ATR outperforms expectations, strategic plans at FSFL provide cause for optimism and HGT’s Annual Results include a 26.2% share price total return.

Frank Buhagiar
15 Mar, 2024

Doceo’s Weekly 360 – the week’s Investment Trust results
A bumper week this week, so let’s get straight into it.

Ashoka India Equity (AIE) believes India is at the cusp of realizing its true economic potential

Inline half-year performance from AIE thanks to share price/NAV total returns of 16.3% and 15.7% respectively (sterling terms) – the benchmark index clocked up 16.4%. Chairman Andrew Watkins believes there’s more to come “India is at the cusp of realizing its true economic potential while benefitting from several secular tailwinds, the most important being its favourable demographics and rising income levels”.

Numis rates Ashoka India highly “Since listing in July 2018 Ashoka India has been an exceptional performer, producing NAV total returns of 155% (17.9% pa) compared to 86% (11.5% pa) for the index. It is interesting to see comments from the Board that the company is exploring consolidation opportunities. We rate Ashoka India highly, based on the strength of its track record and its clearly defined and differentiated investment approach”.

HgCapital (HGT) successfully navigating challenging market conditions

Highlights of HGT’s Annual Results include a 26.2% share price total return and 11.1% NAV total return. Chairman Jim Strang said “HgT delivered a resilient performance in 2023, successfully navigating challenging market conditions. The portfolio maintained strong underlying performance over the year with sales and EBITDA across the top 20 investments (76% of the portfolio) growing at 25% and 30% respectively”.

Winterflood “We retained HGT in our 2024 Recommendations, and these results offer little to dissuade us from this decision. We note that while some may feel that the 26.1x valuation multiple is on the expensive side, this is roughly in line with SAP, HGT’s closest listed comparable, which has significantly lower revenue growth”.

Numis “We continue to believe that HgT’s portfolio is of exceptional quality and is well placed to continue to deliver strong earnings growth which will drive value creation. HgT remains one of our favoured Investments”.

JPMorgan “At the current price of 457.5pps the shares are trading on a headline discount of 8.5%, with the implied discount at a similar level. This is narrow relative to peers, but we believe is justified on account of HGT’s track record of capturing material uplifts to carrying value, and the differentiated company exposure an investment in the shares provides”.

Liberum “Underlying performance continues to be strong, reflected by the organic growth, while the high frequency of realisations (four between December 2023 and January 2024 and 13 since the beginning of 2023) in the face of a much tougher exit environment helped drive a c.11% narrowing in the discount in 2023. This was the main source of the 26% total share price return”.

Foresight Solar Fund’s (FSFL) strategic plans are cause for optimism

Chairman Alexander Ohlsson describes FSFL full-year performance as “resilient against a challenging market backdrop. Our operational strength, the powerhouse behind our progressive dividend, enabled us to comfortably meet our dividend target of 7.55p per share for 2023 and allows us to propose an above inflation increase of 6.0% for the 2024 target dividend of 8.0p per share”.

And Ohlsson is confident for future “After a challenging year for markets, we believe there are reasons for optimism. Industry fundamentals remain attractive and solar generation continues to be one of the cheapest and most reliable sources of electricity available. This promising outlook, coupled with Foresight Solar’s improved financial position and clear strategy to deliver income and growth, positions the fund well to capitalise on the opportunities ahead”.

Jefferies “FSFL had pre-announced a NAV per share of 118.4p at 31/12/23, resulting in a total return of 1.9% for Q4, and -0.4% for the year. Given the shares traded at wider than a 10% average discount over calendar 2023, the fund has triggered a discontinuation resolution (structured as a special resolution) to be held at the forthcoming AGM”.

Liberum “Based on the buyback yield in 2023 (c.2.7% –total repurchases/beginning of year market cap) and the current dividend yield, an implied total distribution of nearly 11% is within the top 20 of all alternative funds”.

Numis “Given the ongoing buyback, 200MW disposal programme which has shown some notable success to date, and a well-covered dividend, we believe the current discount of 23% remains too wide”.

