Our columnist explains why these investment trusts are in his forever fund and how they could be a good match for investors who want to diminish risk by diversification.

31st July 2025

by Ian Cowie from interactive investor

Tilting at windmills was an early sign that Don Quixote was going mad in the famous 1605 novel of that name. Now that Donald Trump, the American president, has taken a tilt at Britain’s wind turbines this week, is it time to reconsider investment trusts exposed to renewable energy?

Trump told reporters at Prestwick Airport in Scotland: “You see these windmills all over the place, ruining your beautiful fields and valleys and killing your birds, and if they’re stuck in the ocean, ruining your oceans.”

He claimed the turbines drive whales “loco” and added: “The whole thing is a con job. Germany tried it, and wind doesn’t work.”

Never mind all that hot air, the £2.6 billion investment trust Greencoat UK Wind  UKW

currently blows out 8.3% dividend income, which has risen by an annual average of 7.6% over the past five years, according to independent statisticians LSEG; formerly London Stock Exchange Group.

It is important to beware that dividends are not guaranteed and can be cut or cancelled without notice. However, if that rate of ascent could be sustained, it would double shareholders’ already substantial income in less than a decade.

This exhilarating prospect is enough to earn UKW a place in my ISA, where I hope its handy four-figure annual tax-free income will help to pay for an enjoyable retirement. Better still for buyers today, despite strong long-term returns, recent performance has been disappointing and is reflected in the shares being priced 17% below their net asset value (NAV).

UKW is the top performer over the past decade in the Association of Investment Companies (AIC) “Renewable Energy Infrastructure” sector and ranked second over the past five years, before shrinking over the past year. Its total returns over the three periods were, respectively, 88%; 12% and minus 9.4%.

Elements of the explanation for recent share price weakness include falling electricity output, doubts about dividend cover and NAV. Iain Scouller at the stockbroker Stifel said on Wednesday: “This morning, UKW announced first-half (H1) electricity generation was 14% below budget due to low wind speeds.

“As a result, dividend cover was 1.4 times earnings for H1 as a whole, including two times in Q1 2025, which implies Q2 was barely covered, if at all.

“The NAV also saw a fall over H1 from 151.2p at the end of December last year to 143.4p at June 30, 2025, a decline of minus 5.2%. This is a disappointing set of results given the size of the NAV fall, decline in dividend cover, and we think the discount is vulnerable to widening.”

Against all that, Ben Newell at the stockbroker Investec, noted that UKW has increased its dividends every year since its launch in 2013 by at least as much as the Retail Prices Index (RPI), and repeated his “buy” recommendation. A long track record of preserving the real purchasing power of our income is a powerful attraction for investors nearing retirement.

What do the board of directors think? Three out of UKW’s six directors have more invested in its shares than their annual fees but two of them hold no stock at all and the chair, who has been in place since 2019, holds little more than a tenth of her annual fee in this stock.

More encouragingly, the fund management team hold UKW shares worth £7.1 million, according to Investec’s “skin in the game” research. So, whatever happens next, at least the fund managers and half the board will experience ordinary shareholders’ pleasure or pain.

To return to where we began, Trump has touched a nerve that divides opinion dramatically but this is not the place to get into the ecology or science, for or against, his allegations. From a purely financial point of view, investors who wish to diminish risk by diversification across a wider range of renewable energies might prefer the £3 billion Renewables Infrastructure Grp TRIG

which yields 8.6% income, rising by 2.5% on the same basis as above.

But TRIG’s total returns have been disappointing recently; over 10 years they were 52%; over five years they were minus 13%; and over one year it lost 11%. No wonder TRIG is trading at a 25% discount to NAV.

Even more diversification across all forms of renewable energy, including controversial nuclear power, is provided by my biggest investment trust holding, Ecofin Global Utilities & Infra Ord  EGL

.This £294 million fund yields 3.8% income, rising by 5% per annum, and trades 9.8% below NAV.

Unfortunately for investors who seek a long track record of historical data on which to base decisions, EGL won’t celebrate its 10th anniversary before September next year. But its total returns over the past five years were 59% followed by 26% over the past year.

