Bond funds are sold as they are a ‘safe’ investment but as u can see from the chart the reality is entirely different.
Same chart but incudes earned dividends. If u were in De-accumulation u would spend the dividends but in Accumulation it would be better to re-invest the dividends into a higher yielder to grow your Snowball.
Current yield 6.7% and trading at a small premium.
The dividend has been very reliable, useful if u want to pay your utility bills.
But as always it’s your hard earned and only u can decide where to invest it.
Launched: Formed in 2021 through the merger of Invesco Enhanced Income and City Merchants High Yield Limited
Manager: Rhys Davies and Edward Craven
Ongoing charges: 0.86% including annual management fee (as at 31/01/2023, Source: Invesco factsheet)
Dividend policy: Target annual dividend of 11.5p per share. This is a target and there is no guarantee the dividend will be paid
Benchmark: The company does not have a benchmark
One investment company that aims to provide income to investors is Invesco Bond Income Plus (BIPS). BIPS invests primarily in high-yielding fixed-interest securities, with the goal of providing a mix of capital growth and income to shareholders.
The company was formed through the merger of the Invesco Enhanced Income and City Merchants High Yield Limited in 2021. BIPS continued to pay a dividend during the pandemic and, once the merger was complete, the company’s management team confirmed it would target an 11p per share annual dividend for the following three years. In the third quarter of 2022 the board decided to increase this target to 11.5p per share per year, paid quarterly.
The BIPS portfolio is made up of typically higher-yielding corporate bonds and financial debt instruments. BIPS also holds a small number of bonds that have come under price pressure but where the portfolio managers believe the companies are capable of turning around their businesses.
Risk is obviously a major consideration in the high yield bond market and BIPS portfolio managers Rhys Davies and Edward Craven try to mitigate this using their skill, experience, and judgement to diversify the portfolio. It’s not uncommon for the portfolio to hold over 100 companies, meaning a single bond issuer defaulting will not by itself lead to a large loss of NAV.
High yield bonds of the sort held by BIPS are typically harder for retail investors to evaluate and invest in by themselves. Anyone looking to gain some exposure to the corporate bond market may want to consider doing so via an investment company like BIPS as a result.
1. What is the company’s goal?
Invesco Bond Income Plus aims to produce capital gains and income for investors by investing in a diverse portfolio of high yield bonds and other fixed interest securities.
2. What kind of bonds do the managers like?
Portfolio managers Rhys Davies and Edward Craven, supported by their team, typically invest in a diversified portfolio of bonds issued by large and medium-sized businesses across the sectors of the economy, both corporates and financials. They are also happy, to a limited degree, to invest in bonds which have experienced substantial price pressure but only if they believe there is a strong enough case for a turnaround.
3. Are investment decisions driven by a particular investment style?
Fixed income brings with it credit risk and the possibility that issuers will default, more so in high yield bonds. Reducing the likelihood this will happen is a big part of the decision-making process at BIPS as a result. The company aims to hold bonds issued by companies the team know well, where they have confidence in their ability to service their debt. It also means holding a diversified portfolio of bonds, to potentially reduce any downside risk.
4. How many bonds does the company typically hold?
In line with those efforts to offer sufficient diversification, the company typically holds a diversified portfolio of around 200 individual fixed income securities. This number is not fixed and can change.
5. What is the company’s dividend policy?
After BIPS was formed from the merger of Invesco Enhanced Income and City Merchants High Yield Limited , management said it would target an 11p per share dividend for the following three years. In the third quarter of 2022, the board decided to increase the target dividend to 11.5p per share per year. Assuming it meets that target, the dividend will be paid out via four 2.875p per share dividends, issued on a quarterly basis. The company typically pays dividends from income it receives but may use capital and revenue reserves to pay shareholders if it experiences a shortfall. Please note as dividend policies and future dividend payments are determined by the board, they are not guaranteed.
6. What are the company’s ongoing charges?
The company’s ongoing charges are 0.86% at the time of publication, with an annual management fee of 0.65%. Note that this can change over time.