Fidelity Emerging Markets’ (FEML) unique investment process

FEML posted a 3.2% NAV total return for the half year, a little short of the MSCI Emerging Markets’ 4.4%. The managers note “While the long book detracted overall, the short book performed well, and added over 100bps to relative returns over the six-month period.” According to Chair, Heather Manners “The managers’ ability to hold short as well as long positions – investing in well financed, well managed businesses that can drive growth, while also making money from identifying those at risk of disruption – is a key differentiating factor that is increasingly feeding into positive performance for the Company”.

Winterflood “Underperformance largely attributed to weakness in Consumer names held in China. Short positions contributed over 1% to relative performance. China allocation remains underweight. Latin American allocation increased over period, with managers seeing opportunities in Mexico and Brazil”.

Finsbury Growth & Income’s (FGT) Magnificent Five drive portfolio outperformance “Four of our magnificent five outperformed the FTSE All-Share last month; not that that was too much of a challenge because the index itself was effectively unchanged. Those five are the holdings in your portfolio of more than 10% of NAV and are ‘magnificent’ in the sense they are world-class and substantive businesses, each with a clear secular growth opportunity…we hope they will be drivers of value for our investors for years to come.” FGT factsheet for February 2024 during which NAV was “up 1.7% on a total return basis and the share price up 2.3%, on a total return basis, while the index was up 0.2%”.

Cautious optimism at Seraphim Space (SSIT)

1.8% increase in NAV per share at SSIT at the half-year mark. Chair Will Whitehorn said “Private companies continue to account for the majority of the portfolio (88.2% by number and 97.5% by fair value). The fair value of the private portfolio increased over the Period, reaching 121.5% vs. cost (121.4% excluding FX impact) at the Period end. The listed element of the portfolio remained depressed (13.2% fair value vs. cost)”.

Whitehorn said he is cautiously optimistic “Indications of inflation being tamed and interest rates having peaked has resulted in some evidence of improved sentiment in both the private and public markets. We continue to believe that SSIT’s current cash reserves are sufficient to meet the near-term capital needs of the portfolio”.

Liberum “Looking towards what might provide a further catalyst to the shares, a portfolio sale and higher magnitude share repurchase combination probably stands out”.

Numis “The portfolio comprises interesting companies, many of which benefit from first mover advantage which help to cement their place in a growing sector, helping to fuel a rerating. The shares are up c.50% in 2024 ytd, but we believe they remain cheap on a c.42% discount”.

Winterflood “We do not think that a 40%+ discount will be appropriate if 2024 indeed sees more widespread cash generation across the portfolio and further evidence of operational execution is provided, particularly once portfolio companies put the funds raised to work”.

Schroder Asian Total Return (ATR) Investment Managers on a possible cure for insomnia

“We will keep our strategy review mercifully short this year. For professional clients that would like a more comprehensive run down we would recommend they ask their Schroder contact for our 60-page Year of the Dragon report, a perfect cure for insomnia”.

ATR outperforms with room to spare

ATR’s 8.8% NAV total return for the full year comfortably above the benchmark’s 1.3%. Chair Sarah MacAulay says the “key to performance is our continued focus on long-term fundamentals when selecting stocks. In the case of China and Taiwan our outperformance was often as much about the stocks we avoided rather than the ones we held”.

Following a trip to Asia, the investment managers are feeling “a little more upbeat on prospective Asian stock market returns. We think inflation is likely to be less of a headwind and outside of China the economic picture in Asia looks reasonable. Company balance sheets are generally in good shape and whilst the earnings outlook is uncertain, valuations and market sentiment in the main reflect this in your Portfolio Managers’ view”.

Winterflood “The portfolio outperformed the index in 10 out of 12 Asia Pacific markets. The managers note that ageing demographics in Asia are likely deflationary”.

AVI Japan Opportunity Trust’s (AJOT) deep relationships pay off

Chairman Norman Crighton said that AJOT’s 15.8% return for the year means “Since its inception, AJOT has delivered returns of +40.5% versus +16.2% for the benchmark. In JPY terms, since inception, returns are significantly higher, at +73.7% vs +43.6% for the benchmark.” The Chairman puts this down to relationships “AVI’s investment team builds deep relationships with the management of every portfolio company. This approach has led to numerous shareholder-friendly measures being introduced across multiple companies which has delivered strong results for our investors”.

