Strategy

A new Jerusalem

Dividend increases and share buybacks are good news for UK equities according to our analysts – who think those dark Satanic mills could deliver world-beating total returns..

Josef Licsauer

Disclaimer

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

What if the UK market isn’t the forgotten backwater of global investing but instead the hidden realm where the next total return champions are quietly being forged? Picture an arena of dividends, buybacks, and capital growth, combining in a powerful alchemy, creating opportunities for those bold enough to seize them.

Sure, the UK is often labelled as a home to sluggish and out-of-favour industries, comprised of stocks that are overshadowed by the glittering tech titans across the Atlantic. But we think such labels fail to capture the dynamism simmering beneath the surface. Clinging to these perspectives risks overlooking a trove of undervalued and resilient opportunities, waiting for their moment to seize the gladiator’s rudis—the ultimate recognition of victory in the total return arena.

In this article, we examine how shifting market dynamics are reshaping the UK as a playground for total return strategies. Most importantly, we also highlight the investment trusts that have proven themselves in the heat of battle—armed not with shields and swords, but with disciplined strategies, attractive income and share buyback profiles, and a keen eye for uncovering value in a market brimming with potential.

Time to shift perceptions?

It’s no secret that UK valuations are languishing at historic lows relative to the US, with returns trailing far behind their transatlantic counterparts. This disparity has driven waves of capital outflows from the UK in recent years, as investors have chased the stellar performance of US tech giants. Simultaneously, we believe that many investors have also sought refuge in higher-yielding bonds and savings accounts amid elevated interest rates and economic uncertainty.

But history has shown, time and time again, that adversity often plants the seeds of opportunity for those willing to look beyond short-term market pessimism. One can’t help but draw on Warren Buffett’s timeless adage, be fearful when others are greedy and be greedy only when others are fearful. With UK equities overlooked and undervalued, could now be the time to embrace them?

Catalysts of change

Beneath the surface lies a diverse tapestry of resilient businesses that are benefitting greatly from the UK’s evolving dynamics. Many UK companies showcase strong fundamentals and a proven capacity to endure challenging macroeconomic conditions. We think that in many cases, not all, depressed valuations are less of a reflection of poor management or flawed business models but rather the result of prolonged economic headwinds.

One common critique of the UK market is its perceived lack of capital growth potential, even considering today’s valuations. There’s some truth to this, especially when comparing UK companies to their US equivalents. However, the tide may be turning. Key market fundamentals are showing improvements, as shown below, with stronger return on equity and reduced leverage, pointing to companies with greater profitability and healthier balance sheets. If this persists, the UK could be prime for a re-rating, as investors awaken to the long-term opportunities.

MARKET METRICS: FTSE ALL-SHARE

	current roe %	ten-year roe average	current net debt/ebitda (X)	ten-year net debt/ebitda average
FTSE All-Share	10.2	9.0	1.0	1.4

Source: Bloomberg, as of 15/01/2025

But here is where we think things get particularly compelling. The UK market is not only undervalued and showcasing improving fundamentals but it’s also energised by transformative catalysts, which could unlock significant value without the need for a flood of new capital. One such catalyst is the heightened corporate takeover activity, fuelled by depressed valuations that have transformed UK companies into attractive acquisition targets for international buyers. In 2024 alone, British firms worth £145bn were acquired—over half involving foreign entities. By year-end, deal activity had jumped 21% compared to 2023, underscoring the growing recognition of the UK’s undervalued potential. Many of these takeovers occurred at a premium to prevailing share prices, delivering, in some cases, substantial share price growth—a vital slice of the total return pie.

Building on this momentum, and chief among the catalysts, in our view, is the rise in buyback activity. Over the past year, nearly half of UK companies repurchased shares—the highest percentage among global markets. We think this is a clear signal that companies themselves recognise their undervaluation and are taking proactive steps to enhance shareholder returns. When executed at valuations below intrinsic value, buybacks can amplify shareholder returns, complementing the traditional income generated through dividends.

We think NatWest and Shell are prime examples. Over 2022 and 2023, NatWest repurchased approximately 10% of its shares whilst distributing dividends equivalent to about 12% of its market capitalisation. Shell, meanwhile, repurchased around 20% of its shares and paid dividends equivalent to roughly 10% of its market capitalisation. Together, these actions have delivered substantial value to shareholders in just two years—roughly 22% of market value for NatWest and 30% for Shell, or c. 11% and 15% annualised. Other players in the UK market, such as BP, Standard Chartered, and Barclays, echo this trend, embracing similar buyback and dividend strategies, helping support rising share prices in recent years. But for now, the two cases below help illustrate how buybacks and dividends can work harmoniously to deliver meaningful value to shareholders.

