Investment Trust Dividends
If when the blog portfolio started, I had decided to invest 100k in VWRP Vanguard FTSE All World ETF, (an accumulation ETF) at the end of last year it would have increased to a value of £133,280.00
For comparison purposes we will use the 4% rule so in 2025 u could withdraw income of £5,331.20
The blog portfolio earned income of £10,976.00.
Or to be more conservative, this year’s income fcast is £9,120.00 and the target is 10k.
The choice my friend is yours.
Michael Foster
Contributor
Michael writes on high income assets that help people retire early.
Jan 18, 2025
Real estate investment trusts (REITs) are making a comeback from their post-pandemic downturn—and with the sector still lagging the stock market, we’ve got a chance to buy at attractive discounts.
And we’re well set up to add some 7%+ dividend yields—that have started to grow lately—as we do, not in REITs directly, but in REIT-focused closed-end funds (CEFs).
While the S&P 500 has enjoyed a 14.0% annualized return over the last five years, as of this writing, REITs, as measured by the performance of the benchmark SPDR Dow Jones REIT ETF (RWR), have returned a paltry 2.6% annualized over the same period.
That’s unusual, as REITs—landlords who own properties ranging from apartments to data centers and warehouses—usually outperform the S&P 500, as you can see by RWR’s long-term return (from the date of RWR’s IPO) below.
MORE FOR YOU
What makes this trend even weirder is that it is happening even when there’s not been a shift in the trendlines between REIT prices and house prices. I know these may sound like separate things, so let me explain.
In the mid-2000s the housing bubble plateaued, as we can see in the US House Price Index (in blue above), but investor fervor for real estate more generally did not, causing investors to bid up RWR (in orange) far above the trendline we saw for houses.
Today, the trend is the exact opposite, with investors bidding less for REITs (again in orange) than the trend in house prices would suggest is most natural.
Housing prices have gained 7.2% per year on average over the last decade, yet RWR has gained just 3.7% over the same time period.
The reason? A 7.2% annualized gain is just too much for houses—if we go back 33 years, since records of this metric were first kept, housing rises an average 4.5% per year, so we’re due for a pullback. Still-high 30-year mortgage rates add further pressure here.
In other words, all the bad news is currently priced into REITs, which as we just saw, are lagging home prices.
This real estate pessimism means REITs are currently at a lower price point than they were both in 2007, during the bubble, and in 2015 to 2019, after the real estate market had recovered and mortgage rates continued to climb.
This is important because interest rates are going to move lower, either in 2025 or later. And even if they do fall more slowly than people first thought, REITs will still be able to collect rents from their current portfolios as they wait for rates to decline, and still see their properties’ value increase, even if we see no rate cuts in 2025. The Fed, however, has made it clear that it does plan to cut rates.
When rates do fall, mortgages will get cheaper, driving more real estate demand.
But there’s another hidden benefit for REITs specifically, and that’s leverage.
When the Fed lowers interest rates, it lowers the cost of borrowing across the market, and that means REITs can borrow for less (and of course, they can already borrow for much less than your typical homebuyer). This expands their profit margins and results in more dividend cash handed over to investors.
So REITs can take advantage of lower rates to expand their book of owned properties.
Will REITs do that? Not only will they, but the data suggests they’ve already begun.
Before interest rates first started rising, REITs performed well, thanks to the weird economic factors of the pandemic, which meant that leverage was at a multi-decade low in 2021, when interest rates started to climb.
While REITs have started to borrow again (see right side of chart above), bringing current leverage ratios to mid-2010s levels, there’s still plenty of room for them to borrow and expand.
When they do, this will increase their net asset values (NAVs) and the total amount of income they receive, driving up payouts to shareholders in the form of higher dividends.
We’re already seeing this.
After an unsurprising dip in income following the pandemic, REITs have been able to grow payouts so that they’re now 7.5% higher than pre-pandemic levels. Yet REITs cost less to buy now than they did back then.
With interest rates headed lower (again, even if slowly) and potential declines in housing prices priced in, REITs are compelling, but there’s another part of the story. Some REIT sectors (infrastructure, data centers and cell towers most notably) are seeing strong growth now, regardless of interest-rate trends.
Others, like office REITs, are recovering from the return-to-office trend that is still dominating work life, so much so that companies like Starbucks, Amazon and JPMorgan are requiring workers to return to the office.
Thus, even if housing prices fall in the future, it seems likely that other real estate sectors will see prices rise. And even if housing prices do fall, REITs’ ability to borrow at lower rates will let them pick up residential properties and start renting them out, collecting more income. This suggests REITs’ dividend hikes have just gotten started.
