned in the last few years is that, whereas ‘sustainability’ or ‘ESG investing’ more generally can be a polarising topic, property is an area where sustainability’s link to investment returns is less controversial. A more energy-efficient building, for example, is something a tenant might feel more inclined to occupy and pay a higher rent for. Put solar panels on the roof, and again, the building might be more attractive. Those simple industrial metal boxes we mentioned above are particularly good for this and can help shift at least some energy generation close to where it is used.

In recognition of this, Schroder Real Estate (SREI) adopted an explicit sustainability element to its investment strategy. This is not about simply going out and buying the best, most energy-efficient buildings, but about thoughtful expenditure on upgrades to existing assets. A pattern has developed across SREI’s portfolio where buildings that see efficiency upgrades tend to achieve higher rents, longer lease lengths and better-quality tenants. SREI has also long followed a higher yield strategy, and its current yield of 7%, on a covered dividend and plenty of reversionary potential, looks very attractive.

The one stop shop

TR Property (TRY) is unique in the investment trust sector in offering investors a readymade portfolio of property shares and REITs from across the UK and Europe. Thus, while TRY itself has tended to maintain quite a narrow discount over the past few years, its underlying portfolio of REITs has seen the full effect of discounts widening, then narrowing, and TRY has benefitted on several occasions from M&A activity both in the UK and Europe.

TRY’s UK exposure covers the large sectors of industrial, offices and retail, but also takes in more specialist niches such as hotels or student accommodation. European exposure generally favours the larger European economies and prime markets such as Paris and Berlin. Although many of the same growth drivers exist, e.g. industrial, logistics, and retail warehouses, the pan-European approach gives investors exposure to niches that a UK-only focus would not. For example, German residential property is much more institutionalised than in the UK, and some of the largest-listed REITs own vast portfolios of German residential assets. This highly regulated market lends itself to higher levels of gearing, making it quite interest-rate sensitive. After a few years of higher interest rates, it’s easy to focus on the negative aspects, but as rates fall, the reverse is true, and gearing can play a very positive role.

Proving the point that property income has grown over the very difficult period property went through, TRY’s own dividend yield has grown steadily and is now c. 5%. TRY’s approach should be considered more ‘total return’ than a REIT, which owns physical property, but nevertheless, 5% is a significant premium to UK equities and beats most UK equity income trusts.

Situation normal?

While it’s very difficult to define what ‘normal market conditions’ are, it’s much easier to know when they aren’t normal. At the time of writing, it is clear, and rather sad, that this is where we are today. REIT share prices, like all other equities, are falling as investors move into ‘risk off’ mode and try to grapple with what a war in Iran means for the global economy.

But listed property’s significant shake-up over the last few years has masked the fact that, on the ground, much of the work of property fund managers has been business as usual. Yes, M&A has dominated the headlines, yes, some sectors have faced a more uncertain future, but a lack of speculative development, hampered by higher borrowing costs, combined with the reshaping of the UK and global economy, has helped drive strong demand and rental growth for the right assets.

REIT share prices are, just like any other equity, susceptible to big macro changes, but over the longer term, rental growth is what matters most for property investing. Behind all of the noise generated by market conditions since 2020, REIT share prices have returned to more or less where they started, but often with higher dividends. The structural drivers behind that remain in place, and what does remain normal is that, over the long-term, REITs can play an important role in a diversified income portfolio.

It looks as the easy money is now becoming a distant memory, although it was great whilst it lasted.

Dividends can be more reliable than share prices as they’re driven by
the companies performance itself and not by the whim of investors. As part of a total return / reinvestment strategy, this income could be reinvested into income assets or back into the equity market depending on the relative valuations.

The emotional benefits of dividend re-investment.
In fact, with this investment strategy you can actually welcome falling share prices.

With an astonishing 7.5% yield, is this ‘defensive’ REIT worth buying today?

Due to its massive yield and sole focus on a niche part of the commercial property market, is this REIT ideal for the turbulent times in which we live?

Posted by James Beard❯

Published 11 March

SUPR

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With the UK stock market turning red at the moment, plenty of investors are looking at real estate investment trusts (REIT) for sanctuary. But are they really the ‘safe haven’ that some believe them to be? Or is it a case of buyer beware?

Let’s consider both sides of the argument by looking at one particular high-yielding example that today (11 March) has released its results for the six months ended 31 December 2025.

Bricks and mortar

Supermarket Income REIT (LSE:SUPR), which owns a portfolio of freehold and leasehold grocery stores in the UK and France valued at £2.06bn, has paid dividends of 6.15p a share over the past 12 months. With a current share price of 82.1p, it means the stock’s yielding an incredible 7.5%.