7. Does the company have performance fees?
The company does not have performance fees. The portfolio managers are invested in the company, so their interests are aligned to shareholders.
8. How much attention do the portfolio managers pay to their benchmark, and to what extent are absolute returns important?
Unlike most investment trusts, BIPS does not run against a benchmark, nor do the positions it takes reflect one. The portfolio managers do look at the BofA Merrill Lynch European Currency High Yield Index as a way of gauging their performance but the index is also not reflective of the positions BIPS takes. Rather than obsessing over their performance relative to a benchmark, the BIPS team are focused on achieving the company’s stated goals – delivering a high level of income and capital growth to shareholders.
9. Does the company use gearing and if so is it structural or opportunity led?
The company uses gearing, when appropriate, to potentially enhance the income it generates. Levels of gearing tend to fluctuate as a result. The company uses gearing by means of repo financing.
Investment risks
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
When making an investment in an investment trust/company you are buying shares in a company that is listed on a stock exchange. The price of the shares will be determined by supply and demand. Consequently, the share price of an investment trust/company may be higher or lower than the underlying net asset value of the investments in its portfolio and there can be no certainty that there will be liquidity in the shares.
Invesco Bond Income Plus has a significant proportion of high-yielding bonds, which are of lower credit quality and may result in large fluctuations in the NAV of the product.
The product uses derivatives for efficient portfolio management which may result in increased volatility in the NAV.
The use of borrowings may increase the volatility of the NAV and may reduce returns when asset values fall.
The product may invest in contingent convertible bonds which may result in significant risk of capital loss based on certain trigger events.
How investment trusts can support your income goals…
Kepler Trust Intelligence
Updated 21 Apr 2023
Generating a reliable income has always been one of the foremost goals of investors. Younger investors tend to invest for capital growth but that starts to change as they get older.
Instead of wanting to generate large capital gains, they’re much more likely to want their investments to pay out so they can have cash to use during retirement.
Although generating income from your investments is a straightforward goal, there are lots of ways that investors go about trying to achieve it.
It might mean they focus their efforts on bonds, stocks, or alternative investments, like real estate or private debt. There’s also nothing to stop people from mixing things up and having holdings in a range of assets that they believe will generate income.
Investing in bonds for income
In the past, the bond market was typically seen as the go-to for income investors. As bonds are usually structured to pay out a fixed sum of cash at regular intervals and over a set period of time, they’re often regarded as offering a mix of reliability and, if they are issued by a reliable counterparty, low risk to income investors.
Bond investors have had a strange time since the financial crisis in the late 2000s. Many central banks set their interest rates close to zero in the wake of the crisis. This meant government bonds from countries like the US and UK, the traditional go-to for many investors, offered anaemic yields.
However, this started to change in late 2021. Central banks came under pressure to raise interest rates to try and stem the wave of inflation, which emerged in the wake of the Covid-19 pandemic. As a result, lower risk bonds, such as treasuries and gilts, are now offering more attractive yields than they have in over a decade.
This may mean we will see a shift back into these assets, after a long period in which they did not offer much to make them appealing for investors.
It’s also worth remembering that the bond market is much broader than those issued by a few governments in developed markets. Companies and governments across the world issue bonds and many of these yield comparatively high returns.
The problem is they do tend to carry more risk with them. Investors should take note of these risks prior to investing, given that the likelihood of default – and investment losses – are commensurately higher.
Investing in stocks for income
One consequence of the low yields in government bonds that we saw after the financial crisis was a move towards equity markets.
Equities have always been a source of income for investors, so that’s not to say this was new territory for them. But it did mean income investors had more exposure to stocks than they might have in the past.
Typically income investors put their cash into larger, blue-chip stocks. In the UK, that has usually meant firms like Unilever, HSBC, or Shell.
The reason for this is fairly straightforward. Large, established companies don’t tend to have ambitious, capital-intensive growth plans, meaning they’re less likely to reinvest their earnings and can pay dividends instead.
For those investors looking for the level of reliability that government bonds provided in the past, larger businesses are also perceived as offering a measure of stability. Rightly or wrongly, investors tend to believe these companies will be around for a while, earning stable revenues and paying out predictable dividends.