RWR’s 3.8% yield is really too small for us to take seriously, so I’d suggest playing this trend through a CEF likethe Cohen & Steers Quality Income Realty Fund (RQI). The fund’s 8% yield has been consistent—RQI has maintained its dividend for the last nine years—and its total returns (in purple below) put those of RWR (in orange) to shame.
Despite its outperformance, high yield, and consistent dividend, RQI trades at a small discount to NAV—and that discount is likely to turn into a premium if market demand for both high yields and real estate continues apace.
Furthermore, with 13% of its portfolio in telecommunications, 11.2% in healthcare and 9.4% in data centers, the fund has positioned itself for those kinds of real estate seeing the most demand, while its single-family-home portfolio, at 3.5%, is much lighter, meaning it’s ready to profit from a downturn in home prices if they do happen to take a dip in the short term.
Michael Foster is the Lead Research Analyst for Contrarian Outlook.
Our writer explains how careful share selection, diversification, and compounding could potentially help an investor turn a £30k SIPP into a £400k+ one.
Posted by
Christopher Ruane
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.
A SIPP is the perfect vehicle for the sort of long-term investing I prefer.
By looking decades into the future and thinking about where business sectors and specific firms may go, I think it is possible to help decide what sort of shares bought today might help set an investor up for a bigger SIPP down the road.
I do not buy shares just because of their yields. After all, no dividend is ever guaranteed.
But I do think zooming in on yields of the shares I mention below can help illustrate why I am such a fan of the long-term approach to investing.
If an investor put £10,000 into Legal & General today and compounded that investment at 8.9% annually, after 30 years the investment would be worth over £129k. Putting the same amount into M&G and compounding at 10%, after 30 years the holding would be worth over £174k. For British American o (LSE: BATS), compounding at 8.1% for 30 years, the investment would be worth over £103k.
So, £30k invested now could potentially be worth over £406k in three decades.
How likely is that to happen?
I did not pick those numbers out of thin air. They are the current dividend yields of those high-yield shares.
The example presumes no share price movement and a steady dividend per share. If the dividend moves up, the result could be even better. But dividends can also be cut or cancelled.
All three of these shares have a policy of not cutting their dividend per share. Actually, each has grown it annually in recent years. However, high yields can be a warning sign that the City expects a cut could be on the cards at some point.
To illustrate the point, consider British American Tobacco.
The FTSE 100 firm is a rare British Dividend Aristocrat, having grown its payout per share annually since the last century. Despite falling cigarette volumes, tobacco remains huge – and hugely profitable – business.
But British American has a lot of debt and its core market is in systemic, long-term decline. That could be a real risk to the dividend. Still, although there are risks, I think British American has a lot of strengths too and see it is a share investors should consider for their SIPP.
Risk is part of investing, after all.
I own Legal & General and M&G in my SIPP. Both have strengths, such as a large market of possible customers, deep experience, and sizeable client bases.
But what if the markets crash ? I could imagine many investors scrambling to pull out funds, hurting profits at asset and investment management firms. That could lead either company to cut (or even axe) its dividend.
Over the long run, though, I like the investment case for these firms and have no plans to sell my shares
3 No-Brainer Dividend Stocks to Buy in 2025
Jennifer Saibil, The Motley Fool
Sun, January 19, 2025
Dividend stocks are an important part of a diversified portfolio. They provide passive income under almost any conditions, which strengthens your portfolio and protects your money in changing economies.
Younger investors may want to focus more on growth, and retirees tend to switch to more dividend stocks. Whichever category you’re in, if you’re looking for excellent dividend stocks, consider Realty Income (NYSE: O), Home Depot (NYSE: HD), and Coca-Cola (NYSE: KO).
Realty Income is a top dividend stock that has an excellent business, high yield, and growing dividend, and it also has the added perk of cutting a monthly check.
It’s a real estate investment trust (REIT), a business structure for companies that own and lease out rental properties. Realty Income is one of the largest REITs in the world, with more than 15,000 properties that it leases mostly to retailers. Its top 20 tenants include brands like Walmart and CVS, chains that do well in most circumstances and can keep up their leases. Although it touts that as an obvious advantage, it has also expanded to other categories through recent acquisitions and contracts.
It made a recent deal with Wynn Resorts, and 14% of its properties are in the industrials category. However, retail accounts for nearly 80% of the total, with grocery and convenience stores accounting for almost 20%. In other words, it has a stable and growing business, which is important in a dividend stock.
Another reason to be confident about Realty Income’s ability to pay and grow its dividend is its extensive track record. It has paid a dividend for 655 months consecutively, and raised it 128 times since going public in 1994.