Numis “We think that AVI Japan Opportunity is an attractive way to access the Japanese market, through an activist approach seeking to unlock value from companies that the manager believes suffer from weak corporate governance and capital misallocation”.

Oakley Capital Investments (OCI) shows resilience

4% NAV per share total return and 18% total shareholder return at OCI for the full year. Chair Caroline Foulger believes the results are “testament to the resilience of the underlying portfolio and Oakley’s active management that, in spite of the unsettled nature of the global economy, the Company continued to deliver. Most importantly, total shareholder return was 18%, taking the annualised five-year total shareholder return to 24%. OCI continues to offer one of the most accessible ways to gain exposure to pan-European private equity through one of the industry’s best performing managers”.

Jefferies: “NAV performance has been relatively pedestrian of late, likely reflecting a cautious approach applied to future earnings and a lack of exit uplifts. However, this arguably sets OCI up for a strong recovery”.

Numis “The shares are trading at a 31% discount to NAV, which we believe offers exceptional value for exposure to a high-quality private equity manager, with a very strong track record”

Liberum “The underlying portfolio is growing well, benefitting from a focus on digital disruptors exposed to megatrends”.

Pacific Horizon (PHI) says east is the way to go

PHI outperformed over the half year courtesy of not falling by as much as the benchmark – NAV off 4.8% compared to 7.3% for the index in sterling terms. The Interim Management Report notes “a significant dispersion of geographic returns across the region, with the worst performing market indices, China and Hong Kong, both falling approximately 20%, while the best performing markets, India and Taiwan, rose approximately 16% and 8% respectively. The portfolio was generally well positioned in this environment, with India our largest country position. By contrast, China and Hong Kong were among our most substantial underweights”.

The investment managers “remain extremely positive on the long-term outlook. Asia has already taken up the baton of global demand growth. Asia is now better positioned financially than much of the developed world and, with a renewed investment cycle unfolding, Asian growth is likely to significantly outperform over the coming years. We believe looking east remains firmly the right course of action”.

Winterflood “Unlisted holdings 8.4% of NAV. Largest sector exposure remains India Real estate (10% of NAV), which was top contributor over period”.

Strategic Equity Capital (SEC) focusing on high quality

SEC’s 1.7% NAV total return for the half year was a little way off the FTSE Small Cap (ex Investment Trusts) Index’s 9.6%. According to the investment managers “This reflected the relatively defensive positioning of the portfolio compared to the wider market” That’s because the focus is “on high quality businesses in less cyclical parts of the market and with resilient business models and robust balance sheets”. Typically, these businesses are “exposed to structural growth, key competitive advantages or self-help opportunities”.

Winterflood “Underperformance largely reflective of defensive positioning of portfolio, e.g. being underweight cyclical sectors, such as Consumer Discretionary, which contributed strongly to index performance”.

Manchester & London’s (MNL) favoured themes gaining momentum

Tech-heavy MNL posted a 23.3% jump in NAV per Ordinary Share for the half year. Chairman Daniel Wright said “It is becoming ever more evident that corporate digitalisation and automation of the labour force command increasing significance, and the Manager’s three favourite secular growth themes of Cloud Computing, Artificial Intelligence and Semiconductor Use gather further momentum. In summary, the portfolio remains focused on larger capitalisation, liquid, listed stocks with profitable and cash generative business models that are aligned with some of the most exciting forward-looking themes of the day”.

Winterflood “Key stock contributors included Nvidia (22% of NAV), Microsoft (29%), AMD, Arista, Cadence, ASML and Synopsys. The managers expect secular growth in Electric Vehicles, Artificial Intelligence, Cloud Computing, IoT, Digitalisation and Automation driving the Semiconductor market to double over the next decade”

Why dividend yields are more important than ever

Story by Alan Oscroft

MotleyFool

I’d say we really shouldn’t try to judge the value of our investments based on share prices. Did anyone famous ever say that? They should do.

Total returns matter. And they’re made up of share price gains and dividends. So don’t they both contribute to the valuation of our shares?

