Warren Buffett is among the most successful investors of all time. He’s amassed a fortune worth in excess of $120bn.

So how can one of the richest people in the world help me? Well, the great man’s advice can even help small savers aim for market-beating returns. And that’s perfect for those of us with less investing experience.

Starting with nothing

The first thing to address is how we can start investing without any existing capital. Well, the answer is simple. I need to put aside a chunk of my monthly salary, every month, and work from there.

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

So I’ll need to set up an investment account, perhaps within an ISA if I’m a UK resident, and decide how much money I can put aside each month.

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.

It might not sound like a winning strategy, but these things take time.

Moreover, with time I can benefit from compounding — this is a key ingredient when investing. Compounding happens when I reinvest my returns year after year. This then allows me to earn returns on my returns.

This leads to exponential growth. Just look at the example below.

Buffett’s teachings

Buffett has achieved annualised returns near 20% over the decades he’s been investing. That’s quite incredible and hard to replicate.

And his success is partially due to the copious research that he and his team undertake to make the right investment decisions.

However, that’s all secondary to his “rule number one” — often referred to as his “golden rule”.

So what is the rule? “Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.” 

This might sound obvious, but it’s absolutely key. Protecting capital is paramount in investment strategy.

Avoiding losses not only preserves wealth but also prevents the compounding effect of setbacks. Of course, if I lose 50%, I’ve got to gain 100% to get back to where I was.

Embracing a cautious approach, thorough research, and risk management aligns with these rules, ensuring a disciplined investment mindset.

Remembering Buffett’s timeless advice underscores the fundamental importance of capital preservation in navigating the dynamic landscape of financial markets.

BSIF will need to break above resistance to go higher.

Will it won’t it ?

If u are considering buying any of the above u need to be extremely careful.

There is a wide spread as seen above, u can deal within the spread

but the trade will make a big hole in your portfolio.

FTSE 100 dividends: the top 10 yields

We look at the 10 stocks with the best dividend yields in the FTSE 100 and discuss if you can depend on these blue-chips for income.

BY MARC SHOFFMAN

Blue-chip companies on the FTSE 100 are expected to have returned £77.8bn of dividends to shareholders in 2023, according to AJ Bell’s latest Dividend Dashboard. 

The report considers the highest best dividend yields in the FTSE 100, based on company data and forecasts by City analysts.

It can be a good place to start when looking for investments as it provides an indication of companies that are generating enough cash and profits to reward shareholders.

FTSE 100 DIVIDENDS FEEL THE HEAT 

At the end of 2022, AJ Bell says analysts were projecting a record dividend haul for people buying UK stocks, surpassing the all-time high of £85.2bn returned in 2018. 

But aggregate dividend forecasts for 2023 and 2024 continue to slide, with estimates for each year now around 10% lower than a year ago, AJ Bell said.

Falling profits across the blue-chip index and concerns about the economic outlook are to blame for lower income projections. 

Russ Mould, investment director at AJ Bell, says the FTSE 100 continues to “paddle sideways” and is no higher than twelve months ago or indeed six years ago, especially compared with the strong performance of the US stock market.

“Competition from gilts and even cash in the bank may be one reason why the FTSE 100 is failing to make any major progress,” he says

“Another is worries that the long-awaited recession may finally take hold in 2024, even as the Sunak-Hunt administration tries to provide some boost to the economy.”

Aggregate profit estimates for 2023 and 2024 keep drifting lower, even if the FTSE 100’s members earn more in total overseas than in the UK, the report warns.

“The hefty portion of earnings from unpredictable sectors such as miners and oils, and economically sensitive ones such as banks and consumer discretionary, may not help here,” adds Mould.

The combination of a £2 trillion market capitalisation and aggregate ordinary dividend forecasts of £77.8 billion for 2023 and £83.7 billion in 2024 mean the FTSE 100 offers a forecast dividend yield of 3.9% for this year and 4.2% for next.

That compares to 4.5% for two-year gilts and 4% for ten-year gilts, which offer tax-free gains and come with less capital risk, the report highlights.

