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The Retiree’s Guide to Dividend Investing: Creating a Sustainable Income Stream
Story by Shane Neagle

Unlike other forms of investment income that fluctuate wildly with market conditions, dividends provide a more stable and predictable income stream, which can be particularly appealing for those in retirement.

The beauty of dividend investing is that it preserves the potential for income generation and capital growth. By carefully selecting companies with a strong track record of dividend payments, retirees can benefit from regular, reliable payments that help cover living expenses without eroding the principal investment.

To sweeten the pot further, if you reinvest your dividends, you can use compound growth, potentially adding large sums to your gains over a long timeframe.

That said, for all the benefits, dividend investing is far from a simple strategy. We’re talking about significant benefits here—steady payments, long-term sustainability, and the ability to maintain or enhance your lifestyle without savings—and that requires a bit of legwork.
However, the payoff is well worth the reward—and we will do our part to help you achieve those goals. Without further ado, let’s delve into how dividends work, how to identify the best dividend-paying investments, and how to keep your portfolio profitable and balanced in the long run.

Understanding Dividends
Dividends are payments a business makes to its shareholders, usually derived from the company’s profits.

When a company earns a profit, it can choose to reinvest it in the business (called retained earnings) or distribute it to shareholders as a dividend. These payments are often made regularly (monthly, quarterly, biannually, or annually) and can be issued in cash or as additional shares of stock.

This declaration includes the size of the dividend, the record date (the date you must be on the company’s books as a shareholder to receive the dividend), and the payment date.

Once dividends are declared, they become the company’s liability and must be paid out on the scheduled payment dates. Dividends are typically paid per share, meaning that the more shares you own, the larger your payout.

Dividends are divided into three subtypes:

Regular dividends — distributed as part of the typical cycle of dividend payments according to the company’s established dividend policy.
Special dividends — occasionally, a company might pay a dividend not part of the regular cycle, often to distribute unusually high profits from a windfall.
Stock Dividends — companies may issue additional shares instead of cash as a form of dividend.
Why Dividends Are a Viable Option for Income
For retirees, dividends offer a particularly attractive income source. They provide a steady stream of income, which can be a great boon for managing living expenses—without depleting the principal investment. Here are several reasons why dividends are a popular choice for income:

Predictability: Dividends provide regular income, which can be predicted and planned for, unlike capital gains, which can be irregular and unpredictable.
Lower Volatility: Stocks that pay regular dividends tend to be less volatile than non-dividend-paying stocks.
Tax Advantages: In many jurisdictions, dividends are taxed at a lower rate than other forms of income, such as interest income or capital gains.
Compounding: Reinvesting dividends can lead to compound growth, increasing the value of your investment over time.
Why Choose Dividend Stocks
Dividend stocks are a cornerstone for generating passive income, particularly attractive for retirees or those seeking consistent cash flow.

By investing in dividend-paying companies, investors receive regular payouts that can supplement other sources of income. This passive income stream requires little to no day-to-day management, making it an ideal strategy for those who wish to focus on enjoying retirement rather than managing complex investments.

One significant advantage of dividend stocks is their potential to hedge against inflation. As the cost of living increases, companies that generate higher revenues can afford to increase their dividend payouts.

Many dividend-paying companies are established, financially stable, mature businesses that can raise dividends over time. This increase in dividends can help maintain the purchasing power of your investment returns during inflationary periods, protecting your income against the erosion of value that inflation can cause.

Favourable Tax Treatment
Dividend income often benefits from more favourable tax treatment than other income types, such as interest or non-qualified stock gains.

In many jurisdictions, qualified dividends are taxed at a lower rate than ordinary income, which can significantly enhance the after-tax return on these investments. This tax efficiency makes dividend stocks attractive for investors looking to maximize their investment income while minimizing tax liabilities.

Additional Points to Keep in Mind
Dividend-paying stocks often belong to industries and sectors known for their stability and steady growth. Investing in these stocks can provide a reliable income stream and the potential for capital appreciation.