But things get better. Its payout’s been increased every year since it listed in July 2017. This impressive record is partly due to the fact that — in common with all REITs — it has to return at least 90% of its rental profit to shareholders each year by way of dividends.

However, the trust still has to be profitable for it to be in a position to reward shareholders. After all, 90% of nothing is nil.

Importantly, the trust’s able to target paying a progressive dividend because its income is secured via long-term inflation-linked leases. And because of the calibre of its tenants – Tesco and Sainsbury’s to name just two – it has full occupancy and no bad debts.

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.

Adapt and survive

I particularly like Supermarket Income because large supermarkets have evolved over the years to become the hub of the grocery market. With more people shopping online, many started to believe that the industry would transition towards centralised distribution centres. However, large grocers have successfully adapted to this challenge.

Whether someone wants to visit a store, have their groceries delivered, or go and collect what they’ve bought online, the omnichannel supermarket remains essential. I don’t think it’s a coincidence that Ocado Group’s now planning to close some of its customer fulfilment centres.

In my opinion, these qualities make Supermarket Income a great defensive stock. Both the REIT business model — and the grocery sector — can be attractive during times of market volatility. That’s why I have shares in the REIT and why I think others could consider adding some to their own portfolios.

No regrets

However, some are wary of REITs because they, generally speaking, tend to have large borrowings. That’s because most use debt to expand. At 31 December 2025, Supermarket Income’s balance sheet disclosed borrowings of £980m. This gives it a loan-to-value (LTV) of 43%, taking into account some 2026 transactions. Higher interest rates will lead to increased borrowing costs and reduced earnings.

Others investors don’t like the cyclical nature of the commercial property market, particularly in the UK. If supermarket real estate values were to fall, the trust’s net asset value would tumble and its LTV rise. This could limit its future borrowing capacity.

But I still rate Supermarket Income. Compared to the same period a year ago, its latest results show an 11% increase in rental income and a 0.1% improvement in portfolio yield. The group’s targeting a 2% increase in its annual dividend from its next financial year onwards. That’s why I’m happy with my choice of REIT.

REIT’s have been a poor investment when interest rates are rising, so you would need to take a view on the direction of inflation/bank rate.

This ultra-high-yield UK stock just cut its dividend by 50%! Time to buy?

Normally a dividend stock cutting its payout in half is a sign to run for the hills. But does the new 8%-9% yield on offer tempt me?

Posted by Ben McPoland

Published 11 March

NESF

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When a dividend stock’s yield rises above 10%, I tend to get a bit nervous. It suggests the market is pricing in bad news to come and a probable dividend cut.

Before today (11 March), NextEnergy Solar Fund (LSE:NESF) sported a mammoth 15% yield. But that level of income proved to be a shimmering desert mirage as the solar energy investment trust just announced a massive cut to its payout.

As I write, the share price is down 13%, so investors haven’t reacted well to the news. It leaves the stock, which was relegated from the FTSE 250 last year, 61% lower than in September 2022.

Yet, NextEnergy Solar Fund is targeting a FY26/27 dividend in the range of 4p to 4.6p per share. At the current share price of 47p, that suggests a yield of at least 8.5% (and possibly over 9%).

So, might this be a high-yield stock to add to my income portfolio this month?

Strategic reset

At the end of 2025, NextEnergy Solar Fund had 101 solar assets primarily in the UK and Italy, as well as one energy storage asset.

Like many renewable energy trusts, it has been hit hard by the higher interest rate environment. This has made servicing its debt more expensive and cut the present value of cash flows from its solar farms.

Today, the fund announced a strategic reset to try and deliver better shareholder results. The headline change is that it will transition from a progressive dividend policy to one that targets a 75% distribution of operating free cash flows (after debt servicing and fund operating expenses).

This will free up approximately £40m over the next five years to increase debt repayments and offer flexibility to support future growth opportunities. It plans to reduce the debt level to between 40% and 45% of total assets.

Other long-term goals include:

• Provide shareholders with a total return of 9% to 11%.
• Restart net asset value (NAV) growth.
• Initiate regular capital recycling for reinvestment (sell old assets to buy higher-yielding new ones, basically).
• Repower existing assets by using new solar technology to increase power output.
• Increase energy storage assets to 30% of the portfolio.

Investing more in energy storage assets should help, as these can make a higher profit than solar alone. It would also help diversify the portfolio.

When co‑located with solar, energy storage can optimise generation to align with demand, unlock additional revenue streams, and materially strengthen project economics by maximising the value of existing grid connections, which remain a critical constraint in the current market.
NextEnergy Solar Fund

Political risk

There are things to like beyond the massive forecast yield. The government’s Clean Power 2030 mandates a tripling of solar capacity to 50GW, as well as a four-fold increase in energy storage. So the current backdrop for sector growth is very supportive.