However, the value of share buyback announcements keeps growing even if dividends are lower, offering an alternative way to return cash to investors.

FTSE 100 companies announced share buybacks worth £54.7 billion so far this year, not too far behind 2022’s all-time high of £58.2 billion.

If this is added to dividend payouts, that means FTSE 100 firms are primed to return £137.2 billion to their shareholders in 2023, a tiny fraction below 2022’s all-time high of £137.6 billion. That figure equates to 6.9% of the FTSE 100’s market capitalisation.

“This compares favourably to the prevailing rate of inflation, exceeds the Bank of England base rate of 5.25% and handily beats the yield available from two and ten-year gilts at the time of writing,” adds Mould.

“Although it can be hard for retail investors to participate in, and benefit from, share buyback schemes.

 “That is one potential caveat to this cash bonanza. Another is how much easier it is for a company to start a buyback than it is to commit to a higher dividend and how there tends to be less critical comment and share price reaction if a buyback is halted compared to when a dividend is cut.”

Here is a list of the companies where you will currently find the ten best dividends.

THE HIGHEST DIVIDEND YIELDS IN THE FTSE 100 

Company	Dividend yield 2023
Phoenix Group (LSE: PHNX)	11%
Vodafone (LSE: VOD)	10.8%
British American Tobacco (LSE: BATS)	10.6%
M&G (LSE: MNG)	9.2%
Legal & General (LSE: LGEN)	8.6%
Imperial Brands (LSE: IMB)	8.1%
St James’s Place (LSE: STJ)	8%
NatWest (LSE: NWG)	7.8%
Aviva (LSE: AV)	7.7%
Glencore (GLEN)	7.4%

 CAN INVESTORS TRUST THESE COMPANIES TO DELIVER?  

This list is dominated by companies in the financial services sector. Pension giants Phoenix, M&G, Legal & General and Aviva, all offer inflation-beating dividend yields. 

These businesses are more likely to offer sustainable dividends than most as they’re highly regulated. Therefore, they’ll only pay what they can afford to and are allowed to by the regulator. 

Also, cashflow from the management of pension assets and insurance products offered are relatively predictable over the long term. This means management has a lot more visibility over cash flows and can set dividends accordingly. 

Vodafone and British American Tobacco (BAT), also offer double-digit percentage yields, but AJ Bell suggests this may reflect the market’s lack of faith in those companies’ earnings growth potential. 

“Investors are demanding a very high yield to compensate themselves for the risks that are perceived to come with holding the stock,” the report says.

It highlights that Vodafone, which has pressures from high levels of debt, has cut its dividend once in its history while British American Tobacco has never done so but is facing falling sales due to declining smoking rates.

The outlook for other companies on the list is a bit more uncertain. NatWest benefits from higher interest rates, which means it charge more to borrowers. However, if the economy starts to stutter, they may have to deal with higher loan write-offs in their portfolio. They’re also likely to have to pay out higher rates of interest to savers to keep their business. This could hit profit margins and force the lenders to reduce shareholder returns to focus on profits. 

Companies can quickly see their fortunes change. For example, Taylor Wimpey has fallen out of the top ten compared with the third quarter, perhaps reflecting concerns about the health of the property market and how confident people will be about buying or selling property in 2024.

Daily Mail
HAMISH MCRAE: Backing Britain pays dividends

The year is off to a mediocre start for shares, and in London, unlike New York, there was not much of a Santa rally.

Big tech America is particularly hard hit, with the biggest enterprise of all, Apple, now worth $2.85 trillion (£2.25 trillion), down from $3 trillion three weeks ago.

But here, the FTSE 100 index shuffles sideways, as it has done for much of this century, unloved by British institutional investors and reliant on foreign buyers to prop it up. So another year of lacklustre performance?