This is, of course, just a rule of thumb and there are still large companies that don’t pay dividends and smaller ones that do. But income investors do usually like stability and predictability, something that we tend to see as a feature of larger firms.
Income investing using alternative investments
Alternative investments is a broad term that could refer to anything from fine art collections to a hedge fund.
For private investors it usually means investing in things like real estate, debt products, or commodities.
Obviously not all of these are easily accessible, nor do they all provide a source of income – a gold bar remains a gold bar, no matter how long you hold it for, so you aren’t going to get any dividends from it.
Probably the most popular alternative investment option for regular investors is real estate. A house or flat can generate rental income that’s reasonably reliable and predictable. It’s also more readily accessible to a regular investor compared to a large-scale private equity investment.
Still, buying a home for investment purposes is likely to be out of reach for many people. That’s why regular investors, looking for income, may invest in a fund that holds alternative assets instead.
Doing so is cheaper and simpler than attempting to go it alone. For instance, if you want to invest in commercial real estate you’ll need a huge amount of money. Investing in a fund that pools together a large amount of money and then invests in commercial real estate is a much more realistic option for most people.
Using investment trusts for income
This is one reason that investment trusts appeal to income investors. Income-producing alternative assets are much more easily accessible through a trust than they would be if an investor wanted to do it alone.
And the various trusts listed in the UK offer a broad range of alternative assets to investors. For instance, TwentyFour Income (TFIF) tries to generate income by investing in asset-backed debt securities. Alternatively, Greencoat Capital operates two investment trusts that attempt to generate income from investments in renewable energy infrastructure.
Beyond these more niche investments, trusts can also generate income from investing in traditional asset classes, like bonds and equities.
Some investors may choose trusts that invest in these because they’re focused on markets that are hard to access for retail investors. For instance, regular investors may find it almost impossible to purchase shares in some East Asian countries themselves. Similarly, buying certain corporate or government bonds can be difficult to do alone.
But this obviously isn’t true across the board. UK stocks are, for instance, pretty easy for regular investors to access themselves, so why bother with a trust?
One reason is they offer access to professional portfolio managers. Stock picking isn’t a simple task and many people find it more convenient to hand the reins over to someone else.
This is particularly the case if you have a specific goal in mind, like generating income, and don’t want to take on the risk of managing it yourself. Anyone considering this should keep in mind that trust’s that have a particular style or purpose often have a lot of overlap, in terms of the assets they hold, so it’s worth checking that you’re not doubling up by buying shares in several trusts.
Trusts also tend to have diversified portfolios and thus offer investors the ability to access a mix of assets through one investment. This may be particularly appealing if an investor has a specific goal in mind, as the trust can act as something of a ‘one stop shop’ for them. Rather than having to pick a whole basket of assets themselves to meet that goal, they can just buy one share in the trust.
How investment trusts can help income investors
Aside from the actual investment process, trusts have unique structural benefits which make them particularly suitable for income focused investors.
Trusts are legally required to pay out 85% of the dividends they receive. For real estate investment trusts the figure is 90%.
The remaining 15% or 10% can be kept in reserve and used to smooth out payments during rough patches in the market. Open-ended investment companies must pay out all of their income, meaning they don’t have this benefit.
The benefit of being able to keep income in reserve was on display during the Covid-19 pandemic in 2020. Whereas many firms were forced to slash dividends or cut them entirely, close to 90% of investment trusts maintained or increased their payouts.
That was possible in large part because of the reserves that many trusts have built up over the years. For income investors, many of whom are partial to that mix of stability and predictability, this ability to retain dividends is thus a very attractive feature.
Income from capital
Another benefit that trusts have for income investors, which complements the above, is the ability to pay dividends from their capital reserves. In simpler terms, this means they can pay a dividend to their shareholders by converting some of the capital growth generated by their investments into an income.
Generally income paid from capital reserves is undertaken in line with a specific dividend policy. This will usually be an agreement by the trust to pay out dividends as a percentage of the trust’s net asset value (NAV).
