Should you be so SDIP-id?Revisit the SDIP ETFThe Oak BlokeApr 14 READ IN APP Dear readerLast year in “SDIP-ping into yield paradise” I looked at the highest yielding ETF: SDIP. I concluded I shouldn’t touch it with a barge pole, due to a poor long-term performance.supportWhy revisit it today?Let’s introduce the ETF first. The idea is simple. Invest in a passive tracker of the 100 international ideas that yield the highest dividend. The highest dividends are found in Financials firms, Energy and Mining with Real Estate and Industrials comprising nearly 90% of the index.Eligible companies must have:No official announcement (e.g. RNS), at the quarterly rebalance dates, that dividend payments will be cancelled or significantly reduced in the future.Market Cap >$500 million.Average liquidity >$1 million over the last three months.Primary listing in a Developed Market or Emerging Market (but excludes India, China, and Argentina). (Includes Hong Kong)Dividend yield of >6% and <20%, if they are not current constituents, and at least 3% if they are current constituents.Traded on 90% of the eligible trading days for the previous 6 months.Free Float percentage of total shares outstanding of at least 10% or a minimum Free Float Market Capitalisation of $1 billion.No Closed End Fund, Business Development Companies (BDCs), Partnership or Trust.There is a quarterly rebalance back to 100 constituents at 1%, with the highest yield (that meet the above criteria)What caught my eyeOver its lifetime this ETF has performed poorly. Yet in 2025 it is performing well with a 9.1% ROE plus dividends. Meanwhile its P/E of 7.5X and P/B of 0.68X offers some decent value.It pays a monthly dividend worth about £0.7475p which I bought at a £5.92 buy price. (12.6%… it’s about 12.4% today)I covered the top and bottom 4 and sampled a couple in the middle. Here’s what I found.#1 Holding SESParis-based SES delivers an 8.9% yield at today’s prices and is a big beneficiary of European Defence spend increases.#2 Holding DNODNO just bought its Norwegian rival which has propelled its share price and earnings. Dividend is 12.1%#3 ProximusBelgium’s 5G telecom’s provider delivers a 9.2% yield and is growing revenue and earnings in Fibre, TV, Mobile and other services.#4 Ithaca EnergyThis is a UK company and the shares are up 50% YTD based on strong production at the top end of guidance (80.2kboe/d), and costs below guidance at $22/boe. An acquisition from ENI is being integrated into the business in 2025.The share delivers a 16.6% yieldThe above 4 are the biggest risers. They are the 4 who would be sold off and reduced back to 1% each at the next rebalance in 6 weeks time.Now let’s consider the bottom 4 performers. These are the ones (subject to the dividend being maintained) would be bought to bring them back to 1%.#97 ZIM down -24%ZIM operates in 90 countries and is an Israeli shipping firm. Its share price suffered earlier in 2025 due to being an unfortunate target of those ship-shooting folks, the Houthis. The 2025 USA campaign of shooting ship-shooters should improve matters. Besides last month Zim announced stunning results with profits 63% y-o-y, but of course this is cyclical, so it’s not out of the err Red Sea quite yet.But I’m optimistic and pleased that the rebalance would add 33% to this holding.#98 Ready Capital down -25%US mortgages and loans provider announced weak quarterly update in March caused a drop. The fourth quarter closes out a year of mixed results. The Small Business Lending segment performed well, with significant growth reflecting the benefits of past investments but its multi-family lending focused business faced challenges from higher rates, inflationary pressures, and lower rent growth.The dividend has been cut and it’s very likely we will wave goodbye to this holding in the end of May rebalance.#99 Kohl’s down -27%1,100 stores in 49 US states this is a dept store. Again a dividend cut means bye bye.#100 AVANCE GAS HOLDING LTD down -88% (yikes!)This is LPG fleet being liquidated (ironic huh) and can delivered capital returns and dividends far in excess of the share price so the -88% drop is quite misleading. It’s a decent gain and as they say themselves “well in the money”.ConclusionI’ve sampled through a number of the holdings, and also focused on the UK names, and as you can see some good names in there where Serica has its temporary Triton disruption, where Energean had its Italy assets deal with Carlyle fall through, M&G is perhaps the weakest given its outflows which hopefully cease before it (and the UK) bleed out with outflows. These six give a decent flavour of what you are buying into.I’m struck by the fact that there are ideas which I’d otherwise not be able to easily access. Companies like shipping co Zim, or Norwegian Oily DNO.I’m struck by a -0.84% capital loss in a pretty volatile quarter is not bad either.I get to a 12.64% average yield and a 8.7X p/e as the average of the 100 holdings.A ~1% yield per month is quite appealing as a place to hide, and where the index rebalances jettisoning those too weak to sufficiently pay dividends replacing them with the highest dividend out of the top #200 not in the index.Is it wise to buy into this as the world faces potential recession? Some ideas are cyclical but not all. Besides I’m not wholly convinced yet that the forecast doom and gloom will happen. I see countries accelerating trade deals on the back of Lib Day (not with the US), although maybe the UK and Japan may get a US free trade deal. US tax cuts and strong momentum could surprise us with the US. I see myself watching this until August, and then re-evaluating (prior to the August rebalance)I pounced on this given its 15% fall from the Lib Day sell off I’ve got a fair bit of margin of safety and where the capital returns are broadly zero and where I get over 12% yield to park some money.For non-UK folks there’s a US SDIV, a Euro UDIV (that ticker would be considered very rude in the UK!) listed in Germany, Italy and Switzerland.There is a 0.45% management charge plus trading costs (quarterly) which I expect aren’t awfully high, but I couldn’t find what they were (the TER).RegardsThe Oak BlokeDisclaimers:This is not advice – make your own investment decisions.Micro cap and Nano cap holdings might have a higher risk and higher volatility than companies that are traditionally defined as “blue chip”Thanks for reading The Oak Bloke’s Substack! Subscribe for free to receive new posts and support my work.Pledge your supportThe Oak Bloke’s Substack is free today. But if you enjoyed this post, you can tell The Oak Bloke’s Substack that their writing is valuable by pledging a future subscription. You won’t be charged, unless they enable payments, and you decide to continue with a subscription.Pledge your support LikeCommentRestack © 2025 The Oak Bloke 548 Market Street PMB 72296, San Francisco, CA 94104 Unsubscribe