Well, my own target is the Footsie will reach a new high of 8,500, as the value it offers will increasingly be recognised. Supposing that proves premature, remember the power of the dividend. Even if capital values were to move sideways, it offers a dividend yield of close to 4 per cent, more than double that of the S&P 500.
Indeed, if you factor in dividends, the long-term performance of London-quoted companies looks much closer to that of New York-quoted ones. This is a point made by Merryn Somerset Webb, ex-editor-in-chief of MoneyWeek, now writing for Bloomberg.

Backing Britain: The corporate sector can ride out any resurgence in inflation – it knows how to cope – that means it can go on paying dividends
by This Is Money

The Footsie reached the age of 40 last week, and according to the investment company AJ Bell it delivered an annualised return over that period of 5.2 per cent.

That lags the 9.1 per cent from the S&P 500 and 7.8 per cent on European shares, as measured by the MSCI Europe (ex-UK) index.

But if you add in reinvested dividends the gaps narrow. The UK is 8.6 per cent, Europe 8.7 per cent and the US 11.4 per cent. That is over the full 40 years, with strong performance in the 16 years from 1984 on, under the Thatcher and Major governments, and the early years of the Blair/Brown one.

However, if you look at what has happened in the 24 years since 2000 the picture is less good. Even adding in dividends the UK does worse than Europe and a lot worse than the US. The decent overall performance by the UK stems from a great run prior to 2000, offset by a poor one thereafter.

There are many reasons for that, including the relentless disinvestment in UK equities by British pension funds and the downgrading of the banking sector. There were the catastrophes at Royal Bank of Scotland and Bank of Scotland, the unfashionable status of mining and oil giants, the small size of the high-tech sector, and negative commentaries about the UK economy. That last point should not matter, as Footsie companies earn three-quarters of their revenue from the world economy, but I suspect in practice it does.

As a result, UK shares offer exceptional value, as the price/earnings ratio of the Footsie – at just over 11 – is close to the bottom of its long-term range.

Will the negative factors continue? Some will, for I can’t see UK banking becoming fashionable again for a while. But one negative cannot persist. UK institutional investors cannot go on reducing their holdings of equities. They haven’t got enough left to sell.

They may not build their holdings, despite being urged to do so, but the fact they are now a neutral force, rather than an adverse one, is some sort of turning point.

In any case, over any long period much of the return comes from reinvested dividends rather than capital growth.

There are two famous long-range reports on investment that come out each year, both going back to the start of the last century. One is the Equity-Gilt Study run by Barclays, the other the Credit Suisse Global Investment Returns Yearbook, which I assume will continue under UBS. Both show that two-thirds of the return comes from compound growth of reinvested income. That applies to bonds as well as equities, but in the case of non-index linked bonds, you have no protection against inflation.

In equities the protection is not perfect because, as we have seen, a surge in inflation can destroy an otherwise viable business. But the rise in general price levels pulls up the value of well-run companies along with everything else.

That gives a further twist to the ‘power of the dividend’ story. We don’t know what will happen to inflation in the medium-term. It will continue to plunge this year, but we don’t know if it will settle around 2 per cent, 3 per cent, or – perish the thought – 4 per cent.

So we don’t know where bond yields will settle. What we do know, with reasonable confidence, is that the corporate sector can ride out any resurgence in inflation. It knows how to cope. That means it can go on paying dividends. And if you want dividends the best place to get those is the UK.

£904 to be added to the snowball.

All earned last year but u can’t double count them

for bookkeeping purposes.

I guess that everyone would agree JGGI is not a buy based on the chart

action. Well maybe not everyone.

The question is how much of your profit, if u bought, are u willing

to give back ?

Of course the price action may change the picture tomorrow

but the only way I know is to keep watching and waiting.

Part two of a round-up of the year’s most memorable quotes from investment company chairmen/chairwomen and investment managers

ByFrank Buhagiar•05 Jan, 2024•

A second serving of something different…

As regular readers will know, as well as covering the week’s investment company results and broker comments, Doceo’s Weekly 360 includes quotes from the various chairmen, chairwomen and investment managers. These quotes are included because they are either helpful, insightful, memorable or a mix of all three. With investment company news in short supply over the festive period, we’ve been trawling through the various Weekly 360s we’ve published over the course of 2023 and picking out one quote for each week of the year. Last week’s Weekly 360 covered the first half of 2023. This week, it’s the turn of the second half.