However, I also think there’s significant political risk here. Recently, the government changed how green subsidy payments were linked to inflation, which was essentially a pay cut for renewable energy companies.

Plus, Reform UK has said that if elected in 2029 it will impose windfall taxes on the renewable sector. While this may never come to pass, it does introduce an uncomfortable level of political risk, in my opinion.

Therefore, while investors might want to take a closer look, I see safer dividend stocks elsewhere for my ISA today.

By Staff Writer

Are you ready to unlock the secret to a steady income stream from your investments? Imagine receiving cash payouts every month, transforming the way you think about dividend stocks.

Monthly dividend paying stocks can be a game-changer for investors seeking both growth and regular income. In this article, we unveil some of the best monthly dividend paying stocks that could help you build wealth while enjoying financial freedom.

Why Choose Monthly Dividend Stocks?

Monthly dividend stocks offer a unique opportunity for investors who crave consistency and reliability in their income streams. Unlike traditional quarterly dividends, these stocks provide payouts every month, allowing you to reinvest your earnings sooner or use them to cover living expenses. This frequent cash flow can help smooth out market volatility and create a more stable investment experience, particularly beneficial during uncertain times.

Top Picks for Monthly Dividend Income

One of the standout choices in the realm of monthly dividend payers is Realty Income Corporation (O). Known as “The Monthly Dividend Company,” Realty Income has a stellar track record of paying dividends since its inception. With an impressive portfolio of commercial properties leased to high-quality tenants, this stock has become synonymous with dependable income. Another excellent option is STAG Industrial (STAG), focusing on acquiring and operating industrial properties across the United States, offering attractive yields that appeal to both new and seasoned investors.

Diversifying Your Portfolio with REITs

Real Estate Investment Trusts (REITs) are among the most popular categories for monthly dividends due to their requirement to distribute at least 90% of taxable income as dividends. Besides Realty Income and STAG Industrial, consider adding Gladstone Investment Corporation (GAIN) into your portfolio. GAIN focuses on investing in small- to medium-sized businesses while providing strong monthly returns—making it an enticing prospect for investors looking for both growth potential and immediate cash flow.

Mastering Risk Management in Your Investments

While chasing high-yield monthly dividend stocks can be tempting, it’s crucial not to overlook risk management. Always perform thorough research into each company’s fundamentals before investing—look at factors such as debt levels, payout ratios, and overall economic conditions affecting their business model. Diversifying across multiple sectors can also mitigate risks significantly; don’t put all your eggs in one basket. Consider blending equities with bonds or other asset classes that align with your investment goals.

Reinvesting Dividends: A Pathway to Wealth Accumulation

Once you’ve established a position in these lucrative monthly dividend payers, consider adopting a reinvestment strategy through a Dividend Reinvestment Plan (DRIP). By automatically reinvesting your dividends back into purchasing more shares, you can harness the power of compound interest over time—accelerating your wealth creation journey like never before. With each passing month of consistent payouts rolling back into your investments, you’ll amplify long-term gains while enjoying immediate financial benefits today.

Investing in monthly dividend paying stocks offers a compelling pathway not only towards generating passive income but also transforming how you approach building wealth over time. By choosing high-quality companies known for reliable payouts and implementing sound investment strategies like diversification and reinvestment plans, you’re setting yourself up for financial success like never before.

Two Trusts in the SNOWBALL have cut their dividend, both are fcast to pay above 7% and have a progressive dividend policy, so both shares remain in the SNOWBALL to see if actions speak louder than words.

The SNOWBALL should achieve it’s fcast for 2026 but the target, at present looks a bridge too far, especially if cutting dividends becomes the trend.

5 Reliable Dividend Stocks to Buy for Safety in a Volatile Market

By Robert Rapier • February 10, 2026 • Stocks to Watch

Markets have a way of periodically reminding investors of a simple truth: not everything that trades is truly investable. Over the past few months, sharp swings in highly speculative assets have reignited debates about valuation and momentum.

I’m frequently asked why I don’t recommend cryptocurrencies despite their popularity. My answer has remained consistent: I don’t know how to determine their intrinsic value. As a result, when that value is falling, it’s impossible for me to ascertain whether that represents a buying opportunity, or a time to head for the exits.

That isn’t a criticism of those who choose to speculate. Many people have made money doing so. But my approach has always been rooted in fundamentals — measurable cash flow, balance sheet strength, and assets that produce reliable income. Without those anchors, price becomes largely a function of sentiment, and sentiment can reverse quickly and without warning.

Utilities sit at the opposite end of that spectrum.

They operate essential infrastructure, earn regulated returns on billions of dollars of invested capital, and generate cash flows that can be analyzed with a reasonable degree of confidence. They aren’t designed to produce overnight riches — but for income investors, predictability and durability matter far more than excitement.