Another appealing aspect of dividend stocks is their role in portfolio stability. Dividend payouts can act as a cushion during market downturns. When stock prices fall, the dividend yield effectively increases, providing a higher return on the lower price. This can make dividend stocks particularly attractive during volatile market periods, offering a semblance of income stability in an otherwise uncertain investment landscape.

Furthermore, dividends can be reinvested to purchase additional shares, compounding the benefits by increasing the potential future income and growth of your investment portfolio.

Criteria for Selecting the Right Stocks
When selecting dividend-paying stocks, the first criterion to consider is the overall health and performance of the company.

Look for companies with a consistent track record of profitability and strong financial health. Financial stability is crucial because it indicates a company’s ability to sustain and potentially increase dividend payouts.

Keep your eye on key financial metrics such as earnings growth, return on equity, and debt-to-equity ratio to ensure the company stands on solid ground.

Understanding Dividend Yield
Dividend yield is critical in choosing the right stocks for income generation. It represents the percentage of your investment that you receive back each year from dividends alone.

While a high dividend yield may seem attractive, it’s essential to consider it in the context of the market and other stocks in the same industry. Extremely high yields can sometimes be a red flag for financial distress or a dividend that may not be sustainable in the long term.

Aim for companies with yields that are competitive yet realistic within their sector. Investors should consider the dividend coverage ratio, which measures a company’s ability to pay its current dividend based on its net income.

A higher coverage ratio indicates a more sustainable dividend, showing that the company is not overextending itself by paying out more in dividends than it earns. This metric can provide an added layer of security for retirees seeking reliable income streams from their investments.

Considering Dividend Growth and Consistency
Beyond the current yield, look at the dividend growth rate and the consistency of payouts. Companies with a history of steadily increasing their dividends are often financially healthy and confident in their future cash flows.

These companies are typically regarded as Dividend Aristocrats or Dividend Kings, having consecutively raised dividends for 25+ years. Consistent dividend growth can not only counteract the effects of inflation but also indicate a commitment to shareholder returns.

Another crucial criterion for selecting the right dividend-paying stocks is the company’s market position and competitive advantage, referred to as its economic moat. Companies with a wide economic moat have sustainable competitive advantages that protect them from losing market share to others in their respective sectors or industries.

These advantages could include brand recognition, proprietary technology, regulatory licenses, or a dominant market share. Such attributes make it more likely for the company to maintain profitability and continue its dividend payouts, which is essential for long-term investment strategies.

Evaluating Risk Tolerance
Individual risk tolerance is a pivotal factor in stock selection. If you prefer lower risk, consider stocks in stable industries with a long history of dividend payments.

Utilities and healthcare are traditionally less volatile. However, if you are willing to accept higher risk for potentially greater returns, you might look into sectors like technology or consumer discretionary, which can offer higher growth potential but with more significant price swings and less predictable dividends.

Building a Diverse Dividend Portfolio
Diversification is a fundamental investment strategy to reduce risk by spreading investments across various sectors and industries.

For dividend investors, diversification helps mitigate the impact of sector-specific downturns, ensuring a more stable income stream. Investing in a broad array of companies reduces the risk that a failed investment could significantly harm your financial health.

When building a dividend portfolio, consider including a mix of sectors known for reliable and growing dividends, such as utilities, consumer staples, healthcare, and real estate — with REITs, in particular, being a strong choice when talking about real estate investments.

Expanding beyond traditional sectors, investors can also consider incorporating emerging industries that show potential for stable and increasing dividends in the future.

Sectors like renewable energy, expected to grow due to increasing global energy demands and a shift towards sustainable practices, could be a strategic addition. While these sectors may currently offer lower dividends, their growth potential could lead to substantial dividend increases as the industries mature.

Geographic diversification is another essential factor in building a robust dividend portfolio. By investing in dividend-paying companies across different countries, investors can tap into varying economic cycles and opportunities that might not be present in their domestic market.

Balancing High-Yield and Growth Stocks
Achieving a balance between high-yield stocks and growth stocks is crucial. High-yield stocks offer higher dividends but can sometimes have slower growth in stock price. They are attractive for immediate income but carry risks if the high yield is not sustainable. Growth stocks may offer smaller initial dividends but have the potential for significant price appreciation and dividend growth over time.