Once again, a big thank you to the chairmen/chairwomen/investment managers for taking the time to write statements and reports that are not only highly informative but also very readable. We look forward to reading their thoughts and musings in 2024!

07 July 2023

“The Company overall had a worthwhile year…” Worsley Investors (WINV) Chairman W. Scott.

14 July 2023

“Last summer, new legislation providing the greatest support for environmental solutions in the history of the United States passed into law. Yet you would hardly have known it from the name. The Inflation Reduction Act of 2022 (IRA)…was originally billed as the ‘Build Back Better Act’, but neither name reflects the true intentions behind the law – combatting climate change and reinvigorating US industrial and strategic policy in the process.” Jupiter Green (JGC) Chairman Statement.

21 July 2023

“Few things irk the portfolio manager more than continued recourse to superlatives when describing the macro backdrop influencing the behaviour of the wider equity market. We can say with some asperity that we are beyond bored with living in ‘interesting times’. Nonetheless, we are compelled to record the reality of another epoch that seems without precedent.” Bellevue Healthcare (BBH) Investment Manager’s Report.

28 July 2023

“Investing at this time in the cycle is always challenging and is often compared to picking up pennies in front of a steam roller.” Henderson Diversified Income (HDIV) Fund Manager’s Report.

04 August 2023

“There are plenty of reasons to be bearish. More than a year ago, the two-year treasury yields rose above the ten-year treasury yields in the US bond market (it is normally the other way around). This ‘yield curve inversion’ has, historically, been a lead indicator of recession about 80% of the time, but the lag between the date of inversion and recession can be six months to three years. It is a bit like seeing a big dark cloud on the horizon and predicting it will rain soon!” Fidelity European (FEV) Portfolio Managers.

11 August 2023

“In nature, there exists a mushroom: the matsutake. Matsutake are wild mushrooms that emerge in some of the most disturbed environments in the world. However, matsutake is not considered a pest; it is a gourmet treat: the most valuable mushroom in the world. Nature shows us that valuable products can emerge even within the most disturbed environments. The same applies to companies; difficult times help us identify resilience and adaptability, two core tenets of long-run success.” Baillie Gifford US Growth (USA) Investment Manager’s Review.

18 August 2023

“There is the noise accompanying the results from public companies, with analysts and investors poring over the numbers and CEO statements looking for an interpretative edge. Cutting through that noise, I sometimes think it is easiest to simply look at the dividend announcement by the company. To us the increase, maintain or cut decision taken by a board of directors about its current dividend captures an enormous amount of information about mid-term prospects.” Finsbury Growth & Income (FGT) Monthly Report for July 2023.

25 August 2023

“Market timing is challenging, particularly in the small cap area, and often it is ‘time in’ rather than ‘timing’ which is critical.” abrdn UK Smaller Companies Growth (AUSC) investment managers.

01 September 2023

“This is the easiest section of any report I have ever written. The outlook is the brightest since NAVF’s IPO in 2020. METI’s M&A review, the Tokyo Stock Exchange’s announced intention to name and shame all companies trading below PBR and requiring them to generate comprehensive plans to plot a path to trading at multiples, and the Corporate Governance programme generally, have never provided a stronger regulatory wind at our back.” Nippon Active Value Fund (NAVF) Investment Adviser Paul ffolkes Davis.

08 September 2023

“If, as Mr Buffet famously said, ‘price is what you pay, value is what you get’, then it is possible to pay too much even for the highest quality companies. Assessing the sustainability of corporate returns and the correct price to pay for future returns is the skill and partially the art of investment.” Mid Wynd International (MWY) Chairman Russell Napier.

15 September 2023

“…our tolerance for companies with intransigent and entrenched management who refuse to listen to shareholder voices has diminished…There are too many well run and undervalued companies in Japan, with management teams who want to create value for shareholders, to waste our time with uncooperative companies with no interest in shareholders.” AVI Japan Opportunity Trust (AJOT) Portfolio Manager Joe Bauernfreund.