In the long run, yes. But on a short-term basis, using share prices can lead us astray. They’re based on… fear, hype, day-to-day news… and all kinds of irrational influences.

But dividends are cold hard cash. Cash doesn’t change with today’s fears, or tomorrow’s hopes.

What if we own some shares paying good dividends? And we don’t plan to sell for at least another 10 years? Should we care what they’re priced at today?
Why now?
So why do I say dividend yields are more important right now?

I see worse disjoint between company share prices and long-term valuation than I have for a long time. That’s no surprise when people are under pressure and worried about the future.

But it makes me sad to see people dumping their ownerships of quality companies for silly low prices.
Let’s pick a bank stock as an example. I choose that sector because I think it offers some super low valuations now, and good dividends.

Cheap stock
I’ll go for NatWest Group (LSE: NWG), with its nice fat 6.8% dividend yield.

I see a recent share price of around 250p. Does that fairly value the bank?

Well, I see NatWest shares were at just a bit over 200p not long ago. Is it a nearly 25% better company now than it was just a few weeks ago?

Over that same short timescale, the forecast dividend is unmoved at 17p per share.

Keep the cash
What if we buy NatWest shares today, and pocket the dividend cash?

If the dividend stays the same, we could get our money back in less than 15 years. And still own the shares.

We could double our investment in that time. Is that worth giving up at today’s share price?

Reinvest
It gets better if we buy more shares each year with the cash. Then, we could double our money in only 11 years, even if the share price gains nothing.

Saying that, I can understand why people might want to sell bank shares, including NatWest, right now.

These are risky times, and there could well be worse to come for the sector. And I can see interest rate uncertainty holding the banks back for some time yet.

Dealing with it
But I think the best way to deal with it is to keep an eye on their dividend yields. Watch to see the earnings are there to cover them. And check cash flow and liquidity are strong enough.

As long as that all looks good, the share price can do whatever it likes.

Why dividend shares are more important than ever.

Story by Harvey Jones

The Motley Fool
Lately I’ve been piling into FTSE 100 dividend shares while ignoring all the headlines about chip maker Nvidia and other super soaraway US tech stocks

It hasn’t been easy, given the hype over the Magnificent Seven mega-caps, but I’ve stuck to my guns. While UK income stocks don’t have the same pizzazz, I think these tortoises may be just as rewarding as the tech hares in the end.

I still have exposure to US tech, through my Vanguard S&P 500 UCITS ETF and Legal & General Global Technology ETF. But when it comes to buying individual stocks, I’ll continue to focus my efforts on undervalued UK blue-chips.

Income over growth
There are a heap of FTSE 100 income stocks on the market right now, trading at low valuations while offering sky-high dividend yields.
The financial sector is particularly fertile ground. Insurance conglomerate Phoenix Group Holdings now yields 10%, wealth manager M&G yields 8.46% and Legal & General Group yields 8.29%. I hold all three in my self-invested personal pension (SIPP).

High yields can be vulnerable. Companies need to keep the free cash flowing, or they die. A rising yield is often the sign of a declining share price, and none of these have shot the lights out lately.

Yet I believe their shareholder payouts may prove sustainable. They may also climb over time. This should give me both a high and rising income, which I will reinvest straight back into stocks.

If today’s yields persist, I should double my money in less than eight years, even if the share prices don’t rise at all.

Personally, I think they will, when inflation is defeated and interest rates fall. That will hit cash savings rates and bond yields, potentially boosting demand for high-yield UK dividend stocks, and reviving their share prices.

When it comes to every dividends, size isn’t everything. Weapons manufacturer BAE Systems (LSE: BA), which I bought recently, has a headline yield of just 2.32%. That’s way below the FTSE 100 average of 3.9%, and pales into insignificance compared to Phoenix.

Progressive policy
However, BAE still plays plenty of dividends, it’s just that its yield has failed to keep up with its rocketing share price. It’s up 42.13% over one year, and 179% over five years.

The board recently increased its annual dividend by an inflation-busting 11% to 30p per share, following another strong set of full-year results. BAE is forecast to yield 2.51% in 2024 and 2.71% in 2025.