Investors should aim for a portfolio that provides a good return in the form of dividends and has the potential for capital appreciation. Adjusting the mix according to market conditions and personal financial goals is essential, as this balance will shift depending on economic environments and life stages.

Continuous Portfolio Assessment
It is vital to regularly review and adjust your portfolio. Market dynamics and company fundamentals can change, influencing which stocks are favorable for dividend income and growth potential. Keeping abreast of these changes and rebalancing your portfolio accordingly will help maintain its health and profitability over the long term.

It’s also crucial to consider the liquidity of dividend stocks in your portfolio. Highly liquid stocks can be bought or sold quickly in the market without a significant price change.

This can be particularly important for retirees who might need to adjust their portfolios quickly in response to personal financial needs or market changes. Stocks with higher liquidity typically have more stable prices, which can help reduce the overall volatility of your investment portfolio.

Risk Management
Managing risks in dividend investing involves a strategic approach to selecting and maintaining a balanced portfolio.

High-yield stocks, while tempting due to their potential for substantial income, can also present significant risks. These stocks might be delivering high dividends not from operational strength but from a struggling business trying to attract investors, which could lead to unsustainable payouts and possible cuts in the future.

To mitigate these risks, thorough due diligence is essential. Analyzing a company’s payout ratio, which compares the dividend per share with the net income per share, provides insight into how much income the company is returning to shareholders versus what it retains for growth while looking at historical volatility will give you an idea as to how the stock reacts to market changes.

A very high payout ratio could signal that dividends are at risk if earnings fall. Similarly, assessing the company’s debt levels is crucial; companies with high debt may not sustain high dividends if financial conditions deteriorate.

Furthermore, diversification across various sectors and industries can help reduce the risk of exposure to a single economic event impacting all your investments. This strategy spreads out potential negative outcomes across a broader array of assets, thereby reducing the impact of a single failing investment.

Regular portfolio reviews are also critical in risk management. This practice involves evaluating each investment’s performance and role within the broader portfolio context, adjusting to align with changing market conditions and personal financial goals.

Tax Planning and Cost Control
Tax planning and cost control are crucial for maximizing the efficiency and returns from dividend investing. Dividend income can be taxed as qualified or non-qualified, with qualified dividends benefiting from lower tax rates akin to long-term capital gains, contingent on specific holding periods and the type of company issuing the dividend.

Investors should optimize their tax exposure by holding dividend stocks in tax-advantaged accounts such as IRAs or 401(k)s, where dividends can grow either tax-deferred or tax-free, depending on the account type.

To minimize investment costs, selecting low-fee brokerage platforms is essential. Frequent trading not only triggers trading fees and commissions but can also lead to higher tax liabilities.

Employing a buy-and-hold strategy not only minimizes these costs but also aligns with the favorable tax treatment of long-term investments. Additionally, investors should choose mutual funds and ETFs without transaction fees and low expense ratios to avoid eroding their dividend gains.

Investors can also reduce costs by planning their trades around tax events, taking advantage of tax loss harvesting, and strategically timing the buying and selling of securities to optimize tax implications. Keeping informed about changes in tax laws and understanding how they affect investment activities is also vital for long-term success.

Long-Term Planning
An effective long-term strategy involves evaluating and selecting dividend-paying stocks that offer immediate returns and sustainable growth, supporting current and future financial needs. This involves understanding the historical performance of these stocks and their potential to increase dividend payouts in response to inflation and changing economic conditions.

Investors should also assess their risk tolerance regularly, especially as they approach retirement. A portfolio that was suitable in earlier years might need adjustments to reduce risk and ensure more stability. Investors should balance their need for immediate income with the potential for long-term capital appreciation.

Adapting to reflect changes in personal circumstances, market conditions, and financial goals is essential. Investing might mean shifting from high-yield stocks to those with stronger growth potential or vice versa, depending on the current economic outlook and personal risk profile. If you’re a business owner, it could mean pivoting to alternative cash flow solutions like invoice financing, expanding into new markets, or even downsizing. It could also entail finding a side job or additional income streams.