The dividend yields 5.9% at the current price, or more than 4 times the S&P 500 average. It’s an excellent dividend pick for just about any investor.
Home Depot is the largest home improvement chain in the world. It has 2,300 stores in the U.S., Canada, and Mexico, and it’s opening new ones, although at a slow pace. People always need home improvement products, providing organic growth opportunities for Home Depot all the time.
The company has been challenged by the pressured housing market, but when people aren’t moving they also have home improvement needs, since they might need more home maintenance in their current digs. Sales increased 6.6% year over year in the 2024 fiscal third quarter (ended Oct. 27), but comps were down 1.3%. Operating margin and net income were both down from last year but beat expectations.
Home Depot is constantly upgrading its platform and converting to a heftier omnichannel model to meet today’s consumer needs. It recently unveiled a larger regional distribution network with 19 fulfillment centers across the country, and it can reach 90% of its customers with same- or next-day delivery. The company launched a marketing campaign to highlight its reach and is already seeing results in higher conversions and incremental sales.
The underlying strength of this business supports its excellent dividend. It yields 2.2% at the current price, well above the S&P 500 average, and it has increased more than 280% over the past 10 years.
Coca-Cola is the great dividend stock, a Dividend King, and the company has raised its dividend annually for the past 62 years, under all kinds of circumstances. It’s totally committed to the dividend, and its payout ratio reached more than 100% early in the pandemic when sales plunged.
It’s the largest all-beverage company in the world, and it reaches customers in 200 countries all over the world. It has pricing power in its loved brands, which is why Coca-Cola is so reliable for strong performance. It’s the top worldwide brand in the non-alcoholic, ready-to-drink category, and it has developed all kinds of packaging and pricing changes to entice its fans even in the inflationary climate. Revenue dropped 1% in the 2023 third quarter, but organic revenue was up 9%.
Coca-Cola has opportunities in acquiring new brands and capturing greater market share, and it has organic growth potential in its diverse beverage categories that include sparkling drinks, dairy, juice, coffee, and more.
The dividend yields 3.1% at the current price, and it’s an excellent choice for a reliable, high-yielding stock.
REGIONAL REIT Limited
(“Regional REIT” the “Group” or the “Company”)
Annual Tenant Survey Published
Office Active Occupation Continues to Increase
Regional REIT, the regional office specialist, is pleased to provide an update on the continued return to the office.
Office active occupation[1] is now ahead of the pre-pandemic level[2] as companies encourage staff back to the office.
· Current active office occupation has increased to 75.3% from 71.4% (February 2024), above pre-pandemic active occupancy, estimated at 70%.
· Employee occupation remains high at an average of 4 days per week (February 2024: 4 days per week).
The survey is the largest of its kind from the largest owner of regional office assets and is based on the Company’s tenants in 112 buildings across the office portfolio. The properties provide space for a broad range of different business sectors that are geographically spread across England, Scotland and Wales.
The survey’s results are based on a 74.5% response rate (by rent), with over 28,000 employees having taken part and demonstrate a continuing improvement in the return to the office trend, which is confirmed by other recent reports and studies. For example, a report by Virgin Media O2 Business Movers Index[3], tracking commuting behaviour in the UK, reported that the number of companies requiring employees to work from company premises three or more days a week has increased to 75% in 2024 from 67% in 2023. Firms in the study seeking staff back in the office for at least four days a week also increased to 50%, up from 46% previously. Nearly 40% of British workers now commute five days a week according to the study.
[1] Active occupation being the average desk occupancy during business hours. For example, if a company had 100 desks, then on average during business hours 75 desks would be occupied, with the balance unoccupied due to absences from holidays, illness, or out of the office on business.
[2] Savills, European Office Occupancy March 2023
[3] Virgin O2 Business Movers Index Q3 2024
Stephen Inglis, Asset Manager of Regional REIT and Head of ESR Europe LSPIM, commented:
“Our latest annual survey further confirms the significant and increasing role that ‘the office’ plays in ongoing business life, further building on the positive trends that we observed in our previous tenant surveys.
An increase in active occupation, in tandem with employees back in the office for an average of four days per week, demonstrates a clear positive trend and an encouraging backdrop for the regional office market. This will over time, result in improving demand for office space and with limited supply, will result in improved occupancy in the UK office markets and rental growth.”
– ENDS –
About Regional REIT
Regional REIT Limited (“Regional REIT” or the “Company”) and its subsidiaries (the “Group”) is a United Kingdom (“UK”) based real estate investment trust that launched in November 2015. It is managed by ESR Europe LSPIM Limited, the Asset Manager, and ESR Europe Private Markets Limited, the Investment Adviser.
