Income Investor: a blue-chip stock for income and growth

These shares have outperformed the FTSE 100 this year and offer a higher yield. Analyst Robert Stephens thinks they’re one to own as returns on cash savings accounts decline.

19th November 2025 08:38

by Robert Stephens from interactive investor

Yields across mainstream asset classes have declined over recent months. For example, easy-access savings accounts now offer little more than 4.0% excluding bonuses following a 75-basis point cut to the Bank Rate since the start of the year.

Similarly, falling interest rates have supported fixed-income prices. This has contributed to a fall in the yield on 10-year gilts, for example, which is down by around 20 basis points to 4.4% year to date.

Additionally, the FTSE 100 has surged by 15% since the start of the year. Its performance has been boosted by continued monetary policy easing not just in the UK, but across developed economies including the US and eurozone, given its overwhelming reliance on the global economy (over 80% of FTSE 100 members’ sales are generated from outside the UK). As a result of its recent surge, the UK’s large-cap index now yields just 3.2%.

Future prospects

The recent trend of falling yields is likely to continue in future. While UK inflation is currently 180 basis points in excess of the Bank of England’s 2% target, the central bank said in November that it believes the annual rate of price changes has now peaked. According to its forecasts, inflation will gradually fall to target during the first half of 2027.

When combined with an unemployment rate that currently stands at 5%, its highest since May 2021, and economic growth that amounted to just 0.1% in the third quarter of the year, this suggests further interest rate cuts are ahead.

Falling rates are likely to prompt continued decline in the income return of cash savings accounts. In theory, further monetary policy easing should also lead to a rise in government bond prices, which could prompt a continuation of falling gilt yields. And with lower interest rates likely to be implemented not just in the UK but also in the US, where the Federal Reserve expects inflation to fall to 2% by 2028, the outlook for the world economy is set to improve. This should support the FTSE 100’s future performance, thereby having the potential to further suppress its dividend yield.

Asset allocation

In terms of portfolio positioning, cash savings accounts are set to become an even less worthwhile means of generating an attractive income. Indeed, income investors who rely on them are likely to experience a substantial decline in their spending power even amid falling inflation.

While a looser monetary policy should boost bond prices, thereby providing scope for capital gains in the medium term, a heightened level of UK political and economic uncertainty could weigh on government bond prices. For instance, reaction to the upcoming Budget and any subsequent changes to fiscal policy remain a known unknown that may prompt heightened volatility in gilt prices.

As a result, income seekers may wish to continue to focus on dividend stocks rather than fixed income or cash alternatives. While the FTSE 100 index currently offers a yield that is around 120 basis points lower than that of 10-year gilts or easy-access cash savings accounts, its members provide scope for significant dividend growth amid falling interest rates and an increasingly upbeat global economic outlook.

Source: Refinitiv as at 18 November 2025. Bond yields are distribution yields of selected Royal London active bond funds (as at 30 September 2025), except global infrastructure bond which is 12-month trailing yield for iShares Global Infras ETF USD Dist as at 14 November. SONIA reflects the average of interest rates that banks pay to borrow sterling overnight from each other (14 November). Best accounts by moneyfactscompare.co.uk refer to Annual Equivalent Rate (AER) as at 18 November. *Includes introductory bonus.

An inflation-beating income?

Over the long run, it would be wholly unsurprising if a diverse portfolio of UK large-cap shares provides income seekers with a positive real-terms increase in their spending power. This contrasts with the fixed income offered by bonds, which is set to decline in real terms, and a likely fall in the income return from cash savings accounts.

Although the FTSE 100’s past performance suggests that its future returns could prove to be highly volatile, its earnings multiple of under 18, versus a figure of 27.6 for its US peer (S&P 500), suggests it is not yet overvalued. Alongside improving operating conditions for its members amid likely global interest rate cuts, this indicates that it could deliver further capital gains alongside inflation-beating income growth in the coming years.

Dividend growth potential

GSK’s 30% share price rise since the start of the year means it now has a yield of 3.6%. While the global pharmaceutical firm still has an income return which is 40 basis points greater than that of the FTSE 100 index, some income seekers may feel it now lacks dividend investing appeal having started 2025 with a yield of roughly 4.5%.