Regular portfolio reviews and adjustments ensure that investments align with an individual’s retirement timeline and financial objectives. This dynamic approach to portfolio management not only protects against potential downturns but also positions investors to capitalize on growth opportunities, ensuring that their retirement savings continue to work effectively for them as their needs and the external economic environment evolve.

Conclusion
Dividends are often underappreciated—however, numbers don’t lie, and dividends have contributed just short of a third (32%) to overall S&P 500 returns since 1926. Not tapping into such a significant source of returns would be a huge and costly mistake.

Exactly how much of your portfolio you will commit to dividend-paying investments is up to you — but with economic cycles, recessions, and the volatility of equities, having a stable source of passive income is a prudent choice—for all of us.

Regarding retirement, this regular income provides a steady cash flow, dependable payments, and the ability to maintain your lifestyle without worrying that you’ll be jeopardizing your future.

Although it isn’t exactly a walk in the park, with meticulous planning, a reasonable, grounded plan, and ongoing reviews, you can reap the advantages of passive income and compound interest, making a stable retirement free from worries one step closer to becoming a reality.

The post The Retiree’s Guide to Dividend Investing: Creating a Sustainable Income Stream appeared first on Due.

https://quoteddata.com/research/jlen-environmental-assets-vote-against-discontniuation-qd

JLEN Environmental Assets Group Limited

(“JLEN” or the “Company”)

Net Asset Value and Dividend Announcement

Net Asset Value

JLEN, the listed environmental infrastructure fund, announces that its unaudited Net Asset Value (“NAV“) at 30 June 2024 is £748.1 million (113.1 pence per share), a decrease of 0.5 pence per share since 31 March 2024 after paying the quarterly dividend of 1.89 pence per share.

Summary of changes in NAV:

The table below summarises the changes in NAV since 31 March 2024, with the main drivers being payment of the aforementioned dividend partially offset by an increase in near term power forecasts and reflection of actual asset performance and unwind of the discount rate.

	NAV per share
NAV at 31 March 2024	113.6p
Dividends paid in the period	-1.9p
Power price forecasts	0.7p
Other movements (including actual performance)	0.7p
NAV at 30 June 2024	113.1p

Dividend

The Company also announces a quarterly interim dividend of 1.95 pence per share for the quarter ended 30 June 2024, in line with the dividend target of 7.80p per share for the year to 31 March 2025, as set out in the 2024 Annual Report.

Dividend timetable

Ex-dividend date	5 September 2024
Record date	6 September 2024
Payment date	27 September 2024

2 shares for setting up big passive income streams after 50
Our writer explains the approach he would take if he wanted to set up passive income streams despite no longer being in the first flush of youth.

Christopher Ruane

Motley Fool

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Passive income can be a welcome financial boost at any stage in life. After 50, though, one’s planning timeframe is unlikely to be the same as it was at 30 or even at 40. Time, ever more, is of the essence.

So at that point my own focus when choosing income shares for my portfolio would be on jam today rather than jam tomorrow.

While I would still focus on buying into quality companies at attractive prices, I would be hunting for ones that offer me sizeable income streams today rather than others that I think could do so a decade or two from now.

Here are a couple of passive income ideas that match that description I would happily buy now if I had spare cash to invest.

Phoenix: 9.9% dividend yield
Insurer Phoenix (LSE: PHNX) has a 9.9% dividend yield.

That means, that for every £10,000 I invested today I would hopefully earn £990 a year in dividends. (A bigger investment could give me bigger passive income streams overall).

In fact, the passive income prospects here could turn out to be even better than that, as Phoenix has what is known as a progressive dividend policy. That means it aims to increase its dividend per share each year.

It has done that recently, but dividends are never guaranteed and a company can always change them as it chooses. Phoenix has a number of strengths as I see it, from a customer base stretching into millions to a specialist expertise in certain types of complex financial products.