It’s a great British dividend growth stock but there are still risks. If Middle East tensions ease, or US-China relations improve somehow, that could slow today’s arms race. The stock trades at 20.42 times earnings, double the average FTSE 100 valuation, so isn’t cheap.

I’m a little impatient so mostly I’m targeting stocks that pay a generous yield today. I’ve also bought Glencore, Lloyds Banking Group and Taylor Wimpey, all of which I believe will give me a solid, rising income over time. That’s hugely important to me, because I plan to build my retirement on the dividends they pay me. I won’t base my pension plans on volatile, low-yielding US tech stocks.

 Provided by The Motley Fool

Billionaire Warren Buffett is famous for his investing tips. The one I’m about to discuss was a real eye-opener for me. It’s something that, if ignored, could cost me or any other average investor hundreds of thousands over a lifetime. 

At first glance, that doesn’t seem like a big deal. I mean, of course losing 1% is going to cost me. That’s obvious. 

But the reality, which isn’t clear at first, is that this isn’t small change. The amount of money I lose could be nothing short of life-changing. Let me explain.

I’m saving £500 a month and I receive a 9% return – broadly in line with the recent history of the stock market in this country. And let’s say that I invest from age 28 to 68, which is 40 years of my working life.

It looks like I’d build my way up to £2.1m. A nice amount there, enough for a cosy retirement, but I’ll point out that inflation will mean that figure won’t be quite so impressive in the future. Either way, we’ve got a baseline for what to expect from my investments. 

So, now I’ve built up to £1.6m. That’s half a million less than my previous value, all from only taking a single per cent off the returns. In terms of a percentage, I lose 24% of my money. All from that just 1% less! 

24% off

If that doesn’t sound right, well, that’s what Buffett is talking about. I expect a 1% cut to slice 1% off what I get, not nearly a quarter of it all

So how to apply this advice? Well, in short, I have to be aware of how much difference a small change in the percentage can make. 

To be specific, if I buy an index fund then it pays to look for low-fee ones. Vanguard is very popular for low-fee funds that track markets like the FTSE 100 or the S&P 500. I invest in a Vanguard fund already and pay just 0.04%. 

The advice is true even if I invest in individual companies. I can reduce my fees by shopping around for brokers or investing in larger chunks. And it’s more proof of how important research is too. 

A game-changer

I’ll point out here that while 1% difference can be a game-changer, it doesn’t guarantee anything. All investments in stocks can be risky and I may get back less than I start with.

I’ll end here by showing how this tip goes both ways. In my example, if I add 1% instead of taking it away? Well, I’d end up with a £2.8m nest egg instead. That would suit me nicely, and I imagine I’d start my retirement by saying a big thank you to Mr Buffett .

Watch to see which way it breaks.

Out of adversity comes opportunity.

Slim Pickings.

The blended yield of the blog portfolio is 9.5%, which even allowing for fluctuations should allow the portfolio to achieve it’s target of a pension of between 14 and 16k pa and u keep all your capital.

How to Retire on

9%+ Dividends

Paid Monthly

Collect $3,750+ in dividends per month—every month—and

earn $50,000 or more annually in capital gains to boot!

Dear Reader,

The suits at Merrill Lynch say you need $738,400 to retire well.

Let me explain why they’re dead wrong. You’ll actually need a lot less than that.

I’m going to show you a simple way to bankroll your golden years on 32% less. That’s right: I’m talking about a fully paid for retirement for around $500,000.

Got more? Great. I’ll show you how you can retire filthy rich on your current stake.

Plus my “9% Monthly Payer Portfolio” will let you live on dividends alone—without selling a single stock to generate extra cash.

And you’ll get paid the same big dividends every month of the year – so that your income and expenses will once again be lined up!

This approach is a must if you want to quickly and safely recover from the recent pullback, book strong gains in the rebound and safeguard your nest egg through the next market correction, too!

This isn’t just a dividend play, either: this proven strategy also positions you to benefit from 10%+ yearly price upside potential, in addition to your monthly dividends.

That’s the Power of Monthly Dividends

We’ll talk more about that price upside shortly. First, let’s set up a smooth income stream that rolls in every month, not every quarter like the dividends you get from most blue-chip stocks.