This may be done once a year or more frequently. For example, Invesco Perpetual UK Smaller Companies (IPU) has a policy of paying out a dividend that’s equal to 4% of its NAV at the year end. JPMorgan Japan Small Cap Growth & Income (JSGI) takes a different approach by paying out 1% of NAV at the end of each quarter. And International Biotechnology (IBT) pays a dividend equal to 4% of NAV at the end of its financial year, but in two instalments, one in January and the other in August.
Trusts can mix and match in meeting these commitments. For instance, half the payout may come from dividends generated by the trust’s holdings, whereas the other half may come from capital reserves.
It’s worth keeping in mind that paying out of capital reserves carries some risk with it. Selling off assets to meet dividend requirements can depress a trust’s NAV, something that can make a bad situation worse if a trust has had a period of poor performance.
That may not please income investors but then they’ve still got plenty of options open to them. And in the long-run, they’d likely be better off choosing an income-focused trust, rather than one that’s decided to adopt a dividend policy which may not be best-suited to its investment strategy.
Why a closed pool of capital helps investment trusts
The investment trust structure is also key to their being able to invest in more niche areas of the market that can produce income.
A closed pool of capital means the buying and selling of trust shares doesn’t impact a trust’s underlying portfolio. This means that trusts are freer than open-ended funds, which must contend with redemptions, to invest in more illiquid assets.
As discussed above, this might include areas like renewable energy infrastructure or commercial property. But there are more specialized areas too.
Accessing these sorts of funds outside of the investment trust market is tricky and trusts’ structure is a key reason for that.
What are bonds? Bonds, sometimes known as fixed income or fixed income securities, are a form of IOU. You lend money to a company or government, and it pays you a fixed return – sometimes called a coupon – for doing so.
At the end of the bond’s term, when it matures, you get back the original amount you paid for the bond. The duration – as it’s known – can be from three months to as much as 50 years.
Interest rates influence the way bonds are priced. When interest rates increase, bond prices generally tend to go down. When interest rates fall, bond prices rise.
Benefits of investing in bonds A key reason for investing in bonds is to receive an income. All types of bonds provide investors with a pre-determined interest rate, which for income-seekers, particularly those in retirement, is a tempting offer. Diversification is another key benefit. Bonds can provide a safer alternative during times of market uncertainty as they traditionally behave differently to stock markets. Held alongside equities they can help to reduce the volatility of the portfolio as a whole, as bond prices typically fluctuate less.
Since returns are already fixed – unlike the capital returns and dividends issued to shareholders, which can change – they are popular with more cautious investors who don’t like the idea of the value of their money rising and falling.
Types of bonds There are a whole host of different types of bonds offering different levels of return – and risk.
Government bonds Bonds issued by the UK Government are also known as gilts. The name refers to a time when they were issued in the form of paper certificates with gilded edges.
There are tax benefits when it comes to holding gilts. Any profit made from a gilt when you sell or redeem it is free from capital gains tax, unlike many other investments, such as shares, funds or investment trusts held outside an Isa.
It’s particularly advantageous for higher and additional rate taxpayers who would otherwise pay capital gains tax at 20pc.
Governments in other developed countries issue bonds too, such as the US.
Emerging market bonds are issued by countries or companies in the developing world. Emerging market debt carries more risk as there’s a greater chance of defaulting and it can be volatile owing to currency movements – but there are clear opportunities.
The liquidity and the financial strength of bond issuers, as well as political stability, need to be considered when assessing these government bonds.
The coupons on emerging market debt can be very attractive, often in double figures.
Corporate bonds Corporate bonds allow you to invest in big companies in a less risky way than buying shares in them. Corporations will often issue bonds to allow them to fund growing their business, perhaps by buying property and equipment, or hiring more staff.
Corporate bonds come in many guises within this sector. Those from companies with high credit ratings (which are an indication of a financial strength) are known as investment-grade bonds. Companies with a higher level of risk associated with them are known as high yield or sometimes as junk bonds.
Investment-grade corporate bonds are issued by companies which ordinary investors are likely to have heard of, such as Apple and Tesco.