The Role of Dividends in Long-Term Returns

One of the most overlooked realities in investing is how much of long-term total return has historically come from dividends and reinvested income. While price appreciation gets most of the attention, steady cash distributions provide the compounding engine that drives wealth over time — particularly during volatile or sideways markets.

That’s why utilities have long been a core allocation for income-focused portfolios such as in my Utility Forecaster newsletter. Their regulated business models tend to produce stable earnings, which support dividends investors can analyze, evaluate, and reasonably expect to continue.

When I screen for new opportunities for Utility Forecaster, I’m not looking for the highest yield or the fastest growth. Instead, I focus on durability: companies with predictable cash flow, constructive regulatory environments, manageable balance sheets, and dividend policies built to survive changing market conditions.

Using that framework, several names currently stand out as compelling long-term income candidates. It’s the same screen that beat the S&P 500 again in 2025, and produced last year’s big winners in the Utility Forecaster portfolios like:

• NRG Energy (NYSE: NRG), up 79%
• UGI Corporation (NYSE: UGI), up 38%
• American Electric Power (NSDQ: AEP), up 29%
• Entergy (NYSE: ETR), up 25%
• CenterPoint Energy (NYSE: CNP), up 24%

The following companies scored well in my most recent dividend durability and cash-flow screening process. While they operate in different regions and face different regulatory dynamics, they share one important characteristic: their income streams are supported by measurable fundamentals rather than market narratives.

Five Great Long-Term Income Picks

NextEra Energy (NYSE: NEE)

NextEra remains one of the strongest examples of combining regulated stability with long-term growth. Florida Power & Light provides predictable earnings through regulated operations, while the company’s renewable energy platform continues to expand under long-term contracts.

Why it works for income investors:

• Consistent dividend growth supported by earnings expansion
• Strong rate-base growth trajectory
• High-quality balance sheet relative to peers

Duke Energy (NYSE: DUK)

Duke’s diversified service territory includes several high-growth regions in the Southeast and Midwest. Its long-term capital plan supports steady earnings growth tied primarily to regulated investments rather than commodity exposure.

Why it works for income investors:

• Attractive yield supported by stable earnings
• Constructive regulatory environments
• Predictable capital investment pipeline

Southern Company (NYSE: SO)

After navigating significant construction challenges tied to new nuclear capacity, Southern is entering a period of improved earnings visibility. With major projects now operational, the company’s focus shifts toward more stable cash flow generation.

Why it works for income investors:

• Longstanding dividend track record
• Reduced execution risk following major project completion
• Strong population and load growth across core territories

American Electric Power (NASD: AEP)

One of our big portfolio winners in 2025, AEP’s expansive transmission network positions it well for grid modernization and rising electricity demand. Transmission investments often generate attractive regulated returns, supporting steady earnings growth and dividend sustainability.

Why it works for income investors:

• Transmission-driven earnings visibility
• Large and diversified footprint
• Consistent dividend policy aligned with long-term capital planning

Consolidated Edison (NYSE: ED)

ConEd rarely attracts headlines, but its conservative approach has produced one of the most dependable dividend records in the sector. Serving a dense urban market provides stable demand and predictable cash flow.

Why it works for income investors:

• Long history of dividend increases
• Low-risk regulated business model
• Conservative financial management

The Bottom Line

Speculation can produce large gains, but speculation is not the same as investing. Investing is about allocating capital to assets with measurable value — businesses whose cash flows you can analyze and whose income streams you can reasonably expect to continue.

No one knows where the price of speculative assets will be years from now. Utilities, however, will still be delivering electricity, maintaining infrastructure, and generating regulated earnings backed by essential services.

For investors focused on long-term income and durable compounding, that distinction is important.

And power companies are more vital than ever as the AI boom runs on electricity. My Utility Forecaster portfolios own the companies that provide that electricity along with other companies that provide services people can’t live without like natural gas, water, and telecommunications. And I buy those stocks at reasonable prices and hold on while they pay me dividends.

ISA deadline looms: experts reveal the investment trusts they favour

Oliver Haill

Published: 16:40 11 Mar 2026

With less than a month left before the deadline for savers to use their Individual Savings Account (ISA) allowance on 5 April, financial analysts and commentators have been recommending a focus on long-term strategies to cope with the sort of geopolitical tensions and volatile markets seen recently. 

ISAs are tax-free wrappers that allow savers to invest in shares tax-free. The annual allowance stands at £20,000.

The Association of Investment Companies (AIC) has polled a number of financial experts to find out which investment trusts they recommend for cautious, moderate and adventurous investors.