However, the company’s shareholder payouts are set to rise at a relatively fast pace over the coming years as a result of its improving financial performance. Recently released third-quarter results, for example, included an upgrade to profit guidance for the full year. GSK 

GSK now expects to deliver earnings per share (EPS) growth of 10-12% versus a previous forecast of 6-8%.

Higher profits should ultimately translate into rising dividends, given that the firm aims to pay out between 40% and 60% of earnings to shareholders. Having already announced dividend payments for the first three quarters of the current year, shareholder payouts are on track to rise by 4.9% for the full year. This is 110 basis points ahead of an elevated inflation rate and gives a forward yield of 3.6%. A consensus forecast of a double-digit rise in profits next year is set to have a further positive impact on dividends.

Solid fundamentals

As with any pharmaceutical company, there are no guarantees that GSK’s product pipeline will deliver on its potential. However, the company is boosting the chances of it doing so by spending a larger proportion of revenue on research and development (R&D).

In the first three quarters of the current year, for instance, it spent 21.5% of total sales on R&D. This is up 2.5 percentage points on the same period of the previous year. When combined with the firm’s improving financial performance, it means that R&D spending was up 20% versus the same nine-month period from the previous year.

Given its solid financial position, the company is well placed to further invest for long-term growth. Although its net debt-to-equity ratio is relatively high at 92%, the firm’s defensive characteristics mean this figure is by no means excessive.

Meanwhile, net interest cover of 17.8 in the first nine months of the year suggests the company could overcome even a material fall in profits should it ultimately experience difficulties in replacing today’s top-selling drugs, for example.

Total return prospects

Clearly, an upcoming change in CEO and ongoing geopolitical risks, notably rumours regarding tariffs on pharmaceuticals, are uncertainties facing the business. They could weigh on investor sentiment and act as a drag on future share price performance.

However, even after its share price surge over recent months, GSK trades on an earnings multiple of just 11.2, and less than 11 on a forward basis. This is more than a third lower than the FTSE 100 index’s price/earnings (PE) ratio and indicates that there is a wide margin of safety present which provides scope for a further upwards rerating over the long run. This is especially the case given the company’s upbeat earnings profile and solid fundamentals.

As a result, GSK appears to offer long-term investment appeal. Its encouraging financial performance and strong earnings growth potential could equate to inflation-beating dividend growth that more than adequately compensates investors for a relatively modest yield. And with upward rerating potential and a rising bottom line, the stock’s total return prospects also appear to be relatively favourable.

Robert Stephens is a freelance contributor and not a direct employee of interactive investor. 

This “Bubble Fear” Is the Best Setup We’ve Had in Years. These 6%+ Divvies Are the Play

Brett Owens, Chief Investment Strategist
Updated: November 18, 2025

What a time to be a contrarian!

The economy is en fuego as AI boosts productivity (even if, yes, it’s cooling payrolls). Yet the mainstream crowd is hunkered down, terrified of an AI bubble.

That sets up some very attractive deals in 8%-paying closed-end funds (CEFs), many of which have gone on sale in the last few weeks.

2 “North Stars” Show Us What to Do Now

To get a feel for the setup in front of us, all we need to do is look at two things.

First, the Atlanta Fed’s GDPNow indicator, the most current economic “barometer” we have. In the recently completed third quarter, it’s telling us the economy grew a solid 4% annualized. Cooking!

Meantime, the “dumb money” is in full panic mode. Consider the CNN Fear & Greed index, a fairly reliable “investor mood ring”:

Source: CNN.com

Look, I get the bubble fears. But here’s the thing: When you strip out tech and look at things on an equal-weight basis, the S&P 500 is only up about 7% this year. To put that in context, the index has returned around 10% annualized since 1957. So that 7.2% figure isn’t much of a worry.

This is why we want to steer clear of an index fund like the SPDR S&P 500 ETF (SPY) and go with a CEF instead: The latter are run by human managers who can “pick their spots” for bargains.

What’s more, as I wrote last week, CEFs are a “go-to” for us at times like these because these funds are a small market. That means CEF buyers tend to be individual investors—there’s just not enough cash in play here for the big guys to bother with.

But there’s plenty for us! Plus, without competition from institutional players (and their algorithms), we get more bargain opportunities. In addition, CEF investors tend to be conservative sorts, so when the needle moves to “fear” (or better yet “extreme fear,” where it is now), they’re much quicker to sell. And when they do, CEF discounts to net asset value (NAV) get wider. That’s our “in”!