Should a business run into financial trouble, these bonds rank higher in the pecking order than shareholders, so you can take comfort from that when it comes to weighing up risk.
High-yield or “junk” bonds are issued by companies with lower credit ratings. To compensate for the greater risk taken by investors that they might default on a payment or not be able to repay bondholders in full, these bonds pay higher returns. High-yield issuers are often smaller companies in more niche, specialist areas.
Inflation-linked bonds A specialist sector of inflation-linked bonds – also known as index-linked or “linkers” – pay interest that rises with inflation. Such bonds aim to offer protection when stock markets fall, as well as providing a shield against inflation.
Bond returns A bond’s yield is expressed as a percentage. It’s the return an investor can expect to receive as income over the next 12 months, which is based on the amount originally invested.
When it comes to prospects for returns ahead, there’s no crystal ball to tell investors what to expect.
Hal Cook, a senior investment analyst at Hargreaves Lansdown, believes that interest rates are likely to be at their peak for this cycle, with the broad expectation being that rates will come down from here.
He said: “This is good for bonds, because falling yields means increasing prices. Current market pricing is suggesting that interest rates in the UK will be around 3.25pc to 3.5pc in five years’ time. This figure is around 3.6pc for US interest rates and 2pc to 2.25pc for Europe. If this turns out to be correct, that will mean interest rate cuts from three of the most influential central banks globally in the coming months and years.
“When inflation falls and the central banks cut rates, bonds appeal more to investors. This increases demand and pushes the price up – so investors who are holding bonds will see the value of their holding increase.
“In the event of a market shock, it is possible that bonds will increase in value again. This is particularly true for government bonds such as gilts, that could benefit from a safe haven trade in a market-shock environment.
“The potential for bonds to increase in value in this scenario increases their diversification benefit within an investment portfolio.”
Risks of buying bonds One major risk to fixed income is that posed by inflation. Bonds are less attractive in periods of rising inflation because as prices rise, the value of the income in real terms is reduced.
While inflation is today rising at a much slower pace than in previous years, it’s still high.
The lower volatility of bonds also tends to make them popular with cautious investors or those who want to reduce overall risk in a portfolio, but there are no guarantees as bonds can experience rough times too.
Credit risk is another issue for bonds. This is the risk of a company or government defaulting by not paying the coupon or repaying your capital.
Liquidity is a risk because if you want to sell and can’t find a buyer you cannot cash in your investment.
For global bonds, where bonds are paid and priced in local currencies, there is currency risk because the value of that currency could fall, impacting the value of your investment.
Bonds with a shorter lifespan of five years or fewer can be considered less risky as there is not as much time for things to change in terms of the economic environment. That’s why a lower level of income is typically offered with short-duration bonds. Those with a longer duration usually pay a higher level of income to compensate for the greater levels of risk involved.
You can buy government bonds directly through the Government’s debt issuer – the Debt Management Office (DMO) – where they are issued in units of £100.
It provides a trading service, meaning that you can buy and sell gilts that are already in the market. However, to be eligible to use the service you must first sign up as a member of a DMO “approved group of investors”, which is only available to UK residents.
You don’t need to be a member of the approved group to sell gilts via the service, however. For buying or selling, you’ll pay fees of 0.7pc of the value of the gilts you’re trading.
Alternatively you can use a stockbroker or investment platform, such as Hargreaves Lansdown or Interactive Investor. Each gilt is priced differently and will be constantly changing, and will have varying coupon and maturity dates, which means that there are several choices to make before investing.
The maturity date and the coupon appear in the name of the gilt, so they are easily found.
You can also buy corporate bonds via an investment platform.
Emerging market bonds are not so readily available. You can get exposure by investing in a global bond fund which would usually hold emerging market debt.
In fact you can buy all types of bonds in an investment fund where you’ll pool your money with other investors to hold a portfolio of bonds. These funds are either run by a fund manager or invested via a tracker fund or an exchange-traded fund (ETF) which will mimic an index of bonds.