Investment trusts are London-listed, closed-ended funds. As a closed-ended fund, this means there is a fixed number of shares that investors can buy and sell on the stock market, while the fund manager invests the money in a portfolio of assets.

Trusts can pay resilient and rising dividends, as they can hold back some income in good years and use those reserves to maintain or increase payouts when markets are weaker.

“Trusts can also work well for high growth areas like emerging markets as their fund managers are able to take a long-term view of their portfolio,” says AIC director Annabel Brodie-Smith.

“Despite the war in Iran and worrying headlines about financial markets, most investors have seen these situations before. It’s vital to keep investing as usual and remain calm and patient. Panic selling is never wise – you will not find experienced fund managers radically changing their plans or rushing into short-term decisions because of a conflict with a very uncertain duration and outcome. They know that they need to steer a steady ship and that means sticking to their long-term strategies.”

Trusts for cautious investors

Three wealth preservation investment trusts were tipped by Kyle Caldwell, funds and investment education editor at Interactive Investor, who says this trio has “consistently delivered in terms of protecting capital during periods of stock market weakness”.

They are Capital Gearing Trust PLC (LSE:CGT), Personal Assets Trust (LSE:PNL) and Ruffer Investment Company Ltd (LSE:RICA).

“Each has a low weighting to shares and plenty of defensive armoury, such as low-risk, inflation-linked bonds. Each offers a steady, defensive option for investors seeking long-term real returns with controlled risk.

“As ever investors need to do their homework and look under the bonnet to see how the defensive exposure differs – particularly the equity holdings, where the three trusts have less in common,” Caldwell says.

Jason Hollands, managing director of Bestinvest, also highlighted Personal Assets Trust.

“For investors unsettled by geopolitical events and the debate around a potential AI bubble, Personal Assets Trust, managed by Sebastian Lyon and Charlotte Yonge of Troy Asset Management, stands out as a defensive option,” he says, highlighting its long-standing emphasis on delivering dependable returns but with a strong focus on capital preservation.

“The managers take a multi-asset approach, blending blue-chip global equities with short-dated bonds, index-linked gilts and Treasury Inflation Protected Securities (TIPS) and gold. This diversified toolkit has historically helped dampen volatility and limit drawdowns in turbulent markets. It won’t shoot the lights out in a raging bull market, but for those prioritising resilience over excitement, it merits consideration.”

Emma Wall, chief investment strategist at Hargreaves Lansdown, adds her support for Personal Assets Trust too.

She says Yonge and Lyon are “tried and tested fund managers who deliver on their mandate of capital preservation and steady growth over time. The trust’s allocation to gold has been welcome in recent years, as has their focus on downside protection. The board also has a well-executed discount control mechanism.”

Trusts for moderate risk investors

Hollands highlighted Temple Bar Investment Trust (LSE:TMPL) as one that “takes a disciplined value approach to investing predominantly in UK equities”.

Led by managers Nick Purves and Ian Lance at Redwheel, the team “focuses on companies trading at meaningful discounts to their assessment of intrinsic worth, rather than simply low near-term earnings multiples,” he adds.

“A strong emphasis on balance sheet resilience helps avoid value traps. The bias towards large and mid-sized financially robust dividend-paying companies combined with a strong value discipline makes this a relatively defensive way to access UK equities but with an excellent track record.”

Paul Angell, head of investment research at AJ Bell, went for City of London Investment Trust (LSE:CTY), which he says was “all about giving investors a blend of income and growth.

“That’s appealing to investors of all ages. Younger investors may want to reinvest any dividends to enjoy the benefits of compounding, while older investors typically welcome regular dividends to help pay the bills.

“Key to City of London is a long history of raising the dividend, giving investors a growing income stream. While it invests in big companies on the UK market, a big chunk of earnings from these companies is generated elsewhere in the world. That gives City of London some built-in geographical diversification.”

HL’s Wall also tipped the trust. “It is not sensible to hold a trust with a single region exposure without others to add diversification, but assuming an investor is looking to add to their portfolio this tax year, City of London is my pick. Manager Job Curtis is one of the most experienced UK equity income investors in the industry, running a dividend hero trust invested in quality cash-generative companies. Reinvest the dividends if you’re looking for growth.”

Caldwell also picked Murray International Trust plc (LSE:MYI). “Given global stock markets are becoming increasingly concentrated and there are growing fears of the AI theme potentially being overheated, I am looking more towards those investment trusts that use their full global remit in having a good chunk of exposure (around a third in total) to Asia Pacific and Latin America. Murray International ticks this box.”

He says the Murray portfolio is “very different from the wider market, which gives it plenty of opportunity to add value versus a global index fund or ETF”, with US exposure only 30%, much lower than the MSCI World Index’s allocation of 70%.