RETURNS TO SHAREHOLDERS

uk company	Two-year dividend paid (ex-special) (%)	Two-year share buyback return (%)	Two-year cash shareholder yield (%)
NatWest	12.3	10.1	22.4
Shell	10.0	19.7	29.7

Source: NatWest and Shell latest annual report 2023, Kepler calculations (two-year period covering 2022 & 2023).

Together, these catalysts unveil a market rich with opportunity, and several UK-focussed investment trusts are already reaping the benefits by backing UK companies leading the charge on delivering shareholder returns. Take CT UK High Income (CHI) . Manager David Moss views the current environment as a pivotal moment for the banking sector as many are now generating low to mid-teen returns on equity and rewarding shareholders with growing dividends and buybacks. Growing conviction here has prompted him to build up notable positions in the likes of NatWest (3.7%) but also HSBC (6.6% at the time of writing), attracted by their robust dividend profiles, share buyback programmes, and strong market positions.

Similarly, the broader energy sector is proving its potential. Managers like Imran Sattar of Edinburgh Investment Trust (EDIN) and Ian Lance and Nick Purves of Temple Bar (TMPL), know that whilst oil companies often face broader scrutiny, Shell is standing out for its evolving approach to the energy transition, as well as boasting a strong market position, attractive yield, and robust free cash flows. When combined with its disciplined capital allocation, which has driven high and growing returns to shareholders, these qualities have made Shell a key holding for both, with a 7.0% position in EDIN’s portfolio and a 5.8% in TMPL’s, as its current shareholder-focussed strategy and growth prospects align with their total return ethos.

Champions of the total return arena

Investment trusts, as listed companies themselves, face many of the same pressures, challenges, and tailwinds as the businesses they invest in. When they buy back their own shares, the accretion to NAV is very easy to calculate (much more so than is the case with operating companies), adding another dimension to the measurable cash return to shareholders. Below we show how many shares have been bought back by each trust in the AIC UK equity income sector over the past three years (to 10/01/2025). We also show the percentage of market cap bought back.

AIC UK EQUITY INCOME SECTOR: BUYBACK RETURN

UK equity income trusts	Total share buybacks (in £)	Three-year buyback return (as a % of market cap)
FGT	518,074,060	25.8
EDIN	132,232,272	12.1
TMPL	75,097,811	9.7
BRIG	2,524,076	6.1
JCH	27,209,686	6.0
MUT	37,771,499	3.6
SHRS	2,579,981	3.1
LOW	7,321,020	2.0
CTY	8,478,035	0.5
CTUK	1,476,000	0.4
DIG	526,833	0.1
SCF	123,526	0.1
LWDB	212,875	0.0
AEI	N/A	0.0
CHI/CHIB	N/A	0.0
DIVI	N/A	0.0

Source: Morningstar, Kepler calculations (data range 10/01/2022 to 10/01/2025). N/A – trusts that didn’t initiate a share repurchase over the period (share redemption and additional listing corporate action types have been excluded).

Below we take it a step further by annualising each trust’s buyback return over three years and combining it with their historic dividend yields to give a rough idea of the potential total cash return on offer. This reveals several trusts putting forward a strong case to be considered total return champions. We stress that this approach isn’t a precise calculation—due to market variables and the fact that trust boards may alter their policies moving forward— but we think it provides a useful indication of which trusts, relative to their size, offer the highest all-in cash “yield”, or total cash return as we refer to it below.

RETURNS TO SHAREHOLDER

UK equity income trusts	Annualised three-year buyback return (%)	Historical yield (%)	Total cash return (%)
FGT	8.0	2.2	10.2
EDIN	3.9	3.7	7.6
SHRS	1.0	6.0	7.0
JCH	1.9	5.0	6.9
TMPL	3.1	3.5	6.6
MUT	1.2	4.7	5.9
LOW	0.7	5.1	5.8
CTY	0.2	4.8	5.0
BRIG	2.0	2.5	4.5
CTUK	0.1	3.9	4.0

Source: Morningstar, as of 10/01/2025

Finsbury Growth & Income (FGT) – amplifying shareholder returns

FGT stands out in the UK equity income sector for its focus on quality growth companies and a concentrated portfolio of just 23 holdings. Its 8.0% annualised three-year buyback return leads the group, complementing a lower dividend yield of 2.2% to deliver a total cash return, based on our rough calculations, of 10.2%—the highest among peers. This high buyback return reflects FGT’s commitment to its discount control mechanism, which aims to ensure shares trade within a range of a 5% discount to a modest 2% premium. Combined with the defensive and compounding nature of its portfolio, FGT offers investors a compelling mix of capital growth and incremental shareholder value.