But it also faces risks, such as a market downturn forcing it to reassess asset valuations, hurting earnings. Even considering the risks, though, I like the passive income prospects of Phoenix not only in the future but right now.

Legal & General: 9.1% dividend yield
Another share that has strong passive income prospects right now, not just in the future, is financial services provider Legal & General (LSE: LGEN).

We will likely hear in the next fortnight how the business has performed in the first half and what that means for its interim dividend.

I am not expecting any surprises: like Phoenix, Legal & General has a progressive dividend policy and has already set out the increase in its per share dividend expected for the full current year (5%).

As it is buying back its own shares at the moment, the FTSE 100 firm could potentially raise its dividend per share in future (it is foreseeing 2% annual growth) without needing to spend more money than now in total.

The firm benefits from an iconic brand in a pensions and retirement product market that I expect to benefit from resilient client demand over the long run. Weak markets are a risk, partly because they can lead to clients pulling out funds but also because changes in asset values could hurt earnings. Legal & General held its dividend flat in 2020 and cut it during the last financial crisis.

But with a long-term mindset when assessing business prospects alongside a focus on passive income in the short term as well as further out, this share would easily make my shopping list.

The Early Bird
A Message from WealthPress

Dividend stocks are possibly the only investment where you have the opportunity for capital growth as well as income.

It’s truly empowering once you see the impact that dividend stocks can make on any account size.

Imagine the peace of mind that could give you, knowing that your nest egg could be growing without having to make massive annual contributions.

Or slaving away at the computer screens trying to pick some miracle stock.

The key ingredient is DIVIDENDS.

And when you look at it over the scope of time, the difference dividends make is truly mind boggling.

Just visualize a $10k investment in the S&P 500 since 1960 with me.

Without the dividend payments…Your account would have grown to:

$641k

That’s not bad… But it’s certainly not enough to retire worry-free.

But during that SAME time period…With that SAME starting stake…

If you reinvested the DIVIDENDS:

$4 million

That means dividends were the ONLY difference between not having enough to make it through retirement.

Or retiring in the TOP 1% of all U.S. Households.

And the best part is, there’s no extra legwork on your end to collect these dividends – just sit back and watch.

As long as a company doesn’t cut its dividend, you’re guaranteed cash.

8 dividend super aristocrats to look out for

Consider these dividend super aristocrats that have increased their payout for up to 60 years in a row.

(Image credit: d3sign)

By Dr Mike Tubbs

The term “dividend aristocrats” was coined to describe S&P 500 stocks that had increased their payout to shareholders each year for at least 25 years. Shareholders in such firms have great confidence that their companies can provide a secure and rising income. This steadily rising payout is a sign of strong financials and, usually, of lower share-price volatility. 

On the other hand, aristocrats may produce lower capital gains than growth stocks (which often pay no dividend). Investors also need to check that the company is not paying out too high a proportion of earnings as dividends, and thereby forgoing growth opportunities by reinvesting too little. In 2021 there were 65 dividend aristocrats in the S&P 500. 

Over the previous decade, those stocks had produced a total annual return of 14.3% compared with 14.2% for the index. There were 66 aristocrats in 2023 and 81% of these were from five sectors: industrials (24.1% of the total), consumer staples (22.8%), materials (12.5%), financials (11%) and healthcare (10.4%).

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What are dividend super aristocrats?

While dividend aristocrats boast at least 25 years of continuous dividend growth, some of them have records of over 60 years. We define a dividend super aristocrat (DSA) as a company with at least 40 years of continuous dividend growth; it need not be a member of the S&P 500. 

Examples are Automatic Data Processing (ADP), Coca-Cola, Medtronic and Halma of the UK. ADP, one of the largest business-services outsourcers, has a record of 49 years of continuous dividend increases and a dividend yield of 2.3%. Medtronic, the world’s largest manufacturer of biomedical and implantable devices, has had 47 consecutive years of increases and has a dividend yield of 3.5%. This illustrates the point that DSAs with a modest yield, but a history of strong profitable growth may prove to be as good, or better, than DSAs with higher dividend yields but lower growth potential. 