Cash is not king. During a market rout, seek undervalued income

A 43 year track record of increasing payouts stands this trust in good stead

Robert Stephens

Extreme stock market volatility will inevitably prompt some income investors to declare that “cash is king”. After all, cash does not fluctuate in value and currently offers an income return in excess of 4pc.

However, holding cash for the long term is problematic for several reasons. It offers no capital growth potential, which means it has a rather drab long-term track record versus shares, and is likely to produce a diminishing income return as monetary policy easing continues. 

By contrast, share prices are extremely likely to rise from their current levels and produce growing dividends as the economic outlook gradually improves.

Therefore, rather than sitting on piles of cash in perpetuity, Questor believes that drip-feeding excess cash into undervalued shares is a far better idea. With several high-quality income shares now offering lower valuations and higher yields than they did earlier this year, there is a wide range of attractive options for income-seeking investors.

For example, FTSE 250-listed The Merchants Trust has a dividend yield of 5.5pc thanks to its 5pc share price decline since the start of the year. This is 190 basis points higher than the FTSE All-Share index’s yield, and the trust has the added bonus of raising its dividend for the past 43 consecutive years, a record it won’t be keen to lose.

While this does not guarantee further dividend growth in future, when combined with revenue reserves amounting to around 65pc of last year’s shareholder payout, it suggests the trust could prove to be a relatively reliable income option.

In addition, its dividends have risen at an annualised rate of 6.3pc since 1982. This compares favourably with an average annual inflation rate of around 3pc over the same period and, as a result, its shareholders have enjoyed a material increase in their purchasing power.

The company’s recent share price decline also means that it now trades at a 2.3pc discount to net asset value. This compares with an average discount of just 0.2pc over the past five years and suggests the trust offers good value for money.

Separately, the company’s major holdings are dominated by well-known FTSE 100 stocks including British American Tobacco, GSK and Shell. However, it also has significant exposure to mid-cap shares, with 32pc of its assets currently invested in the more domestically-focused FTSE 250 index.

This is significantly higher than the mid-cap index’s representation in the FTSE All-Share, which sits at roughly 15pc of the wide-ranging market, meaning the trust’s performance is more closely aligned with the UK economy’s performance vis-à-vis its benchmark.

In Questor’s view, this adds to Merchants’ overall appeal. The FTSE 250 has, after all, been exceptionally unpopular with investors over recent years. As a result, depressed valuations were widespread even before the stock market’s recent bout of extreme volatility. Over the long run, today’s grossly undervalued stocks could deliver strong total returns as the economy’s performance gradually improves.