This earns EGL its place as the fifth-most valuable holding in my 50-stock “forever fund” and shows how it can pay to accept a lower initial income, albeit rising strongly, in the hope of higher total returns. That is likely to remain true whatever Trump says or whichever way the wind blows.

Ian Cowie is a freelance contributor and not a direct employee of interactive investor.

The current plan for the Snowball

Remember most of the compounded gains are made in the final few years rather than in all the early years, so the sooner you start the sooner you will finish.

Current earned dividends for the Snowball £7,393, less £1,933 from VPC which has been re-invested to earn more dividends but is not a repeatable dividend.

£5,460, which would equate to income for £9,360 which would be ahead of the plan of £9,120 and the target for next year would be £9,758, if the Snowball manages to outperform, hopefully we will be able to skip a year.

Remember that the table shows the compounded interest added at the end of the year but you will receive dividends every month to invest, to earn more dividends. There is a cost to re-invest so the minimum amount re-invested is around 1k,. Any rebalancing costs uses the markets money so could be less.

All baby steps.

What is passive income, anyway? And why do I love it so much?

A Russian proverb states, “Those who take no risks, drinks no Champagne”. So that’s why I use these simple investments to generate powerful passive income!

Posted by Cliff D’Arcy

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.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.

When I first started investing in the late 1980s, I was studying maths, statistics, and computer science. This gave me a leg-up in understanding financial markets, so I’ve been trying to build wealth ever since. However, I often hear students and young people say they ‘hate maths’ and don’t understand investing. So here’s my quick guide to one of my favourite things: passive income.

What is passive income?

Passive income is earnings that come other than from paid work. Nevertheless, some passive income requires hard work, such as managing rented properties — dealing with tenants and their problems. I’m too lazy for this, so I haven’t built a property empire.

Unearned income can come with little effort, such as savings interest from cash deposits. That said, I don’t know many people who got rich from avoiding all risks, so I don’t keep tons of cash in savings accounts.

Owning bonds is riskier than saving in cash, because these fixed-income securities are IOUs (debts) issued by companies and governments. If trouble arrives, their coupons (interest) and capital (the initial investment) could be under threat. Even so, my wife and I own a wide range of bonds through a single money-market fund.

My favourite unearned income

However, my preferred form of passive income by far is share dividends. Some people believe that owning shares is no better than buying lottery tickets. However, my goal is to become part-owner of a wide range of great businesses. And when these companies do well, many of them choose to pay out dividends to shareholders.

Most members of the UK’s FTSE 100 index pay dividends. This makes the Footsie my happy hunting ground for generating passive income. Still, future payouts are not guaranteed, so they can be cut or cancelled at short notice (as happened in Covid-hit 2020/21). But as American tycoon John D Rockefeller once remarked, it gives me great pleasure to see my dividends coming in.

The Motley Fool

Story by Royston Wild 2024

Dividend shares are (in my opinion) one of the best ways to target a long-term passive income. With the use of a Stocks and Shares ISA, investors can build a large and steady income stream with shares, trusts and exchange-traded funds (ETFs).

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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Choosing funds

It’s critical to remember that dividends are never guaranteed, as company payouts during the pandemic showed. As the Covid-19 crisis exploded, even the most reliable of passive income stocks cut, postponed or cancelled dividends entirely as earnings faltered and balance sheets deteriorated.

Yet over the long term, we’ve seen that a well-diversified portfolio can deliver a reliable stream of dividends. A portfolio whose holdings are spread across dozens of companies, industries and regions can provide a solid income across all points of the economic cycle.

Here are two top ETFs worth considering that I believe could deliver a large long-term dividend income.

1. Broad appeal

With holdings in scores of companies worldwide, the SPDR S&P Global Dividend Aristocrats UCITS ETF (LSE:GBDV) offers excellent diversification straight off the bat.

In total, this ETF has holdings in just over 100 different shares. Major holdings range from Verizon Communications and CVS Health to Universal Corp.

On the downside, half the fund (49.5%) is tied up in US shares. This means it carries greater geographical risk than more regionally spread vehicles. However, this allocation also taps into the long-term outperformance that Wall Street has enjoyed.