22 September 2023

“Unlike more predictable professions, where following certain procedures guarantees certain outcomes, investing demands similarly precise methods but success is never guaranteed. We would all prefer it to be straightforward.” Brown Advisory US Smaller Companies (BASC) Portfolio Managers’ Review.

29 September 2023

“It can be very tempting, when share prices fall or performance is challenging, to go for the quick fix, to chase performance and do things that you would not do in other circumstances. As shareholders in this Company, you should neither expect that from your Portfolio Managers, nor excuse it.” JPMorgan Emerging Markets (JMG) portfolio managers.

06 October 2023

“Feeling uncomfortable is necessary if seeking to perform differently from the crowd.” Ruffer (RICA) Investment Manager’s Report.

13 October 2023 “Here I go again, wishing that the following year is better than the current one.” Ashoka India Equity (AIE) Chairman Andrew Watkins.

20 October 2023

“Experience demonstrates that some of the best investments are undertaken at the bottom of the economic cycle.” Seraphim Space (SSIT) Chair Will Whitehorn.

27 October 2023

“…what is the catalyst to end this period of UK Small and Mid-cap underperformance?…Sadly the answer is unsatisfactory. I don’t know. There it is, I simply don’t know. So often the catalyst is something we only see in a rear-view mirror, a moment that is only identified from post event analysis, a trough on a Bloomberg chart we look back on and say ‘that was the bottom, and what an opportunity it was’. BlackRock Smaller Companies’ (BRSC) Investment Manager’s Report.

03 November 2023

“It is always difficult for us to assess when businesses will become better appreciated which is why we try to focus more on the underlying progress of sales and profits in the expectation that, over the long term, these will be reflected in share prices. Like you, we would like to have seen significantly better share price results over the past couple of years but, in general, we see solid ongoing progress at individual businesses and take significant comfort from that.” Baillie Gifford Japan Trust (BGFD) full-year investment manager’s review.

10 November 2023

“The noise around market moves seems to increase with every passing year.” BlackRock Greater Europe (BRGE) Investment Manager’s Report.

17 November 2023

“There was a huge spike in the number of articles containing the phrase ‘soft landing’ in both 1999/2000 and 2007/08. We worry that history will repeat itself.” Capital Gearing Trust (CGT) Investment Managers.

24 November 2023 “’Illegitimi non carborundum’ is our mentality currently…” Rockwood Strategic (RKW) fund manager Richard Staveley. Need help translating? ‘Don’t let the b* grind you down…’

01 December 2023

“I feel like a well-worn record in continuing to point out the value in this space but that isn’t normally the time to stop doing it.” Odyssean (OIT) Chair Jane Tufnell.

08 December 2023

“Chairmen, and other commentators, are apt to open by remarking on ‘uncertain times’. No-one would dispute that we are in such times now. In reality, however, we always are, and what varies is the depth of uncertainty.” Lowland (LWI) Chairman Robert Robertson.

15 December 2023

“Geopolitical risk has increased since we wrote our mid-year outlook, but this fact does not seem to have put much of a dent in the market’s confidence in the ‘Magnificent Seven’, which have streaked ahead on a cloud of AI (recall that by the end of the film, only three of the seven were still alive).” Schroder UK Mid Cap (SCP) Investment Manager’s Report.

22 December 2023 “We have heard the death knell sounded for investment trusts many times before. The sector has always evolved and progressed.” MIGO Opportunities Trust (MIGO) Investment Manager’s Report.

The Motley Fool

I’m using the Warren Buffett method to build wealth in 2024

Story by Christopher Ruane

Compounding builds wealth

Given how successful his company Berkshire Hathaway has been though, why does it not pay dividends?

The reason is that Buffett is a big believer in compounding. That basically means reinvesting earnings, whether in the form of dividends or capital gains.

He compares it to pushing a snowball downhill. As it goes, it picks up more snow that, in turn, picks up even more snow. In Buffett’s analogy, the snow represents money.