In 2023, there were 67 dividend aristocrats in the S&P 500. 42 of these were DSAs – of which 10 had achieved between 60 and 68 years of dividend increases. A yield of 0.8% may seem low, but its shares have almost quintupled over the last 10 years, so those who bought a decade ago now have a yield of almost 3.8% on their original investment. 

To find stocks with a consistently rising income, choose from dividend aristocrats or DSAs since their long history of rising dividends gives confidence that they can continue their year-on-year increases. However, it is always worth carrying out some additional checks on aristocrats you are thinking of investing in, for income, to make sure they will be able to keep raising their payouts.

What to check for ‘super aristocrats’

The first key criterion is that the company should still be growing its revenue and profits.

Second, check that there are no factors that could cause growth to cease or reverse. An example might be a tobacco company where health regulations may be tightened to make it more and more difficult to sell its products. 

Third, the proportion of earnings per share (EPS) paid out as dividends – the payout ratio – should not be too large. 

A useful rule of thumb for companies (but not for investment trusts, where it is the payout ratio of the companies in their diversified portfolios that matters) is that the dividend per share (DPS) should be less than half of both EPS and cash flow per share. That ensures that dividends can still be paid and increased modestly even if EPS were to fall during a downturn. It also means that there is enough profit retained after paying dividends to invest in continuing growth. 

Medtronic is an example that breaks this rule since DPS for 2023-2024 was 100% of EPS. However, research and development (R&D) comprised 8.5% of sales, so EPS is calculated after deducting the R&D investment that drives future growth. In addition, the health sector is not cyclical, so Medtronic is unlikely to suffer a substantial downturn in revenue and profits, and has, of course, increased its dividend each year for 47 years. 

Another example is Johnson & Johnson, the pharmaceutical giant, which has raised its dividend for 62 years in a row, but has a DPS of 70.7% of EPS. Again, however, it invests very substantially in R&D (17.7% of sales).

8 dividend super aristocrats for dependable growth

We now give eight examples of potential DSA investments, each with 40-68 years of dividend increases and, in seven cases, yields between 2.3% and 3.4%. This range of yields is fairly safe, since with dividends being increased each year, the yield on an investor’s original investment will be climbing each year and will relatively soon exceed 5%, the highest available on easy-access savings accounts (which offer no capital growth). 

Four of the eight DSAs are US companies, one is a UK company and three are UK-listed investment trusts that are currently selling at a discount to the value of their underlying investments. 

1. Sysco Corporation (NYSE: SYY)
   The first example is Sysco Corporation (NYSE: SYY), the $37 billion market cap global leader in wholesale food and food-equipment distribution to restaurants, hotels, healthcare and educational establishments. Sysco’s annual turnover is $76.4 billion and it boasts 53 years of dividend increases. 

The forward dividend yield is 2.8%, with a payout ratio of 48.8% and the forward price/earnings (p/e) ratio is 15.7. The recent share price is $75 and analysts see scope for the share price to reach $121 in the next five years. In May 2024, Sysco gave a financial outlook for the next three years that foresees sales growth of between 4% and 6% per year, adjusted EPS growth of 6%-8% per year and a total return to shareholders of 9%-11% per year. 

2. Genuine Parts (NYSE: GPC)
   Our second example is Genuine Parts (NYSE: GPC), the $19.7 billion market-capitalisation company selling vehicle and industrial parts, electrical materials and business products in the US, Europe and Australasia. Its turnover is $23 billion and it boasts 68 years of annual dividend increases. 

The forward dividend yield is 2.82%, with a payout ratio of 42.7% and forward p/e of 14.3. The recent price is $144 and analysts’ five-year price target is $225. Full-year 2024 guidance given with the latest results confirmed sales growth of 3%-5%, but increased expected diluted adjusted EPS to $9.80-$9.95, from the previous estimate of $9.70-$9.90. 