You probably know that it’s a pain to deal with payouts that roll in quarterly when our bills roll in monthly.

But convenience is far from the only benefit you get with monthly dividends. They also give you your cash faster—so you can reinvest it faster if you don’t need income from your portfolio right away.

More on that a little further on. First I want to show you…

How Not to Build a Solid Monthly Income Stream

When it comes to dividend investing, many “first-level” investors take themselves out of the game straight off the hop. That’s because they head straight to the list of Dividend Aristocrats—the S&P 500 companies that have hiked their payouts for 25 years or more.

That kind of dividend growth is impressive. But here’s the problem: these folks are forgetting that companies don’t need a high dividend yield to join this club—and without a high, safe payout, you can forget about generating a livable income stream on any reasonably sized nest egg.

Worse, you could be forced to sell stocks in retirement—maybe even into the kind of plunges we saw in March 2020 or throughout 2022—just to make ends meet.

That’s a nightmare for any retiree, and leaning too hard on the so-called Aristocrats can easily make it a reality: the ProShares S&P 500 Dividend Aristocrats ETF (NOBL), which holds all 67 Aristocrats, still yields just 2.4% as I write this.

Solid Monthly Payers Are Rare Birds …

You can certainly build your own monthly income portfolio, and the advantage of doing so is obvious: you can target companies that pay much more than your average Aristocrat’s paltry payout.

Trouble is, only a handful of regular stocks pay in any frequency other than quarterly, so we’ll have to patch together different payout schedules to make it happen.

To do that, let’s swing back to the Aristocrats and cherry-pick a combo of above-average yields and payout schedules that line up. Here’s an “instant” 6-stock monthly dividend portfolio that fits the bill:

Procter & Gamble (PG) and AbbVie (ABBV) with dividend payments in February, May, August and November.
Target (TGT) and Chevron (CVX), with payments in March, June, September and December.
Sysco (SYY) and Wal-Mart Stores (WMT), with payments in January, April, July and October.
Here’s what $500,000 evenly split across these six stocks would net you in dividend payouts over the first six months of the calendar year, based on current yields and rates:

You can see the consistency starting to show up here, with payouts coming your way every single month, but they still vary widely—sometimes by $687 a month.

It’s pretty tough to manage your payments, savings and other needs on a lumpy cash flow like that.

And the bigger problem is that we’re pulling in $17,396 in income on our $500,000 nest egg. That’s not nearly enough for us to reach our ultimate goal of retiring on dividends alone, without having to sell a single stock in retirement.

We need to do better.

Which brings me to…

Your Best Move Now: 9%+ Dividends AND Monthly Payouts

This is where my “9% Monthly Payer Portfolio” comes in. With just $500,000 invested, it’ll hand you a rock-solid $45,000-a-year income stream. That’s enough for many folks to retire on.

The best part is you won’t have to go back to “lumpy” quarterly payouts to do it! Of all the income machines in this unique portfolio, nearly half pay dividends monthly, so you can look forward to the steady drip of income, month in and month out from these plays.

That’s How This Grandma Makes

$387,000 Last Forever

A while back, I was chatting with a reader of mine who manages money for a select group of clients. He’d been using my Monthly Payer Portfolio to make a client’s modest savings – a nice grandmother who came to him with $387,000 – last longer than she ever dreamed:

“She brought me $387,000,” he said. “And wants to take out $3,000 per month for 10 years.”

The result? The last time I’d spoken with him, it had been over four years since she started her $3,000 per month dividend gravy train. In that time, she’d taken out a fat $159,000 in spending money.

And that nest egg? Well, it’s going strong. Last time I checked in with this reader, she was still sitting on more than $358,000 after nearly four and a half years and $159,000 worth of withdrawals.

Grandma’s Monthly Dividend Gravy Train

Her investments pay fat dividend checks that show up about every 30 days, neatly coinciding with her modest living expenses. And the many monthly dividend payers she bought dish income that adds up to 5%, 7% and even 8% or more per year.

There’s no work to it; these high-income investments provide a “dividend pension” every month.