Here are two CEFs paying 6%+ and sporting double-digit discounts today. The first is run by a well-known value-investing guru. The second is a young tech fund paying a huge 9.7% dividend that just delivered its first-ever payout hike.

CEF #1: A Top “Rinse-and-Repeat” Play for Double-Digit Gains

There are few managers better at “picking their spots” than Mario Gabelli. If you’ve been a member of my Contrarian Income Report service for a while, you’ll recall his Gabelli Dividend & Income Trust (GDV), which we’ve tapped for nice double-digit returns a couple times.

The first was from early October 2020 till February 2022, when we booked a solid 44% total return. Then we came back and dipped in for just three months, from October 2023 till January 2024, for another 10.8% return.

Now, as we near the end of 2025, I’m keeping an eye on GDV again. Why? Because our man Mario’s been putting on a clinic this year, racking up a 16.6% return on GDV’s market price, as of this writing, ahead of the S&P 500’s 13.9%.

“Rinse-and-Repeat” Play GDV Outruns the Market …

For that, you might think GDV would be trading close to par. Ha!

… And Gets Little Credit for It

Sure, its discount has narrowed a bit, but 10.4% is still far too big for a fund performing this well. That’s an opportunity—as is the fact that GDV’s discount has momentum, showing that it’s getting on at least some CEF investors’ radar.

We also like the fact that Mario is looking to other sectors beyond tech, which matches up with our view that industries like finance will be next to streamline their businesses. As you can see below, only three of GDV’s top-1o holdings are AI plays—Microsoft (MSFT), Alphabet (GOOGL) and poster child NVIDIA (NVDA).

Source: gabelli.com

Now, far be it for us to turn up our noses at a 6.2% dividend, but Gabelli’s payout is a bit low for a CEF. However, we can look forward to upside from that closing discount and Mario’s stock picking to make up the difference.

Plus, the dividend—paid monthly—has been rising, so we can consider that 6.2% a “starter yield” on a buy today.

GDV Delivers the (Monthly) Dividend Cash

Source: Income Calendar

(Note that those dips in late 2021 and late 2022 are special dividends, not cuts!)

All of this makes now a good time to consider GDV—especially if you’re looking for a bargain-priced, high-yield way to diversify beyond tech.

CEF #2: A 9.7% Dividend That Just Jumped 

Now just because we’re leaning into GDV’s non-tech bent doesn’t mean we’re turning away from tech. But again, we’re picking our spots—and that’s where the Neuberger Berman Next Generation Connectivity Fund (NBXG) comes in.

NBXG goes in the opposite direction of GDV, holding the main tech names: Amazon.com (AMZN), Meta and Microsoft are all here, as are some more aggressive tickers, like Robinhood Markets (HOOD) and “adjacent” plays like AT&T (T).

Source: nb.com

Plus, the fund is generous on the dividend front, with a 9.7% payout. And shareholders just bagged their first-ever dividend hike (NBXG hasn’t been around long, having launched in May 2021):

Source: Income Calendar

Moreover, the fund has outrun the NASDAQ on a total-return basis this year.

NBXG Crushes Its High-Flying Benchmark

Which brings us to the discount, which is a sweet deal at 12%. But as you can see below, the markdown has largely moved sideways this past year, despite the fund’s strong performance:

NBXG Is Cheap, But Will Likely Get Cheaper

That means we can’t expect much upside from the closing discount, and will be looking to the fund’s portfolio to drive gains. That’s not a bad thing, but I’d wait till that markdown is below 13% before considering this one—and look to GDV till then.

This 11% (!) Divvie Got Tossed in the “Sale” Pile, Too (It Won’t Stay There)

My ULTIMATE buy on this pullback is an 11%-paying fund trading at a truly ridiculous discount.

The incredible 11% dividend this fund throws off also has a history of being hiked—and our top pick’s manager, a top name in the bond world, regularly drops special dividends, too!

This fund has been swept up in the pullback, but that won’t last. Because as rates fall (and they will, especially when Jay Powell’s term ends in May and he’s replaced by someone who will work with the administration to cut rates), this fund’s huge payout will likely be in high demand.

The time to grab a position is NOW, while today’s overdone fears have this 11% payer in the bargain bin.

Story by Rupert Hargreaves

More clouds gather over renewable energy trusts – is there any hope for the sector?