3. Automatic Data Processing (Nasdaq: ADP)
   The third example is Automatic Data Processing (Nasdaq: ADP), the world’s largest business-services outsourcer with a market value of $101 billion. Its turnover is $18 billion and it has had 49 years of dividend increases. The forward dividend yield is 2.3% with a payout ratio of 59% and forward p/e of 24.8. The recent price is $249, with a five-year price target of $399. ADP’s latest quarterly results showed revenue up by an annual 7% and EPS up 15%. 
4. Johnson & Johnson (NYSE: JNJ)
   Our fourth US example is Johnson & Johnson (NYSE: JNJ), the $375 billion market-cap pharmaceutical company with a turnover of $85.2 billion. It has a record of 62 years of annual dividend increases and a forward dividend yield of 3.3%, with a payout ratio of 70.7% and forward p/e of 14.8. The high payout ratio is acceptable given the company’s substantial R&D investment (17.7% of sales) for growth and a long record of increasing dividends. The recent price is $156 and the five-year price target is $243. Full-year guidance given with the latest results is for sales growth of 5.5%-6% and adjusted diluted EPS growth of 6.6%-8.1%. 
5. Halma (LSE: HLMA)
   Our fifth example is Halma (LSE: HLMA), the £10 billion market-cap FTSE-100 company with a range of products for safety, environmental analysis and health. Its turnover is £2 billion and it has an incredible record of 45 years of annual dividend increases, all of 5% or more. Its forward dividend yield is 0.8%, with a payout ratio of only 29% and forward p/e of 30. The full-year results released in June 2024 showed record profits for the 21st consecutive year, with sales and pre-tax profit both up by 10% and the dividend up by 7%. The shares have gained 16% in the past year.

The final three examples are UK-listed investment trusts – City of London Investment Trust (LSE: CTY), The Scottish American Investment Company (LSE: SAIN) and the Witan Investment Trust (LSE: WTAN), which is merging with Alliance Trust. They all have extensive portfolios of investments, providing corporate, but not necessarily geographical, diversification. 

6. City of London
   City of London has a 58-year history of increasing dividends. About 85% of the fund is in UK shares, with the top-10 holdings including BAE Systems, Shell, HSBC and AstraZeneca. The forward yield is 4.7% and the trailing p/e 17.5. The fund sells at a discount of 0.6% to net asset value (NAV). The shares are up by 10.4% in a year, but 1.3% over five years. 
7. Scottish American
   Scottish American has a 50-year record of increasing dividends, with 36% of the fund in North American equities and 35% in European ones. Top-10 holdings include Novo Nordisk and Microsoft and TSMC Taiwan Semiconductor Manufacturing Company (TSMC). The forward yield is 2.7% and the historic p/e 8.8. The trust sells at a discount to NAV of 8.2%. The shares have gained 24.3% in five years. 
8. Witan
   Witan has a 50-year record of dividend increases, with 39% of the fund in North America and 42% in Europe. Top-20 holdings include Amazon, Unilever, Diageo, Microsoft, Nvidia, Nintendo and Alphabet. The forward yield is 2.2% and the trailing p/e 9.7. The trust sells at a discount of 5.2%. The shares are up 20.4% over one year and 22.4% over the last five.  

For investors requiring the highest immediate yields, together with the confidence that a record of over 50 years of consecutive dividend increases brings, City of London (with a yield of 4.7%, but a modest growth record) and Johnson & Johnson (yielding 3.3% and a five-year share-price target 56% above current levels) are probable choices. 

Sysco (with a yield of 2.8% and a target of 61% above today’s price), or Genuine Parts (2.82% and a target of 56% above) have yields of just under 3% and good growth prospects. Halma (yielding 0.8%) is a longer-term prospect with its excellent history of share price and dividend growth.

Foresight Solar Fund Limited

(the “Company”, “Foresight Solar” or “FSFL”)

Q2 2024 Net Asset Value and Trading Update

Foresight Solar, a sustainability-focused fund investing in solar and battery storage assets in the UK and internationally, announces that its unaudited net asset value (NAV) was £656.8 million at 30 June 2024 (31 March 2024: £665.0 million). This results in a NAV per Ordinary Share of 114.9 pence (31 March 2024: 114.7 pence per share).