Edinburgh Investment Trust (EDIN) – quality focus, steady returns

Based on our workings, EDIN’s total cash return of 7.6% reflects a 3.7% historical yield and 3.9% annualised buyback return. Whilst its yield is more modest compared to some peers, EDIN has built a steady track record of reliable income and capital growth, alongside a strong commitment to share buybacks. Under the leadership of Imran Sattar, the trust has focusses on high-quality, cash-generative companies with strong growth potential and competitive advantages, positioning it for both income generation and long-term capital appreciation.

Despite trading at a higher price-to-earnings (P/E) ratio than the index, the emphasis Imran places on profitability and growth prospects supports its superior long-term performance potential. Additionally, the focus on companies with lower debt also provides added resilience in times of market stress, helping the trust navigate challenging periods, including rising interest rates, with greater financial stability. Combining robust dividend growth and an attractive buyback strategy, EDIN remains a reliable option for income and growth-focussed investors.

Shires Income (SHRS) – punching above its weight

Despite being smaller in size compared to some of its peers, with a market cap of around £127m, SHRS has consistently returned value to shareholders through buybacks, annualising 1.0% over the past three years, according to our rough indications, on top of its already generous 6.0% historical yield. Additionally, we also think SHRS’s high, yet growing dividend, benefits from its unique income strategy. The trust’s allocation to preference shares offers stability and predictability to its yield, whilst its ability to invest in small- and mid-cap businesses strikes a strong balance between current income and future growth potential. SHRS’s inclusion on the AIC Dividend Hero list further reinforces its commitment to consistent income, distinguishing it as a reliable option for income-focussed investors.

JPMorgan Claverhouse (JCH) – all-cap income in action

JCH takes a more income-focussed approach than some peers in the sector. It has consistently returned value to shareholders through buybacks, annualising 1.9% over the past three years, on top of its already generous 5.0% historical yield, one of the highest in the group. The change in the management team has introduced a refreshed strategy, embracing a “genuinely all-cap approach” and rethinking income exposure by diversifying into mid-cap companies with strong dividend growth prospects and a three-bucket yield strategy which prioritises income stability and growth. Moreover, JCH boasts a 51-year dividend growth track record and significant reserves, which we argue places JCH as a strong option for both reliable income and consistent growth potential.

Temple Bar (TMPL) – focussed value delivery

TMPL disciplined value investing approach prioritises businesses offering attractive valuations, strong cash generation, and sustainable dividend growth, a combination which helps the portfolio deliver both resilience and upside potential, even in challenging market environments. TMPL’s total cash return of 6.6% reflects this disciplined approach, balancing a solid historical yield of 3.5% with a 3.1% annualised buyback return. TMPL’s managers are advocates of the power of total returns, consistently highlighting the importance that both buybacks and dividends can have to shareholder returns over time.

Over the last three years, the board has shown a clear commitment to returning value to shareholders and putting its strategy into action. Whilst its dividend yield is lower than some peers, TMPL’s focus on undervalued opportunities with strong recovery potential, alongside its commitment to added additional returns through buybacks, remains a core attraction for long-term investors, further enhancing its appeal, in our view.

What about smaller companies?

We’ve focussed much of our attention on trusts that invest predominately in larger companies. However, when it comes to smaller companies, we think they often fly under the radar. Some investors might assume that smaller companies sacrifice income potential for capital growth potential—or vice versa. Whilst this can be true for some, many smaller businesses offer the best of both worlds: strong, rising income alongside impressive capital growth.

Trusts that specialise in smaller companies recognise this potential, offering investors a differentiated source of total returns not often seen in large-cap stocks. Aberforth Smaller Companies (ASL) is a prime example. Although ASL does not explicitly target income, it has consistently demonstrated its ability to provide a solid yield of 3.0%, with annualised dividend growth of 7.4% since inception. This growth has outpaced inflation (2.5%) and surpassed both small-cap and broader market indices. Additionally, ASL has returned value to shareholders through share buybacks, annualising 1.0% over the past three years, bringing its total cash return to 3.9%.