Regional REIT’s commercial property portfolio is comprised wholly of income producing UK assets and comprises, predominantly of offices located in the regional centres outside of the M25 motorway. The portfolio is geographically diversified, with 131 properties, 1,303 units and 808 tenants as at 30 September 2024, with a valuation of c.£648.8m.
Regional REIT pursues its investment objective by investing in, actively managing and disposing of regional Core and Core Plus Property assets. It aims to deliver an attractive total return to its Shareholders, targeting greater than 10% per annum, with a strong focus on income supported by additional capital growth prospects.
The Company’s shares were admitted to the Official List of the UK’s Financial Conduct Authority and to trading on the London Stock Exchange on 6 November 2015. For more information, please visit the Group’s website at http://www.regionalreit.com
Only two companies in this week’s round-up: global fund Bankers (BNKR) and capital preservation trust Ruffer (RICA). Unsurprisingly, of the two BNKR, the standout in performance terms with NAV total return up +21.1% for the year. By contrast RICA’s NAV total return for the 12 months to 31 December 2024 came in exactly flat, a 0.0% return for the year, now that’s an achievement in its own right.
By Frank Buhagiar
BNKR’s full-year net asset value (NAV) total return came in at an impressive-looking +21.1%. Share price equivalent fared even better, up +21.4%. Both however could not quite match the FTSE World Index’s total return of +26.1%. But, as Chair Simon Miller points out, “It is worth noting that only a few investment funds have outperformed our global benchmark index this year.” That’s down to market returns being dominated by those Magnificent Seven and their flying share prices which powered a +30.3% increase in the US market in sterling terms during the year, around double the return from European and Japanese stocks. Stock selection in the US and an underweight exposure to the US market cited as reasons for the shortfall when compared to the benchmark. Steps have been taken to address the US underweight – BNKR’s exposure to US equities had been increased to 50% by year end from 40% previously and currently stands at 60%. “We hope to see improved performance relative to the benchmark next year as a result of these changes” says Miller.
And that’s not the only reason why Miller is optimistic for the year ahead “I have cautious optimism about the future. The prospect for further interest rate cuts on the back of lower inflation gives credence to the view that this year’s performance will not be given up next year. The new administration in the US appears focused on growth and reform, which will be welcomed by many businesses there.” So “Provided the economic outlook prevails, Bankers is in strong position to take advantage of a broadening out in markets.” Shares were up a cautiously optimistic 1.2p to 122p on the day of the results.
Numis: “The shares have been trading in double-digit (discount) territory in recent months (currently c.9%) and given the market backdrop of activism we would expect buybacks to be active to seek to prevent any widening of the discount.”
JPMorgan: “Bankers of today benefits from an attractive combination of low costs, long term low cost fixed rate debt and trades at a slightly wider than average discount in its peer group with the board making significant buybacks. But we think an improvement in the relative NAV performance is the one factor that is likely to see a sustained narrowing of the discount. We remain Neutral.”
RICA’s investment managers gave the market their usual heads up on the fund’s performance outside of the formal financial results calendar: over the six-month period to end of December, NAV total return came in at -0.4%; share price total return +0.2%. That means NAV total return for the 12 months to 31 December 2024 was 0.0%, while share price total return was -0.7%. Longer-term performance reads better: the annualised NAV total return since inception in 2004 stands at +6.7% while total return since inception is +276.6%. For comparison, the FTSE All-Share has generated an annualised total return of +7.3%. But, as the investment managers write, “There is no denying we are at a painful moment for Ruffer and our shareholders. After four strong years from 2019 to 2022 when the NAV total return annualised over 10%, investors have now experienced two consecutive losses in share price terms. So where have we gone wrong?”
The investment managers put the performance down to “tension between the cyclical and the structural. On the cyclical, we have been proved wrong – there was no recession, but there was an aggressive disinflation and a resurgence in animal spirits. On the structural? Sticky inflation, financial stability preferred to monetary stability, geopolitical fracturing, the rise of populism and state directed capitalism – so far, spot on.” According to the managers, it’s a question of timing “We view this as an intertemporal snag. We currently see the elastic band which tethers prices and fundamentals as stretched taut, with the potential for an aggressive snap back.” And if that happens “a redemptive performance moment” can be expected. As the managers point out “We have been in this uncomfortable position before. We do not attempt to time every market turn, but we do seek to ensure the portfolio’s protective armoury is in place when we sense moments of danger”. Shares added 1.5p on the day to 271.5p – investors wanting exposure to that protective armoury too, it seems.