Highlights:

·    Near and long-term power price forecasts for the UK and Spain trended up in the second quarter, leading to a positive impact on NAV.

·    UK electricity production recovered after the wettest first quarter on record: irradiation was 2.7% below budget and generation was 4.3% lower than forecast in the first half. 

·    Active treasury management reduced RCF costs by 80bps, equivalent to potential interest savings of £360,000 to the end of the year. The RCF was £74.5 million drawn at 30 June 2024.

·    The board increased the buyback programme by up to £10 million, taking the total to up to £50 million. Repurchases have added a cumulative 1.9pps of NAV accretion.

Summary of key NAV drivers:

Item	p/share movement
NAV on 31 March 2024	114.7p
Power price forecasts	+0.7
Project actuals	-0.6
Share buyback programme	+0.4
Other movements	-0.3
NAV on 30 June 2024	114.9p

As consultants updated their assumptions, UK power price forecasts reversed a five-quarter downward trend and increased in the three months to 30 June 2024. The position was similar in Spain, with higher near and long-term forecasts, whilst price forecasts for Australia were marginally down relative to the previous quarter. In aggregate, these moves resulted in a positive impact to NAV of 0.7 pence per share.

Foresight Solar continued its accretive share buyback programme, repurchasing a further 7.9 million shares during the second quarter and delivering an additional 0.4pps of NAV accretion to shareholders. FSFL has now deployed over £35 million of its £40 million initial allocation, resulting in a cumulative 1.9pps uplift to NAV since the Company began buying back its shares in May 2023.

Other movements, totalling a downside net impact of 0.3pps to NAV, included a small foreign exchange movement; higher insurance costs; returning the Lorca portfolio to a DCF valuation following the partial divestment in Q4 2023; and a minor upside from rebalancing discount rates across the Australian portfolio to reflect current market conditions.

Trading update

Improved weather and good availability from April to June in the UK helped FSFL recover from the wettest first quarter on record. The better conditions, however, were not enough to completely mitigate the negative impact of the rainy start to the year. At the end of June, cumulative irradiation for the six months was 2.7% below budget and production was 4.3% lower than expected in FSFL’s main market due to unplanned network outages and a small number of inverter issues.

Spain and Australia also suffered from poor weather and network outages. Overall, production for the global portfolio was 7.1% below forecast for the first half of the year – a considerable improvement from Q1, when it was 15.6% behind budget.

Notwithstanding the below-budget start of 2024, Foresight Solar’s active power price hedging strategy ensured another quarter of steady cash flow from operations, with cash distributions only modestly down against budget. The directors are confident the Company will meet its target dividend of 8.0pps for the year with a slightly revised net dividend cover of 1.4x.

The investment manager continued to forward-fix electricity sales at attractive rates to provide revenue visibility for the medium term. Overall, the proportion of contracted revenue for the global portfolio now stands at 89% for 2024, 83% for 2025 and 63% for 2026.

Capital allocation

The board and the investment manager recognise the discount that persists between FSFL’s net asset value and its share price. The directors have thus allocated up to a further £10 million to Foresight Solar’s ongoing share buyback programme, bringing its total to a potential £50 million and extending the renewables sector’s largest initiative relative to NAV.

Demonstrating the Company’s commitment to a disciplined capital allocation approach, FSFL didn’t make any large capital deployments in the period. The divestment programme continues to move ahead, and more details will be provided in the interim report. The board remains focused on returning capital to shareholders and reducing variable-rate debt costs.

NextEnergy Solar Fund Limited

(“NESF” or the “Company”)

Interim Dividend Declaration

NextEnergy Solar Fund, a leading specialist investor in solar energy and energy storage, is pleased to announce its first interim dividend of 2.10 pence per Ordinary Share for the quarter ended 30 June 2024, in line with its previously stated target of paying dividends of 8.43p for the year ended 31 March 2025.  

The interim dividend of 2.10 pence will be paid on 30 September 2024 to shareholders on the register as at the close of business on 16 August 2024. The ex-dividend date is 15 August 2024.