Some fixed interest funds allow ordinary investors access to all types of bonds in one fund. Strategic bond funds are run by a manager who is permitted to move between the different types, according to where they see the greatest value.
Bond funds are available to buy on investment platforms and can be held in tax-efficient investments such as an Isa or self-invested personal pension.
Crest Nicholson Holdings PLC on Thursday said it swung to a loss in its first half-year despite increased revenue.
Shares in Crest Nicholson were trading 8.1% lower at 221.42 pence each in London on Thursday morning.
The Surrey, England-based housebuilder also announced that former chief executive officer Peter Truscott will step down from its board on Friday, having served since 2019.
New CEO Martyn Clark, previously chief commercial officer at fellow housebuilder Persimmon PLC, assumed the role on Monday last week. Clark’s appointment was announced in January, with Truscott agreeing to remain with the firm until the handover process was complete.
Crest Nicholson on Thursday reported a GBP30.9 million pretax loss for the six months to April 30, swung from a GBP28.4 million profit a year before. Its basic loss per share was 9.1 pence, compared with 8.2p.
On an adjusted basis, pretax profit still plummeted 88% to GBP2.6 million from GBP20.9 million. Basic EPS fell 89% to 0.7p from 6.1p.
Revenue decreased 8.9% to GBP257.5 million from GBP282.7 million, as home completions decreased 12% to 788 from 894.
First-half reservations were “in line with expectations”, Crest said, with the revenue decline “reflecting the low level of reservations at the beginning of the financial year”. Land and commercial sales for the period, however, surged to GBP30.8 million from GBP4.9 million.
The adjusted figures come after accounting for GBP5.9 million of completed sites charges, “also reflecting lower volume and a higher proportion of revenue from low margin sites as the group makes good progress in reducing low margin inventory”.
Crest Nicholson declared a 1.00p per share interim dividend, down 82% from the 5.50p it returned for first half of last year.
In my opinion, dividends are one of the most powerful forces in the world for creating and building wealth over time. In today’s modern age, people on the internet love to pedal passive income ideas left and right because they know that passive income is an incredible thing.
The problem is that once you look into whatever new scheme they’re claiming provides passive income, what you typically find is that it’s not passive at all!
Whether it’s real estate or a side hustle creating websites or a whole slew of other “passive income” ideas… Most of them require significant time and even additional resources to realize any passive income at all.
Dividend stocks, as far as I know, are the only thing that allows Fortune 500 companies to work on your behalf and pay you a true stream of passive income from the result of their efforts.
The Company’s NAV decreased by 5.9% during the year but at an increasingly slower rate, quarter-on-quarter, as the impact of higher interest rates and investor sentiment became fully reflected in valuations. The quarter ended 31 March 2024 recorded a marginal increase in NAV due to profitable disposals on the back of flat valuations, suggesting an improving outlook, as rental growth and falling vacancy rates start to have a positive impact. The first move down in interest rates should be the real catalyst for a positive shift in sentiment towards real estate investment, so later in 2024 could be a turning point in the market.
By applying its institutional expertise to the sector, through high quality asset management, covenant management and portfolio construction, the Company is able to provide an institutional offering to shareholders, generating superior income and, notwithstanding recent volatility in pricing, Custodian Property Income REIT can look back over a 10 year average annual NAV total return of 5.5% driven by strong recurring earnings with fully covered dividends.
In a departure from other cycles, the valuation decreases arising from the recent rerating have been at odds with occupational market sentiment, which has remained robust. Our management of the portfolio and the types of assets we own are focused on areas where occupational demand is strongest, allowing us to lease vacant space across all sectors and deliver rental growth. Both rental growth and falling vacancy have been a feature of the year’s performance, discussed in more detail in the Investment Manager’s Statement, and reflected in EPRA earnings per share increasing to 5.8p for the year compared to 5.6p in the previous year.
Despite stability in valuations and earnings, and the prospect of rental growth, sentiment towards listed UK commercial real estate has caused weakness and volatility in the share price. The relative weakness in the share price has enhanced the Company’s dividend yield, which we believe should be highlighted as a key metric for analysts and shareholders in assessing the ‘worth’ of Custodian Property Income REIT. The prevailing share price implied a dividend yield of 8.3%, compared to 6.3% and 5.8% at 31 March 2023 and 2022 respectively.