Numis: “Ruffer IC is managed by Duncan MacInnes and Jasmine Yeo with a capital preservation mind-set. The fund has a strong long term track record of delivering consistent growth with low volatility. The nature of the portfolio means that the NAV will inevitably lag if equity markets remain strong, but we believe that the fund can be regarded as an attractive portfolio diversifier as Ruffer has a record of insulating against market falls, most notably during 2022, Covid-19 and the global financial crisis.”
| psicólogo fortaleza psicologogabriel.comx Kopecky2584@gmail.com 104.153.81.208 | Hi there are using WordPress for your site platform? I’m new to the blog world but I’m trying to get started and set up my own. Do you require any coding expertise to make your own blog? Any help would be greatly appreciated! |
If your search for Today’s Quest most of the answers can be found there.
The Saba Saga dominates the Tip Sheet with The Telegraph strongly defending the track records of two of the US activist’s targets— Herald (HRI) and The European Smaller Companies Trust (ESCT). As The Telegraph points out, HRI is a great success story that has turned £1000 at launch in 1994 to £24,200 today, while, ESCT has beaten its benchmark in 12 of the last 13 years.
By Frank Buhagiar
No prizes for guessing the above Telegraph article focuses on one of the seven funds currently being targeted by Saba Capital. Herald Investment Trust (HRI) launched in 1994, £65m was raised to plough into global small-cap technology and communications stocks. A further £30m was subsequently raised in 1996. Fast forward to today and HRI has grown its assets to around £1.2bn and that’s despite returning hundreds of millions to investors via share buybacks on the way. The share price performance is equally impressive: a £1,000 investment at launch would now be worth £24,200 or £26,000 had warrants that came with the original share issue been exercised. As Questor points out “That is a long way ahead of the return that you would have achieved tracking the UK small-cap market or even a US small-cap technology index.”
And yet, despite producing the goods for long-term investors, HRI is one of the seven investment trusts in which Saba Capital has accumulated a large stake in (20%) and is one of those named by the US activist in its 18 December 2024 announcement calling for general meetings to be held and wholesale changes to the Board to be made. Saba’s plan appears to be to replace the current directors with its own nominees, become the investment manager and change the mandate to one that targets other UK-listed trusts, “As a minimum, it seems to want to force these companies to give it a cash exit at NAV, which is likely to make it a fast buck”.
Notwithstanding the loss of a much-needed and respected investor in the UK technology sector— UK stocks account for 35% of the portfolio—Questor believes the Saba attack needs to be seen off by shareholders because “taking a longer-term view, the performance gap between small cap and large cap tech seems overstretched. The existing investment approach could deliver attractive returns in the coming years and prove far more lucrative than Saba’s self-serving agenda. Shareholders in Herald and the other Saba targets need to ensure that their voice is heard, and this US corporate raider is sent off with its tail between its legs.” Strong stuff and with good reason.
Questor – Europe is in a mess – here’s how to take advantage
HRI, not the only member of the Saba Seven to get a favourable write-up from Questor. So too, The European Smaller Companies Trust (ESCT). Like HRI, ESCT invests in small-cap stocks and like HRI, it has done a good job of it too. Since July 2011 when Janus Henderson’s Ollie Beckett took over as manager, the portfolio has returned +263%, easily beating the +176% generated by the MSCI Europe ex UK Smaller Companies index. In all, the fund has beaten its benchmark in 12 of the last 13 years and over the past decade is the second-best performing European-focused investment trust.
That stellar record, testimony to the manager’s approach that is centred around identifying mispriced stocks from a pool of around 2,000 companies with sub-€7bn (£5.8bn) market caps at the time of investment. It’s an approach that is style agnostic, namely there is no ‘growth’ or ‘value’ focus which in practice means it has a higher exposure to ‘value’ stocks than its more growth-oriented peers.
But, as Questor points out, that strong track record is under threat following Saba’s stake building— Saba says it owns 29.1% of the fund—particularly if the activist investor gets its own way at the upcoming general meeting. As with HRI and the other five funds, Saba is looking to appoint its own directors “then through them impose its will on minority investors. To achieve this, it needs the support of over 50% of those voting.” Bearing in mind the fund’s track record “Questor would be surprised if the shareholders that have stuck by the European Smaller Companies Trust through the lean times would wish to lose the prospect of a recovery in its fortunes.” The stakes are therefore high and nothing can be taken for granted. That’s why “it is important that shareholders vote, as Saba is likely relying on a low turnout to boost its chances of winning.” Shareholders, you have been warned.
Some buyers for Property Trusts.
For those Trusts that don’t have a Premium to Discount figure, u need to compare the NTAV to the CAPITAL amount.
Remember as the share price rises the yield falls.
© 2025 Passive Income
Theme by Anders Noren — Up ↑