In the first half of 2024, fourteen of ASL’s holdings repurchased shares, with boards taking advantage of depressed stock market valuations. This activity highlights the catalysts we discussed earlier are prevalent across the UK market-cap spectrum.

ASL’s commitment to buybacks and conservative approach to income management, supported by significant revenue reserves, strengthens its ability to sustain and grow its dividend. In addition to its regular dividend, ASL has also paid special dividends, though these are not guaranteed. Overall, its blend of value-driven capital growth, a rising income stream, and buyback activity underscore it as a compelling option for those looking for UK smaller company exposure, with strong total return potential.

Conclusion

The UK market, long overlooked and undervalued, is positioning itself as an unexpected powerhouse for shareholder returns. Beneath its seemingly stagnant surface, a battle of transformative catalysts—corporate takeovers, rising buybacks, and resilient businesses—is quietly reshaping the landscape. These dynamics are forging a new breed of total return champions for those willing to look beyond short-term pessimism.

The synergy between buybacks and dividends presents a potent formula for total returns, uniquely suited to the UK’s current valuation landscape. Buybacks not only signal management’s confidence in undervalued businesses but also enhance shareholder value by reducing share count and increasing earnings per share, delivering welcome additional returns in today’s current environment. We should acknowledge here, that the economics of buybacks are not quite the same for trusts as for commercial companies. Shell will generally not be selling oil fields to buy back shares, but one way or another, an equity income trust will be selling equities to buy back shares. This means the compound effect on EPS over time is much higher for a commercial company. That said, trust buybacks do boost NAV per share and have some positive effect on EPS too. Considering these payments and robust dividend payouts, we think investors are well-placed to benefit from both the immediate income and amplified long-term gains the UK has to offer.

UK-focussed investment trusts are capitalising on these evolving dynamics and harnessing their structures and expertise to deliver tangible results for investors, in our view. For those with a long-term perspective, the UK’s once-overlooked market is poised for transformation — potentially as a coliseum ready to crown the next generation of total return champions.

Story by Stephen Wright

Worried about UK stagflation ? Consider buying dividend shares

Earning passive income from dividend shares is nearly never a bad idea. But with the UK at risk of stagflation, now might be an especially good idea for investors to take a look at what’s on offer.

Beating stagflation?

Like the witches in Macbeth, or the ghosts of A Christmas Carol, bad things often come in threes. So it is with stagflation, with the aforementioned mix of sluggish growth, inflation, and elevated unemployment.

The latest fear for the UK is that this might be an unwelcome consequence of the Budget. A big part of this was increases to the National Living Wage and National Insurance contributions for employers.

The worry is this might deter investors (leading to low growth). At the same time, businesses could respond by raising prices (leading to inflation) and cutting jobs (leading to unemployment).

That’s not great, but investors can’t do much about this. What they can do however, is figure out which stocks to consider buying to protect themselves in such an environment. 

Dividends

Shares in companies that can distribute cash to investors in the form of dividends can be attractive in a stagflationary environment. Especially if they can do so consistently. 

I think real estate investment trusts (REITs) are a good example. These are firms that own properties and generate rental income by leasing them to tenants and distributing the cash to investors.

In general, REITs don’t participate much in a growing economy. That’s because tenants don’t suddenly decide to start paying more on their rent just because profits are rising. 

The other side of that coin though, is that they don’t pay less when growth falters. And that can make REITs more resilient than other stocks when things are tougher. 

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Supermarket Income REIT

One example is Supermarket Income REIT (LSE:SUPR). Right now, the stock has a dividend yield of almost 9%, so there’s a real return on offer for investors even if inflation does start to move higher.

Around 75% of the company’s rent comes from Tesco and J Sainsbury. That’s a risk, since it means the business might not have the strongest hand when it comes to negotiating new leases.

It’s worth noting though, that less than 1% of the current leases expire in the next five years. So Supermarket Income REIT should have a decent way to run before it has to get into this issue. 

Long-term investing

I’m not going to buy Supermarket Income REIT or any stock just because of what the economy might do in the next few months or years. But I do think it’s an important consideration. 

One of the benefits of a diversified portfolio is it limits the effect of specific risks. Stagflation is one of these, so I think long-term investors can legitimately look for stocks that offer protection from this.

The post Worried about UK stagflation? Consider buying dividend shares appeared first on The Motley Fool UK.