Story by Rupert Hargreaves© Saeed Khan / AFP) (Photo by SAEED KHAN/AFP via Getty Images

Renewable energy trusts were already struggling before the government decided to kneecap them at the end of October. In a major shock, it has launched a consultation on changing the inflation linkage on the subsidies they receive from the retail price index (RPI) to the consumer price index (CPI) in April 2026, three years sooner than expected.

Even worse, the government has floated a second, complex option that would backdate the switch to 2002. This may have been thrown in mainly to make a April 2026 change sound like a concession, but if actually implemented could reduce the income received by generators by billions of pounds over the coming years. The market reacted accordingly and the sector as a whole lost about 5% of its market value on the day.

Feuding with renewable energy trust managers

It is regrettable that many managers were paid fees based on a percentage of NAV rather than performance. This became increasingly controversial once shares traded far below NAV. In the past year, many trusts have belatedly shifted to levying fees on a 50/50 mix of NAV and market value (or in UKW’s case, entirely on market value). Dealings with managers are becoming a common point of contention. Take Aquila European Renewables (LSE: AERI), which has agreed to sell assets to another fund advised by Aquila at a large discount to the current NAV, says Nicholls. How can the same manager assign two different values to the same assets? Or take a plan by Bluefield Solar Income Fund (LSE: BSIF) to merge with its manager, saying this would make it easier to invest in new projects. The trust has instead put itself up for sale after a backlash. Or just this week, TRIG has said it will merge with HICL Infrastructure (LSE: HICL), run by the same manager.

These developments show a lack of concern for investors, says Nicholls, which is clouding the real value of the assets. “If boards were more respectful of shareholders, the share prices would be a lot higher.”

It isn’t clear what it will take to shift sentiment towards the sector. The government’s consultation certainly won’t help. Still, there needs to be a substantial change in the way these trusts are run, with a primary focus on the interests of shareholders. Only then can investors begin to trust NAVs are what managers say they are.

If you bought at the wrong time, you would have had to wait over 20 years to be in profit.

Better with dividends included, which would have been re-invested in a higher yielder.

With the final shares in the Snowball declaring their dividends the total income for 2025 should be £11,930.00. There are announced dividends to paid next year of £682.00 as we start the journey again.

Income for 2025 of £9,175,57 has been exceeded and I will try to exceed next year’s target also.

One advantage the Snowball has on the above figures is that the interest in the table is compounded once a year, whilst the Snowball can add funds as they are received, normally monthly.

Current cash for re-investment £881, with further income to be received this year of £1,511.00.

Current quarterly income pencilled in of £2,479.00, which of course isn’t income until it sits in your account.

For any new readers, welcome. There are only 3 rules.

Rule one.

Buy Investment Trusts/Etf’s that pay a ‘secure dividend’ and re-invest those dividends into Investment Trusts/Etf’s that pay a ‘secure’ dividend.

Rule two.

Any share that drastically changes its dividend policy, must be sold, even at a loss.

Rule Three.

Remember the Rules.

It’s your duty, if you want to trade your Snowball to check the dividend announcements as they are made.

Foresight Solar Fund Limited

(“Foresight Solar” or “the Company“)

Declaration of Dividend

Foresight Solar is pleased to announce the third interim dividend, for the period 1 July 2025 to 30 September 2025, of 2.025 pence per ordinary share. The shares will go ex-dividend on 29 January 2026 and the payment will be made on 20 February 2026 to shareholders on the register as at the close of business on 30 January 2026.

The Board confirms its annual dividend target of 8.10 pence per ordinary share for the 2025 financial year.

Temple is the Snowball’s pair trade, where a Trust with a lower yield is traded with a Trust with a higher yield to maintain a yield of around 7%.

Buying a Trust to make a capital gain near or at the end a bull market is and always will be a gamble.

Maybe if there is a Santa rally, last years was a damp squib, the Trust could be sold at a profit. If not as the dividends are received, part will be invested into TMPl, so a falling market would be a positive.

The first dividend of £30 has been earned, many a mickle makes a muckle.

Historically anyone who bought has outperformed the market and the share may do again, having achieved the holy grail of investing in that you could take out your capital and invest into a higher yielder and retain the remaining shares and try to do it all over again.

Current yield 3.1%

Dividends included and re-invested into a higher yielder.

At the low the dividend yield was 7.5% and is currently 8% on buying price.