I’m ready to give you everything you need to know about this life-changing portfolio now. Let’s talk about Grandma’s secret – her high-yielding monthly dividend superstars (which even have 10%+ price upside to boot!)

Monthly Dividend Superstars:

9% Annual Yields With

10%+ Price Upside, Too

Most investors with $500,000 in their portfolios think they don’t have enough money to retire on.

They do – they just need to do two things with their “buy and hope” portfolios to turn them into $3,750+ monthly income streams:

Sell everything – including the 2%, 3% and even 4% payers that simply don’t yield enough to matter. And,
Buy my favorite monthly dividend payers.
The result? More than $3,750 in monthly income (from an average annual yield just over 9%, paid about every 30 days). With upside on your initial $500,000 to boot!

And this strategy isn’t capped at $500,000. If you’ve saved a million (or even two), you can just buy more of these elite monthly payers and boost your passive income to $7,500 or even $15,000 per month.

Though if you’re a billionaire, sorry, you are out of luck. These Goldilocks payers won’t be able to absorb all of your cash. With total market caps around $1 billion or $2 billion, these vehicles are too small for institutional money.

Which is perfect for humble contrarians like you and me. This ceiling has created inefficiencies that we can take advantage of. After all, in a completely efficient market, we’d have to make a choice between dividends and upside. Here, though, we get both.

Inefficient Markets Help Us

Bank $100,000 Annually (per Million)

Fortunately for you and me, the financial markets aren’t 100% efficient. And some corners are even less mature and less combed through than others.

These corners provide us contrarians with stable income opportunities that are both safe and lucrative.

There are anomalies in high yield. In an efficient market, you wouldn’t expect funds that pay big dividends today to also put up solid price gains, too.

We’re taught that it’s an either/or relationship between yield and upside – we can either collect dividends today or enjoy upside tomorrow, but not both.

But that’s simply not true in real life. Otherwise, why would these monthly payers put up serious annualized returns in the last 10 years while boasting outsized dividend yields of 8% and beyond?

This is the key to a true “9% Monthly Payer Portfolio” – banking enough yields to live on while steadily growing your capital. It’s literally the difference between dying broke and never running out of money!

But I’m not suggesting you run out and buy these funds.

Some have been on my watchlist and in our premium portfolios over the years, but I mention them only as examples of the potential ahead.

In a moment, I’m going to show you how to earn a passive $45,000 on a half-million … $90,000 on a million … and $100,000+ annually on anything higher. And get paid every month, too.

Plus, you won’t even have to tap your initial capital or “draw down” any of your valuable principal. I’ll even give you the specifics on stock names and tickers to buy. But first, a bit about myself.

My name is Brett Owens and I’m an unabashed dividend investor. Ever since my days at Cornell University and all through my years as a startup founder in Silicon Valley, I’ve hunted down safe, stable, meaningful yields.

For the last 10 years, I’ve been investing my startup profits and finding 7%, 8%, even 10%+ dividends with plenty of double-digit gains along the way. In recent years, I started writing about the methods I use to generate these high levels of income.

Today I serve as chief investment strategist for Contrarian Income Report – a publication that uncovers secure, high-yielding investments for thousands of investors. Since inception, my subscribers have enjoyed dividends more than 4 times the S&P 500 average, plus healthy annualized gains.

Of course, not all high-yield investments are buys. Some vehicles are nothing more than dividend traps, paying high stated yields that are simply not sustainable.

But if you know how to navigate the space, you can earn the types of returns and collect the big monthly dividends that my subscribers do – which means you may never have to tap into your retirement capital to pay your bills.

And getting started is easy.

Story by Owain Bennallack

The Motley Fool
Investing literature is full of old adages that make becoming the next Warren Buffett sound about as difficult as brushing your teeth.

Indeed, the catchiest have become clichés.

And so you’ll hear the same phrases trotted out time and again on social media – especially by pundits during moments of crisis in the markets.

Yet pay attention and you’ll notice that most of these supposedly obvious investing truths are 100% contradicted by another one that’s just as popular!

Here are three bits of head-to-head wisdom where you might be tempted to toss a coin instead for guidance.