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

More reading

Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended J Sainsbury Plc and Tesco Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Dividend Declaration

Residential Secure Income plc (“ReSI)”, or the “Company“) (LSE: RESI), which invests in independent retirement living and shared ownership to deliver secure, inflation-linked returns, is pleased to declare an interim dividend of 1.03 pence per Ordinary Share to be paid in the financial year to 30 September 2024.

The full 1.03 pence of the dividend will be paid as a Property Income Distribution (“PID“) in respect of the Company’s tax-exempt property rental business.

This dividend will be paid on 21 February 2025 to Shareholders on the register as at 31 January 2025. The ex-dividend date is 30 January 2025.

ReSI intends to pay dividends to Shareholders on a quarterly basis and in accordance with the REIT regime.

Story by Mark Hartley

Aiming for passive income in 2025 ? Consider these 3 simple strategies

Creating a passive income stream is a common way to safeguard against unexpected financial troubles. Many UK residents are constantly on the look out for new ways to bring in extra cash.

With that in mind, here are three ways to harness this power in 2025.

Dividend stocks

One of the most popular methods of earning income from stocks is via dividends. These are regular payments companies deliver to shareholders as a reward for their loyalty. The yield is the percentage paid out per share. 

The amount varies and can be altered at any time depending on how well the business is performing. So it’s important to look for reliable companies with a long dividend track record.

For example, Vodafone recently cut its annual dividend from 9 cents to 4.5 cents per share. Whereas British American Tobacco has been increasing its dividend consistently for over 20 years.

Exchange-traded funds (ETF)

Recently, earning extra income by investing in ETFs has become more popular. These products provide a quick and easy way to get exposure to a wide range of stocks — often, an entire index.

For example, the iShares Core S&P 500 ETF has delivered annualised returns of 12.66% over the past 10 years. The fund attempts to beat the overall performance of the S&P 500 by weighting each stock based on market cap.

Investment trusts

Like an ETF, an investment trust provides exposure to a range of stocks. However, it’s usually a much smaller and more focused selection based on a goal like income or growth.

The advantage of an investment trust is that the hard work is taken care of. Rather than try to analyse stocks and balance a portfolio themselves, investors can leave that up to the fund manager.

However, this service incurs an ongoing fee, typically between 0.5% and 1%. This needs to be factored into the expected return. 

For example, the City of London Trust (LSE: CTY) maintains an yield of around 6%. It’s been paying and increasing its dividend consecutively for over 50 years. While past performance doesn’t indicate future results, it provides some peace of mind.

The trust is focused on British income stocks like HSBC, Shell, and RELX. Its ongoing charge is 0.37%.

While the fund is worth considering for dividend income, it isn’t highly diversified. Consequently, if the UK market dips, the trust falls with it. The share price is down 0.9% in the past five years because high inflation has hurt the UK economy. As such, it’s returned no more than the dividend payments. This is an ongoing risk that could hurt the fund’s performance if inflation rises again.

When picking stocks, investors should always consider the company-specific risks. Fortunately, companies typically provide guidance along with their interim results, helping investors to make informed decisions.

The post Aiming for passive income in 2025? Consider these 3 simple strategies appeared first on The Motley Fool UK.

Story by Mark Hartley
MotleyFool

Frustrated young white male looking disconsolate while sat on his sofa holding a beer© Provided by The Motley Fool

Dividend stocks are a popular way to earn passive income on the stock market. The regular payments made to shareholders can equate to a decent flow of cash.

When investing in dividend shares, early investors often fall foul of some common mistakes.

Here are two to keep in mind.

Not all companies are created equal

There’s no shortcut when picking dividend stocks and no single model that applies to all companies. When considering investing for dividends, the individual strengths and weaknesses of each company must be accounted for.

This is particularly true when it comes to dividend coverage. This metric is used to assess how much cash the company has to cover its dividend obligations. Presumably, if its cash is less than the full amount of dividends, there’s going to be a problem.

Companies that need steady cash flow to operate typically pay a low dividend and as such, have high coverage. However, some companies don’t need much cash to operate and so pay a high dividend with low coverage. This reveals how low coverage isn’t necessarily a bad thing.

It’s important to find out how the company operates before making a decision based solely on coverage. Even a company with high coverage may cut the dividend if it has a lot of debt to finance.

These factors differ from company to company, so each one needs to be assessed on an individual basis.

Investing for the yield

Investing purely for the yield isn’t a good long-term strategy. Yields fluctuate wildly and are often high for the wrong reasons, such as a crashing price. 