The Board continues to believe in the merits of the Company’s income-focused investment strategy with an emphasis on regional, below-institutional sized assets that are well-positioned to deliver rental growth. These types of assets provide a clear yield advantage over larger properties with similar tenant profiles and allow us to generate higher income returns and capital growth for shareholders.
Dividends
The Company’s commitment to a property strategy that supports a relatively high dividend, fully covered by EPRA earnings, remains a defining characteristic. In May 2024 the Board announced a 9% increase in the prospective dividend per share from 5.5p to 6.0p and a special dividend for the year of 0.3p per share to take the dividend for the year to 5.8p, which is testament to that commitment.
These dividend increases, which are expected to be fully covered by net rental income, reflect the improving earnings characteristics of the Company’s portfolio with recent asset management initiatives and the profitable disposal of vacant properties also increasing occupancy and crystallising rental growth. Our Investment Manager continues to control costs tightly, while the Company’s substantially fixed-rate debt profile is keeping borrowing costs below the current market rate. Based on the current forward interest rate curve the Board expects that the ongoing cost of the Company’s revolving credit facility will fall, improving earnings further.
The Board’s objective remains to continue to grow the dividend at a rate which is fully covered by net rental income and does not inhibit the flexibility of the Company’s investment strategy.
The Board of Directors of the Company has declared an interim dividend of 1.89 pence per share for the three-month period to 31 March 2024. The dividend will be paid on 18 July 2024 to shareholders on the register as at 21 June 2024. The ex-dividend date is 20 June 2024.
The dividend declared of 1.89p represents a 2.00p equivalent dividend adjusted to reflect the reduction to NAV as a consequence to the B-Shares issued to shareholders on 19 April 2024 and redeemed on 25 April 2024.
The Company has elected to designate all of the interim dividend for the three-month period to 31 March 2024 as an interest distribution to its shareholders, thereby “streaming” income from interest-bearing investments into dividends that will be taxed in the hands of shareholders as interest income. No income tax will therefore be deducted at source from this, or from future interest distributions.
Foresight Solar is pleased to announce the first interim dividend, for the period 1 January 2024 to 31 March 2024, of 2.00 pence per ordinary share. The shares will go ex-dividend on 25 July 2024 and the payment will be made on 23 August 2024 to shareholders on the register as at the close of business on 26 July 2024.
The first step is seeing how much I can allocate to dividend shares right now. A lump sum of £1,000 or more would be great to kick off with. At the same time, I want to run my numbers and set a realistic figure of how much I can invest each month going forward. This will help me to build up my portfolio to a level where it generates income each month.
Once I’ve got my figures sorted, I need to decide where to actually invest the money. There are three main elements to this.
To begin with, I need to pick stocks that have an above-average dividend yield. the higher the yield, the higher the risk associated with the dividend payments. So I have to pick a risk level that I’m happy with.
Another element is the fundamental business operations. Is the company growing? Does it operate in a sector that has a bright future?
From zero to hero
The theory is great, but let’s now put it into practice. Let’s say I have my £1,000 initial investment ready to go and have picked Glencore, Anglo American, BT Group and HSBC as four stocks that I like.
By putting £250 in each, I’ll have a blended average dividend yield of 5.95%. Next month, I’ll endeavour to invest an additional £100 in each stock (£400 total). After a few months, I can mix it up and include some different shares. Ideally, I’d like to get the portfolio to a dozen or more stocks.
From the beginning, I know that if I can keep my average yield at 5.95%, I need to get to a pot size of just under £202k. This will ensure £1,000 of monthly second income from that point onwards.
Using that calculation, it’ll take me 21 years to reach the target. This will change from person to person based on how much someone can invest and how high a yield that can be achieved. Yet from a standing start of zero, it’s an impressive feat.
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Remember in your Accumulation stage if a Trust u own falls in price, as long as the dividend is ‘secure,’ u get more shares from your dividend re-investment.