#1: “Run your winners” versus “You’ll never go broke taking a profit”
You buy a share, and it rises 50% in three months.

Nice going slugger! But what do you do now?

On the one hand, you could recompute the fundamentals of the business to see how the valuation stands at the higher price, versus the progress in its operations.
Or perhaps you could focus on that progress. Is your investing thesis coming to fruition? Is the price rise warranted by superior newsflow from the company?

Alternatively, you could turn to your Little Book of Investing Clichés, which reminds you that – allegedly – you’ll never go broke taking a profit.

So you go to sell, but then you remember skim-reading an earlier entry – one that urged you to run your winners!

It’s quite the dilemma.

Obviously I don’t believe either mantra should guide your next move.

It’s true running your winners is often a good idea. One infamous study found just 4% of all US stocks delivered all the long-term gains that saw equity investing beat buying US bonds. So you would have wanted to hold those rare huge winners as they multiplied over and over again, just to keep up with the market.

In contrast, selling anything that goes up could be a terrible strategy. Because we all buy stocks that go down too, and if you keep cutting the gains from the ones that go up while holding the losers, then your portfolio could go backwards.

Then again, you might argue that 96% of companies in that study didn’t deliver those all-important gains over the long term.

With those stocks, you might have done better to snatch whatever profit they delivered when you could and then move on, looking for the multi-baggers.

Oh well, nobody said investing was easy. Except perhaps the person who compiled the Little Book of Investing Clichés.

#2: “Sell in May and go away” versus “Time in the market is more important than timing the market”
Curiously, the old rhyme “Sell in May and go away, come back on St Leger’s Day” has some validity.

Over the very long term, the stock market does tend to be deliver higher returns between November to April, compared to May to October.

But before you shut down your share portfolio for the summer, I’ve caveats!

Firstly, while this so-called seasonal effect has been found to generally hold in both the US and UK market when looking at the historical record, that’s not a guarantee it will hold in the future. Nor that it will apply in any particular year.

You could easily liquidate your stocks and miss out on a sizzling summer market.

Secondly, the stock market actually tends to go up over both six-month periods.

Yes, it has tended to do better in the cooler months, but there’s no need to sell up in May, given that often you’ll see gains in the months running up to October, too.

Hence, I much prefer the second aphorism, despite the data backing up the first.

Rather than fretting with trading your portfolio based on nursery rhymes and the calendar, focus on buying and holding good stocks – or an index fund – for the long term. Add new money when you can, invest steadily over the years.

And let time and compound work their magic.

You’ll have lower trading costs, you won’t miss out on rallies – and you’ll have a more peaceful life.

3: “Don’t look for the needle in the haystack. Just buy the haystack!” versus “If you really know businesses, you probably shouldn’t own more than six of them”

To mix things up, my last example doesn’t pitch two snappy catchphrases against each other. Rather, it’s a head-to-head from two widely quoted investing legends.

The first comes from John Bogle. It’s a call to invest in the stock market tracker funds that – as the founder of Vanguard – Mr Bogle did so much to popularise.

The second quote is from Warren Buffett. As one of the world’s richest people who got that way entirely on the back of investing, maybe you should listen?

It’s another tricky one.

The data suggests most people will fail to beat the market over the long term. That favours John Bogle’s index fund investing.

Yet, we would never have even heard of Warren Buffett if he’d invested in index funds, had they even been available when he started.

Buffett is living proof of the potential power of picking stocks.

Yet these two market mavens aren’t really at loggerheads. Note that Buffett is saying that those who “really know businesses” are the ones who should own just half a dozen companies.

Given that Buffett’s instructions in the event of his death is the money left to his wife, Astrid, should go into index funds, I’d say he and Bogle are really on the same page.

If you’re ready to dig deeply into businesses and to make investing your passion – and you’re prepared to risk doing worse than the stock market in the quest to do better – then Buffett has shown us one way to get there.

But most of us should probably put at least some of our money into Bogle’s beloved index funds all the same. Because when you already own a chunk of the haystack, it’s less risky to then go hunting for a needle.

Come to think of it… maybe diversification works just as well with investing aphorisms as it does for stock portfolios!