This SPDR ETF’s quest for dividend growth doesn’t mean that yields are sacrificed however. Its 12-month trailing dividend yield’s currently a market-beating 3.9%. During the last five years, the fund’s delivered a total average annual return of 10.5%.

2. A targeted approach

Investing in property stocks is another way to target a dependable passive income. There are many themed ETFs available to play this hand, one of which is the iShares MSCI Target UK Real Estate (LSE:UKRE).

Thanks to their consistent rental incomes, property stocks tend to enjoy consistent cash flows that support regular dividend payments. I like this particular fund because it focuses more specifically on real estate investment trusts (REITs). These investment vehicles are required to pay at least 90% of annual earnings from their rental operations out in dividends.

What’s more, the REITs it holds span multiple sectors including healthcare, retail and residential, providing an attractive balance of reward and safety. A large portion of the fund’s also dedicated to UK government bonds as well, which provides added security.

Since 2020, this iShares fund has delivered an average annual return of just 0.6%. It could continue disappointing if interest rates remain higher than normal. But with inflation dropping, I expect returns to improve strongly from this point.

The 12-month trailing dividend yield here’s a huge 6.6%.

It’s critical to remember that dividends are never guaranteed, as company payouts during the pandemic showed.

The Snowball invests mainly in Investment Trusts as most have reserves to pay their dividends in time of market stress.

Why the Snowball doesn’t own any shares.

Anglo American PLC on Thursday slashed its interim dividend as rough diamond business De Beers continued to underperform, at the time when the diversified miner is simplifying its business with De Beers one of the operations set to be spun off. Anglo American cut its interim dividend to 7 US cents from 42 US cents, owing to negative earnings from discontinued operations and lack of contribution from De Beers.

Technically SUPR is no longer an Investment Trust but

TRADES ON THE INTERNATIONAL SECURITIES MARKET

Still a strong hold for the Snowball.

Welcome to any new readers. Below are the rules for the Snowball, there are only 3.

One. Buy Investment Trusts and or ETF’s that pay a ‘secure’ dividend and use those dividends to buy more Investment Trusts and or ETF’s that pay a ‘secure’ dividend.

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

Three. Remember the rules

The ultimate compound interest example. If held within or outside a tax wrapper all capital gains are tax free. The British Government’s desperate need to borrow your money means it not going to change anytime soon.

If you hold until the 31/01/2028, the government will deem your gilt at £100.00. You don’t need to do anything they will send you your money.

Despite all you may read, it’s a government backed scheme for rich people to avoid paying tax. If you are saving for a special reason, you can work out your payment to the nearest penny. Or if you are nervous about buying high yielding shares as a comfort blanket, if you pair trade.

GL

5 years is a long time to wait to find out how wrong you were.

https://www.mjsmedicals.com mjsmedicals.comx Foran67260@gmail.com 206.232.1.223

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Sorry, can’t help, I receive similar comments.

Man writing ‘now’ having crossed out ‘later’, ‘tomorrow’ and ‘next week’© Provided by The Motley Fool

Story by Ben McPoland
 

One of Warren Buffett’s well-known pieces of advice is: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”

In other words, we will need to regularly invest and be patient. The good news is that this is possible and can lead to a sizeable passive income stream down the road.

Harness the power of compound interest

When it comes to building wealth, compounding is an investor’s best friend. Indeed, Buffett himself admitted that: “My life has been a product of compound interest.”

Specifically, the ‘Oracle of Omaha’ has consistently reinvested the profits from his investments back into the market. This strategy has allowed his capital to keep growing. The longer he holds onto his winning investments, the more they compound, significantly increasing in value.

Indeed, the effect has been so powerful that around 90% of his $135bn fortune was accumulated after the age of 60 (he’s now 93).

While nothing to grumble about, it’s not really a mouthwatering sum. However, if I reinvest my dividends back into buying more shares at the same average price, that £3,500 becomes £38,061 after 30 years

High-quality stock

I’ve chosen this reinvestment strategy with my shares in BBGI Global Infrastructure (LSE: BBGI).

This is a FTSE 250 infrastructure investment company that manages a portfolio of 56 assets across the UK, Europe, North America, and Australia. These include schools, hospitals, toll bridges, motorways, and army barracks.