“It has a yield of 3.5% and has demonstrated it is a consistent dividend payer with 21 consecutive years of dividend increases.”

Trusts for adventurous investors

For adventurous investors, Wall suggested JP Morgan Emerging Markets Investment Trust (LSE:JMG), which is managed by emerging markets veteran Austin Forey and John Citron.

“It is one of the best ways for investors to access the growth in developing economies,” she says. “The managers benefit from a well resourced team of over 100 investment professionals across nine countries, giving them eyes in most corners of the market. We think this is invaluable given the vast range of countries, cultures and companies within their investable universe.

“Emerging markets are likely to be volatile – as we have seen in recent market activity – but over the long term this trust offers diversification and opportunities for growth.”

Hollands recommended Templeton Emerging Markets Investment Trust PLC (LSE:TEM, FRA:1NK), suggesting it is a great option for long-term investors prepared to tolerate greater volatility in pursuit of opportunities in some of the fastest growing economies globally. 

“Launched in 1989, well before China had joined the World Trade Organisation, this trust was a pioneer in emerging market investing and is still going strong today,” Hollands says. “Managers Chetan Sehgal and Andrew Ness take a patient, pragmatic approach, seeking companies with sustainable earnings power that they believe are mispriced. The portfolio is well diversified by stock, sector and geography.”

AJ Bell’s Angell also points to Polar Capital Technology Trust PLC (LSE:PCT), as technology is at the heart of businesses around the world, seen as central to improving productivity.

“PCT seeks to stay one step ahead of the curve by backing companies leading innovation and shaping the future. The portfolio is big on semiconductor-related stocks, hardware, and electronic equipment, as well as a broad spread of names using technology to their advantage. It even has positions in construction-related companies whose goods and services are being used to help build the massive infrastructure needed to run AI.”

He says the managers reduced software exposure “in good time”, ahead of the recent pullbacks when new versions of Claude AI models spooked many investors.

“The shares currently trade at 8% below the underlying value of their assets, meaning this is a way to buy into big names like Nvidia and Microsoft at a discount.”

NextEnergy Solar Fund – New focus on total returns

• 11 March 2026
• QuotedData
• NextEnergy Solar Fund : NESF
• James Carthew

New focus on total returns

Following the conclusion of its strategic review, the NESF board is proposing a reset of NESF’s objectives with a new focus on providing shareholders with both attractive income and capital growth. The aim will be to achieve long-term total returns of 9%-11%.

This year’s dividend target of 8.43p will be met. Going forward, the dividend will be set at 75% of operating free cashflows, post debt servicing and portfolio and fund operating expenses. The estimated dividend range for the financial year ended 31 March 2027 is 4.0p-4.6p.

Reducing the dividend should free up an estimated £40m over the next five years, which will be applied to strengthening the balance sheet (a target of 40%-45% loan-to-value) and funding new investments to support NAV growth. This includes repowering existing solar assets to enhance energy yields and the installation of co-located energy storage. The overall exposure to energy storage is targeted to rise to 30% of the portfolio.

NESF has completed its capital recycling programme with the sale of the Grange and South Lowfield solar farms for a total of £46.2m. The money is being used to reduce the outstanding balance on NESF’s revolving credit facility. A further 120MW of additional asset sales, and the realisations of NESF’s private solar fund investment and two co-investments (from 2027 onwards), will free up additional capital.

As we explain in this note, NESF found itself in a difficult situation. The strategic review did not draw out a bidder. The wide discount to NAV lowers its enterprise value which prevents it from buying back shares under the USS preference share covenant. NESF has demonstrated that asset sales to reduce debt are possible but until demand for mature assets picks up, this is no quick fix, which rules out a managed wind down. As NESF is in need of cash, cutting the dividend is the best option. The board and investment advisers believe they have exhausted all other avenues and have laid out, in great detail, how the money conserved within the business can deliver 9%-11% total returns.

A plan for the future

Reducing the dividend will allow NESF to rebuild its balance sheet

The board has concluded that NESF cannot continue as before. It feels that persistent wide discounts, even in the face of falling interest rates and a resolution to the cost disclosure issues that appeared to trigger that discount widening, are a sign that something must change.

Part of the price for that is a reduction in NESF’s dividend. However, the board believes the reward will be attractive long-term total returns for shareholders. Along the way, NESF will rebuild its balance sheet, aided by an ongoing programme of recycling mature investments.

Managed wind downs have been value destructive

Transitioning to an operating company is neither cost effective or value creating

In reaching its conclusion, the board talked to shareholders and independent advisers. It observed that managed wind downs have been value destructive, as funds have been forced sellers into a market where investors are favouring new investments over mature ones. Transitioning away from an investment company to an operating company was felt to be neither cost-effective nor value-creating. M&A seemed unlikely to produce value-enhancing synergies. A sale to a private investor was ruled out – we believe that no bidder came forward at an acceptable price. Gaining access to third-party capital might still be possible and could enhance NESF’s new value creation plan.