Of course, a significant mid-cap focus and a gearing ratio of just over 14pc mean the company’s share price is likely to be relatively volatile. It could even fall further in the short run as the ongoing global trade war may yet worsen before it improves.

We must also note that the company’s shares have lagged the FTSE 100 index by 10 percentage points since our ‘buy’ recommendation in February 2020.

In this column’s view, however, Merchants has a sound long-term outlook. Its relatively appealing valuation, significant exposure to the grossly undervalued FTSE 250 index and substantial gearing mean it is well placed to deliver capital growth as the economy’s outlook improves.

When considered from an income perspective, the company’s generous yield and longstanding track record of inflation-beating dividend growth equate to a worthwhile long-term opportunity.

The company therefore becomes the latest addition to our income portfolio. We will use excess cash generated from previous sales to fund its notional purchase.

Clearly, some investors will naturally be tempted to do the opposite and hold cash during the current period of economic and stock market turbulence. However, this column firmly believes that gradual purchases of high-quality, undervalued dividend stocks represents a far superior means to obtain an attractive income over the coming years.

Questor says: buy
Ticker: MRCH
Share price at close: £5.32

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Dividend yields balloon on renewables and infrastructure investment trusts
Published: 16 Apr 2025

Dividend yields on renewable energy infrastructure and infrastructure investment trusts are close to all-time highs, data from the industry data shows.

The average yield of the renewable energy sector spiked to 10.6% this month, an all-time high, the Association of Investment Companies (AIC) said.

For infrastructure investment trusts, the yield is 6.4%, with a record of 6.8% on 7 April.

The recent market sell-off sparked by Donald Trump’s new US tariffs has led to yields in both sectors ballooning to all-time highs.

Shares prices for these trusts are at historically wide discounts to their net asset values, with a 21% discount for infrastructure trusts and 33% for renewable energy infrastructure.

“Performance of both these sectors has suffered in the last three years as rising interest rates and cost disclosure issues have taken their toll,” said AIC director Annabel Brodie-Smith.

“However, analysts believe the pessimistic view of these infrastructure sectors is overdone and there’s reason for optimism,” she said.

“The infrastructure dividend yields are some of the highest on the UK market, offering resilient income in an uncertain world.

“There has been some corporate activity within the sector and there are predictions of more to come. Boards are acting proactively for their shareholders, undertaking more share buybacks and realising assets. The market has priced in interest rate cuts which would benefit these investment trusts.”

She noted that investors should “do their homework” and thoroughly research investment trust options and should speak to a financial adviser if they have any doubts.

Renewables investment trusts; Yield (%); Discount (%)

Bluefield Solar Income Fund (LSE:BSIF); 9.54; -26.20

Downing Renewables & Infrastructure Trust PLC (LSE:DORE); 7.93; -35.86

Foresight Environmental Infrastructure (LSE:FGEN); 0.94; -33.81

Foresight Solar Fund Ltd (LSE:FSFL); 9.96; -28.71

Gore Street Energy Storage Fund PLC (LSE:GSF); 12.07; -42.43

Greencoat Renewables PLC (LSE:GRP); 9.30; -34.56

Greencoat UK Wind PLC (LSE:UKW); 9.58; -28.82

Gresham House Energy Storage Fund PLC (LSE:GRID); 9.02; -44.93

HydrogenOne Capital Growth PLC (LSE:HGEN); n/a; -77.10

NextEnergy Solar Fund Ltd (LSE:NESF); 12.34; -30.13

Octopus Renewables Infrastructure Trust PLC (LSE:ORIT); 9.33; -35.79

The Renewables Infrastructure Group Limited (LSE:TRIG); 9.59; -32.97

SDCL Energy Efficiency Income Trust PLC (LSE:SEIT); 13.74; -49.40

US Solar Fund PLC (LSE:USF); 6.82; -48.16

VH Global Energy Infrastructure; 10.60; -48.17

Infrastructure investment trusts; Yield (%); Discount (%)

3i Infrastructure PLC (LSE:3IN); 4.23; -15.27

Cordiant Digital Infrastructure Ltd (LSE:CORD); 4.95; -31.93

GCP Infrastructure Investments; 9.75; -31.93

HICL Infrastructure (LSE:HICL); 7.34; -28.36

International Public Partnerships Ltd (LSE:INPP); 7.53; -22.56

Pantheon Infrastructure PLC (LSE:PINT); 4.40; -18.62

Sequoia Economic Infrastructure Income Fund Limited (LSE:SEQI); 8.99; -19.31

The fcast for the Snowball is £9,120.00, so over the Easter break the Snowball has earned £100.00.