BBGI earns income from public authorities based on the availability and performance of these assets rather than their usage. This provides the company with predictable cash flows, which in turn has supported consistent and rising dividends.

Now, I should mention that the yield is at a historic high due to the high interest rate environment. This has negatively impacted the value of the firm’s assets and also made building out its portfolio much more challenging. There’s a risk these conditions could persist for some time or even worsen.

Reassuringly though, BBGI says its current portfolio of assets could support rising dividends for another 15 years. That’s music to my ears.

A mighty portfolio

Let’s assume I start from scratch and invest £750 every month into quality stocks like BBGI. Assuming I generate a long-term average return of 8.5% (with dividends reinvested), this is what would happen.

My portfolio would grow to an incredible £1.16m in 30 years (excluding any platform fees)!

If my shares were by this point yielding an average of 7% in dividends, I could be earning £81,303 a year in passive income.

In my view, turning £750 a month into this would be equivalent to building a passive income empire.

The post No savings at 35? I’d follow Warren Buffett and aim to build a passive income empire appeared first on The Motley Fool UK.

19 June 2025

BBGI Global Infrastructure S.A. (“BBGI”)

Announcement of Cancellation of Listing

Further to the announcement made by BBGI on 17 June 2025, BBGI confirms that the listing of the BBGI Shares on the Official List and the admission to trading of the BBGI Shares on the Main Market of the London Stock Exchange were each cancelled with effect from 8.00 a.m. (London time) on 19 June 2025.

miracle-compound-growth© Getty

It’s possible for ordinary investors to turn a £10,000 lump sum into as much as £150,000. The only catch is that it may take a little patience.

Its ability to grow wealth exponentially over time is nothing short of miraculous. Yet a new survey by Hargreaves Lansdown shows almost three quarters of us underestimate its power.

Joseph Hill, senior investment analyst at Hargreaves Lansdown, said millions fall behind in their retirement plans as a result. “Compound interest has something in common with other wonders of the world. To most people it’s mysterious and beyond comprehension.”

It’s worth taking a little time to understand how this little wonder works. Compound interest can transform relatively small sums into something sizeable. There’s a catch though. It needs time.

Compound interest is the process where the interest you earn on your initial investment also earns interest. Which earns interest too.

This creates a snowball effect, where your money grows at an accelerating rate over the years. Or decades, if you start early enough.

Time is the operative word here. The longer your money remains invested, the greater the compounding effect.

This is a particularly important lesson for younger savers. Many delay investing in their 20s because they have other priorities. Paradoxically that’s the best time to start.

The first £1 you invest is the most valuable of all, because it has longest to grow.

Say someone invests a £10,000 lump sum at 35 and it grows at an average compound rate of 5% a year, after charges.

By age 65, some 30 years later, it will be worth £43,219. It would have grown more than fourfold, which is pretty impressive.

However, if they’d invested the same sum 10 years earlier, at age 25, they’d have £70,399. Their investment term is just 25% longer, but their money is worth a staggering 62% more. All due to compounding.

That’s roughly in line with the long-term total return on the FTSE 100.

After 40 years, they’d have £149,744. That’s almost than double the £70,399 total, yet the annual percentage growth was just 2% more.

Stocks and shares are more volatile in the shorter term, but over longer periods are far better at building wealth.

The average pension saver hopes to retire on an annual income of £48,868, according to new research from Royal London. This includes the full state pension which is currently £11,542.

To generate that in today’s terms, someone retiring at 67 would need a pension pot of around £696,000, with state pension on top.

That’s a daunting sum and inevitably, most will fall short. That’s despite the success of the auto-enrolment workplace pension scheme.

She said a 22-year-old worker who contributed 8% of their £24,000 starting salary into a pension under auto-enrolment rules would have £468,000 by 67, assuming compound growth of 5% a year after fee

That would give them annual income of £36,600, some £12,200 below that £48,868 target. They’d need to invest more to plug the shortfall.

This shortfall highlights a critical issue: while compound interest can significantly grow our wealth, it cannot compensate for insufficient contributions.

Even miracles require a little human intervention. And the earlier the better