Targeting long-term total returns of 9%–11%

NESF’s new focus will be on providing shareholders with both attractive income and capital growth. The aim will be to achieve long-term total returns of 9%-11%.

Buybacks are not possible currently – see the paragraph on the USS covenant on page 7. However, once NESF is permitted to buy back shares, it will do so.

Resetting the dividend

Estimated dividend for FY27 is 4.0p–4.6p

This year’s dividend target of 8.43p will be met. Going forward, the dividend would be set at 75% of operating free cashflows, post debt servicing and portfolio and fund operating expenses.

The estimated dividend range for the financial year ended 31 March 2027 is 4.0p-4.6p.

Reducing the dividend would free up an estimated £40m over the next five years.

On the current share price, the lower dividend translates into a yield for FY27 of between 8.3% and 9.6%.

Helpfully, NESF has set out – in the form of the chart in Figure 1 – some guidance around how the dividend might evolve as the company pursues its new objective. The dividend would likely fluctuate rather than grow every year, but the indication is that there is a good chance it would grow from the indicated level for FY27.

As shareholders should already be aware, without making new investments, the company’s cash flows and dividend paying ability would decline as subsidies roll off and assets reach the end of their lives. This is already modelled within NESF’s NAV calculation.

However, Figure 2 demonstrates there is a chance that the dividend can be maintained if a proportion of operational cash flows are reinvested. The chart is based on what could happen to the dividend if 25% of operational cashflows are reinvested back into the portfolio post subsidy end. The scenario is described as conservative.

Figure 1: Indicative long-term ordinary share dividend guidance

Figure 2: Possible long-term ordinary share dividend path post ROC / FiT subsidy end

Conclusion of the capital recycling programme

£119m freed up by capital recycling programme

On 10 March 2026, NESF announced that it had sold the two remaining solar plants that had been identified for sale under its capital recycling programme. The sale of The Grange and South Lowfield raises £46.2m, which will be applied to reducing the balance on NESF’s revolving credit facility, which was £151.9m at the end of December. The sale price came in marginally below the carrying value in the NAV, reducing it by 0.32p. However, overall, the programme freed up £119m, crystalised a 1.1x multiple on invested capital, and added 2.44p to the NAV.

In his remarks, NextEnergy Capital’s investment director Stephen Rossiter observed that there is “renewed momentum in the solar M&A market as we move into 2026”.

New capital recycling targets

Further asset sales planned

The board has plans for up to further 120MW of additional asset sales. The realisations of NESF’s $50m investment in NextEnergy III and two co-investments (from 2027 onwards) – about 116MW in total – will free up additional capital.

A stronger balance sheet

The board believes that the lower dividend and ongoing asset sales can both help fund new investments and bring NESF’s loan-to-value ratio (LTV) to within a 40%-45% range, well inside its 50% investment policy limit.

At the end of December 2025, NESF had total debt of £509.1m, equivalent to LTV of 51%. £200m of that was in relation to its preference shares. The preference shares pay a preferred dividend of 4.75% p.a. until March 2036, after which they have the right to convert, based on 100p per preference share and the NAV per ordinary share at the time of conversion, into new ordinary shares or a new class of unlisted B shares with dividend and capital rights ranking pari passu with the ordinary shares. The preference shares are redeemable at the option of the company at any time after 1 April 2030, in full or in part.

£143.7m of NESF’s long-term debt is amortising and will be repaid in line with the remaining life of the portfolio’s subsidised assets.

The balance relates to NESF’s revolving credit facility (RCF). NESF renewed this £205m facility in March 2025, securing finance at 120bps over SONIA. This is set to mature in June 2026, but NESF has options to extend it up to June 2028.

Significant new investment opportunities

In the face of growing demand for power, the UK government has ambitions to triple the UK’s operational solar capacity to 50GW and quadruple the amount of installed battery storage to 27GW by 2030. Solar has the advantage of being the cheapest form of renewable energy (even here in the UK). It would also help increase our energy security and better insulate us from spikes in fossil fuel prices such as those being currently experienced as a consequence of the Iranian war.

For investors, the availability of predictable, inflation-linked, 20-year revenue streams provided under the government’s new contract for difference (CfD) contracts should help attract private funding.

NextEnergy Capital believes that NESF ought to be playing its part in channelling investors’ capital into this opportunity. It can leverage Starlight, the investment adviser’s development arm, and the considerable resources of Wise Energy, the world’s largest solar-focused asset manager to help it achieve its goals.