Comparison share VWRP, last value £119,082.

Using the 4% rule a ‘pension’ of £4,763.00 p.a. and over the Easter break has made nothing, zero, zilch.

It was a positive week for the Watch List shares so some shares above that printed a profit appear in the above list.

With yields currently above 7% and with a long term chart, it should be possible to make a capital gain of 3%, possible but not a certainty.

A chart of Merchants Trust without dividends.

A chart of MRCH including dividends earned but not re-invested into the share as the Snowball’s intention is to re-invest all earned dividends into the higher yielding shares of the Snowball.

Remembering the ‘best laid plans of men and mice’ is to re-invest any capital gains into the higher yielding shares of the Snowball.

While history doesn’t always repeat but it often rhymes a long term hold for the Snowball.

Supermarket Income REIT gets tailwind from buoyant grocery sector

Proactive Investors

Last updated: 15:00 17 Apr 2025 BST, First published: 13:59 02 Mar 2021 GMT

Snapshot

• Supermarket Income REIT completes internalisation of manager as CEO and CFO
• Supermarket Income REIT making all the right moves
• Supermarket Income ‘s price target hiked as internalisation is ‘unequivocally positive’
• Atrato Capital CIO discusses strategic French market expansion with Carrefour acquisition

About the company

Supermarket Income REIT PLC is a real estate investment trust dedicated to investing in grocery properties which are an essential part of the UK’s feed the nation infrastructure.

The company focuses on grocery stores which are omnichannel, fulfilling online and in-person sales.

Supermarket Income REIT provides investors with attractive, long-dated, secure, inflation-linked, growing income with the potential for capital appreciation over the longer term.

How it is doing

26 Mar 2025

Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) has completed the internalisation of its management function, as approved by shareholders last week, bringing its former external fund managers into the company as chief executive officer and chief financial officer. 

The grocery property investment company previously reached an agreement with external manager Atrato for a consideration of £19.7 million.

Today, Rob Abraham has been appointed as CEO and Mike Perkins as CFO, with both joining the board with immediate effect.

Welcoming the pair, chair Nick Hewson said: “This represents a significant milestone for the company, as we continue to make progress on our key strategic initiatives, which are designed to enhance earnings and continue to reduce the discount to NAV.  

14 Mar 2025

Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) managing director, Robert Abraham, and finance director, Michael Perkins, talked with Proactive about the company’s interim results for the six months to December 2024.

Abraham highlighted the company’s strategic progress, including cost reductions through internalisation, asset disposals, and lease renewals. He noted that a recent disposal to Tesco demonstrated the value of these assets, selling at a 7% premium to book value. The lease renewals extended three short-term leases to 15 years at significantly higher rental rates, reflecting the strong demand for top-performing supermarket assets.

11 Mar 2025

Stifel has reiterated its ‘buy’ rating on Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) following the company’s half-year results.

The real estate investment trust, which focuses on grocery store properties, delivered performance in line with expectations, but the real story is what happened after the period ended.

Insight: Supermarket Income REIT making all the right moves

17 Apr 2025

In the face of the market persistently discounting their shares relative to net assets over the past couple of years, most self-respecting investment trust boards have tried various strategies to close the gap.

Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) has done what several others have discussed but rarely delivered – it has parted ways with its external investment manager and brought the team in-house.

What the brokers say

27 Mar 2025

Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) received a reiterated ‘buy’ rating from analysts at Stifel, who raised their price target to 90p from 80p.

This followed a number of strategic changes over the past year, including the internalisation of its management function, which was completed this week.

Stifel said this move and associated reduction in costs “is unequivocally positive for the shares”

What management says

29 Apr 2024

Atrato Capital chief investment officer Steven Noble joins Proactive’s Stephen Gunnion with that Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) has a portfolio of 17 omnichannel supermarkets in France from Carrefour through a sale and leaseback transaction valued at €75 million.

The deal ensures a leaseback to Carrefour for 12 years, yielding an initial return of 6.3% with the advantage of annual uncapped inflation-linked rent reviews.

Noble emphasized that this move aligns with Atrato Capital’s ongoing strategy to focus on omnichannel stores, crucial for both online and in-store grocery sales. The acquisition not only fits its existing investment strategy but also expands its addressable market to the French grocery sector, valued at €284 billion. France was specifically chosen due to its significant online growth potential and Carrefour’s strong market position and omnichannel capabilities.