Some investors buy stocks just before the ex-dividend date as a way to lock in a yield at a certain level. This can be a smart strategy but doesn’t guarantee anything. Ignoring the company’s fundamentals and potential price movements is risky. If the stock falls more than the yield before payment, then it’s all for nothing. 

Before making a decision based on the yield, investors should always carefully assess the company’s financial position

HFEL

1^st Interim dividend for the year ending 31 August 2025

The directors have declared the first interim dividend of 6.20p per ordinary share in respect of the year ending 31 August 2025. The dividend will be paid on 28 February 2025 to shareholders on the register on 31 January 2025 (the record date). The shares will be quoted ex-dividend on 30 January 2025. 

The Watch List will be reviewed at the end of this month. ADIG as it winds down the dividends will be cut so it will be leaving the Watch List.

Following the June 2024 Court approval, and the payment of the interim dividend in October 2024, it is likely that dividends will be paid in smaller, less regular, amounts principally for the purpose of maintaining the Company’s investment trust status while capital will be returned progressively to shareholders by the most tax-efficient mechanism available, which may include further B share issues.

4 passive income shares with 9%+ dividend yields to consider today!

The dividend yields on these high-yield passive income stocks smash the FTSE 100 forward average of 3.6%.

Posted by Royston Wild

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

Searching for the best high-yield passive income shares to buy for long-term dividends? Here are four of my favourites.

Cash machine

Small-cap miners aren’t often famed for their large dividends. But strong cash generation and zero debt means Central Asia Metals has long delivered market-beating cash rewards.

For 2025, its dividend yield is a whopping 11%.

Profit-sapping volatility on commodity markets can make mining stocks a risk. But that robust balance sheet means Central Asia — which owns copper and lead-zinc deposits in Kazakhstan and North Macedonia — still looks in good shape to deliver big rewards.

It had cash in the bank of $67.6m as of December. That was up from £56.3m six months earlier.

Top trust

Real estate investment trusts (REITs) like Assura are required to distribute 90%of rental profits out in dividends. And so the forward dividend yield here is a healthy 9%.

However, there are other reasons why this particular trust’s a reliable passive income share. It operates in the highly stable medical property sector, where rents are underpinned by government bodies. A large percentage of its rental contracts are also inflation linked, allowing it to offset the impact of rising costs on earnings.

Assura has a strong record of dividend growth, too, which I believe should continue as the UK’s ageing population drives healthcare demand.

That said, the company’s aim to boost earnings with acquisitions does come with risks. Acquisitions that don’t work out can be extremely costly.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Super star

As one might assume from its grandiose title, the Global X SuperDividend ETF (LSE:SDIP) boasts one of the highest dividend yields on the London Stock Exchange. It currently clocks in at 11.5%.

High-yield stocks can carry hidden risks. Companies often offer generous dividends to attract investors, even when facing challenges like weak earnings or increasing debt. High shareholder payouts can be difficult to maintain, potentially leading to dividend cuts later on.

Investing in an exchange-traded fund (ETF) doesn’t eliminate this threat. But it can help to significantly reduce the risk by spreading cash across a variety of shares.

The GlobalX SuperDividend ETF invests in more than 100 companies, and what’s more, its holdings span multiple sectors and all four corners of the globe. Major holdings include telecoms provider HKBN, iron ore producer Vale, and asset manager M&G.

This level of diversification provides even more protection for investors seeking a large and reliable dividend income over time.

Power up

The Octopus Renewables Infrastructure Trust invests in green energy projects across Europe. These include (but are not limited to) onshore and offshore wind farms in Sweden, Germany, and the UK, along with solar power assets in France and Ireland.

Unlike with fossil fuels, the electricity generated from ‘clean’ sources can be highly variable depending on weather conditions. But Octopus, with its wide range of technologies and broad geographic wingspan, lessens (if not completely eliminates) this threat to group earnings.

Given the stable nature of energy demand, I think this trust is — on balance — a good option to consider for investors trying to target a large and dependable passive income.

Its dividend yield for 2025 is an enormous 9.5%.

Thursday 23 January

abrdn Asian Income Fund Ltd ex-dividend date
Bankers Investment Trust PLC ex-dividend date
City of London Investment Trust PLC ex-dividend date
CQS New City High Yield Fund Ltd ex-dividend date
Doric Nimrod Air Three Ltd ex-dividend date
Foresight Solar Fund Ltd ex-dividend date
Law Debenture Corp PLC dividend payment date
NB Private Equity Partners Ltd ex-dividend date