Energy storage targeted to rise to 30% of the portfolio

However, given NESF’s inability to raise fresh capital, this morning’s statement identifies more modest goals of improving the health of NESF’s portfolio by repowering existing solar assets with new technology to enhance energy yields and the installation of co-located energy storage. The overall exposure to energy storage is targeted to rise to 30% of the portfolio (this will need shareholder approval, which will be sought at the upcoming AGM).

Co-located storage can optimise generation to align with demand

The board observes that co-located storage can optimise generation to align with demand, unlock additional revenue streams, and materially strengthen project economics by maximising the value of existing grid connections (a lack of grid connectivity is a significant constraint on delivering the government’s clean energy ambitions). NESF says investments in two-hour duration storage can generate IRRs of 10%-13%.

Figure 3: The future of NESF’s portfolio

Figure 3 is designed to give an indication of the potential evolution of NESF’s portfolio. The darker orange boxes represent operational solar assets that can be retained and enhanced, the lighter orange represents the potential to add new-build solar assets, and the dark green boxes are the NextEnergy III and co-investment assets that will be realised. The light green box outlined in orange dashes are the assets that will go into the new recycling programme. There is a chance that this will be expanded over time to encompass the rest of the light green assets. The existing Camilla battery storage asset is in blue, and the dark blue box represents potential new energy storage assets.

A brief history

In April 2023, NESF announced a capital recycling programme, with plans to sell a portfolio of subsidy-free assets comprised of five solar plants – Hatherden (which was still at the ready- to-build stage at the time of disposal), Whitecross, Staughton, The Grange, and South Lowfield. The sale of Hatherden for £15.2m was announced in November 2023, Whitecross was sold in June 2024 for £27.0m, and Staughton in November 2024 for £30m.

In May 2025, the board announced that the dividend target for the financial year ended 31 March 2026 would be maintained at 8.43p, and that it expected this to be covered 1.1x-1.3x by earnings post-debt amortisation. The latest quarterly update from NESF reconfirmed this dividend cover forecast.

Fee cut boosts the dividend cover

In June 2025, the annual results statement included a statement that “NESF continues to explore multiple strategic options for the future”. A couple of days later, the company announced that NESF had negotiated a reduction in management fees, which would now be based 50% on NAV and 50% on market cap (down from 100% on NAV). The estimate at the time was this would save the company about £0.6m per annum, boosting the dividend cover.

At the AGM in August 2025, 12% of the shares that were voted, equivalent to 7% of NESF’s shares in issue, voted in favour of discontinuation.

In November 2025, the UK government launched a consultation on changes to the indexation of subsidies (ROCs and FiTs) and then ignored the feedback it received, opting to impose a switch to using CPI with effect from April 2026. This took 2p off NESF’s NAV.

Covenant restricts buybacks

In December 2025, the interim results announcement highlighted the enterprise value covenant ratio that is part of the USS preference share subscription agreement had been breached. The requirement is that this does not exceed 50% (at 31 December 2025, it was 60.1%). This means that USS’s approval or waiver is needed before NESF can buy back shares, distribute special dividends, or take on additional debt.

No shares have been repurchased since the end of April 2025. The issued share capital had been reduced by about 15m shares from end March 2023 until then.

In February 2026, NESF announced that its end December 2025 NAV was 84.9p (this is before the 2p impact of the indexation change referred to above). This represents a 31% decline from its peak at end September 2022. Various factors have been at work here, including a rise in the weighted average discount rate used to forecast NESF’s future cash flows from 6.8% to 8.0%.

Figure 4: UK power prices (£/MWh)

However, chief of these factors has been falls in power prices. In September 2022, NESF was using £139.1/MWh as its estimate of short-term power prices (between 2022 and 2026). That is the equivalent of £156.8/MWh in today’s money (using CPI). However, in its September 2025 NAV calculation, the estimate of short-term power prices (out to 2029) had fallen to £60.7/MWh.

A significant influence on UK power prices is the price of natural gas. That peaked in August 2022 and at the end of September 2022 it was about 350p/therm. At the end of September 2025, it was closer to 80p/therm. Today, following the outbreak of war with Iran, it is about 125p/therm. If the disruption to gas supplies persists, power prices could be set to climb once again.

Important Information

This marketing communication has been prepared for NextEnergy Solar Fund Limited by Marten & Co (which is authorised and regulated by the Financial Conduct Authority) and is non-independent research as defined under Article 36 of the Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing the Markets in Financial Instruments Directive (MIFID). It is intended for use by investment professionals as defined in article 19 (5) of the Financial Services Act 2000 (Financial Promotion) Order 2005. Marten & Co is not authorised to give advice to retail clients and, if you are not a professional investor, or in any other way are prohibited or restricted from receiving this information, you should disregard it. The note does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.