Dividends received to date £9,615.00

Cash for re-investment £415.00

Thursday 28 November

3i Group PLC ex-dividend date
Alliance Witan PLC ex-dividend date
AVI Global Trust PLC ex-dividend date
BlackRock World Mining Trust PLC ex-dividend date
Fidelity Special Values PLC ex-dividend date
Land Securities Group PLC ex-dividend date
Pacific Horizon Investment Trust PLC dividend payment date
Premier Miton Global Renewables Trust PLC ex-dividend date
Worldwide Healthcare Trust PLC ex-dividend date

I have to take a short break from the blog and there will not be any updates until early next week.

The story to date.

The Snowball commenced on 9 Sep 2022. I previously had a similar portfolio posted on a forum which achieved its target ahead of the plan and was then closed for any further updates.
The Snowball’s initial plan was to have a portfolio that returned 5% and with a bit of trading to double the income within ten years.
Since then discounts have widened and as the price falls the yields rise so the plan’s yield is now 7% plus.

2023 Income earned  £9,442.59
2024 Income to date £9,158.00

The comparable targets were

2023 £7,490.00
2024 £8,014.00
2025 £8,575.00

Current fcast for 2024 income is £10,791.00

Next year’s fcast of £9,120.00 and the target of £10,000.00 remains unaltered.

If you have longer than ten years the ‘magic’ of compounding starts to really increase. If you compound at 7%, your income doubles every ten years. If we take this year’s target of 10k, in 20 years time that would equal 40k, a yield on seed capital a yield of 40%.

If you compound your dividend income at 7% it doubles in ten years but one word of realism, when you start to compound your dividends it takes several years before the amount of income starts to accelerate but the sooner you start to compound the sooner that day arrives.
The current Snowball is an accumulation portfolio where you can take more risks as you have time to correct any clunkers.
A de-accumulation portfolio would probably be investing in lower yielding ‘safer’ dividend shares as you move towards that day.

If you have a plan, stick to the plan until it sticks to you, as many people will find out sooner than later that markets never go up forever and the higher they rise the further they are likely to fall.
If in future you are unable to re-invest at 7% or higher there are several options, like share pair trading or buy a tracker where if you can choose the date to sell, you will not lose any of your hard earned.
But I guess that day is a fair way away. GL

Ed Warner, Chair of FGEN, said:

“FGEN’s half-year results reflect both progress and challenges. While the full write-down of our investment in HH2E impacted overall performance, outside of this our diversified portfolio of sustainable infrastructure assets performed well, delivering record cash distributions and solid dividend cover. During the period, we were pleased to achieve the sale of a majority stake in six anaerobic digestion facilities, to launch our first share buyback programme, and to receive shareholder endorsement of a name change to Foresight Environmental Infrastructure Limited. Additionally, early reductions in UK interest rates provide cautious optimism for a more favourable macroeconomic outlook.

“We remain committed to disciplined capital allocation in the near term, progressing our construction stage assets and delivering other value enhancements across the portfolio. Longer term we are well positioned to take advantage of the significant investment opportunity presented by the commitment to decarbonisation and sustainable development when the wider environment supports it.”

FGEN has announced an interim dividend of 1.95 pence
 per share for the quarter ended 30 September 2024, payable on 27 December 2024.

Dividend timetable

Ex-dividend date:  5 December 2024

Record date:          6 December 2024

Payment date:        27 December 2024

Our track record

Dividend progression

2015        6.00p

2016        6.05p

2017        6.14p

2018        6.31p

2019        6.51p

2020        6.66p

2021        6.76p

2022        6.80p

2023        7.14p

2024        7.57p

2025        7.80p¹

1.    This is a target only, there can be no guarantee this target will be met.

 Helen Mahy, Chairwoman of NextEnergy Solar Fund Limited, commented:

“NESF has remained proactive through its capital recycling and buyback programmes over the period, both of which have made good progress.  Shareholders signalled their confidence in NESF at its recent Annual General Meeting in August with c.94% of votes cast ‘Against’ discontinuing the Company in its current form, the strongest result in the renewable investment company sector this year and demonstrating that shareholders continue to support the Company’s ongoing strategy.”

“The Company remains committed to narrowing the ordinary share discount and is focused on delivering shareholder value now and long into the future.  This includes currently offering shareholders an attractive dividend yield of approximately 11%.”

Dividend:

·     Total ordinary dividends paid since IPO of £370m or 72p per ordinary share.

·     The Company remains on track to deliver its target dividend of 8.43p per ordinary share for the financial year ending 31 March 2025.

·     Dividend cover for the six months ended 30 September 2024 was 1.5x (31 March 2024: 1.3x).

·     Forecasted target dividend cover of 1.1x – 1.3x for the financial year ending 31 March 2025.

·     As at 20 November 2024, the Company offers an attractive high dividend yield of c.11%.

fixed pricingbesttaxis.co.uk/sowerby-bridge-airport-transfersVessell57957@gmail.com104.153.81.74

Good day! Do you use Twitter ? I’d like to follow you if that would be okay. I’m absolutely enjoying your blog and look forward to new posts.

£££££££££££££

I currently do not Tweet and as I’m busy outside of the market I cannot enter into any direct email, hopefully this may change next year. Until then keep on keeping on.

BERENBERG CUTS ASSURA GROUP PRICE TARGET TO 48 (51) PENCE – ‘BUY’

Looking further back, £10,000 invested in the US market 20 years ago would now be worth £106,445 compared to £39,293 if invested in the UK (according to Morningstar total return in GBP to 31 October 2024). Other major markets have done a bit better than the UK, but neither European nor Japanese indices can hold anything resembling a candle to the S&P 500.

If you take the figure of £106,445 and using the 4% rule u could withdraw income of £4,257.80

If you had invested in a dividend compound plan with a blended yield of 6% you would have income of £1,605.00.

The gamble being, will the next 20 years be the same as the

last 20 years ?

One option could be to have a foot in each camp and sleep soundly at night.

Another option would be, if you were lucky enough to have turned 10k into a 100k to buy dividend income Trusts returning 7% plus as opposed to withdrawing your hard earned using the 4% rule.

GL

Is the US stock market too hot to handle?

Laith Khalaf  

• • Invest with AJ Bell

Markets seem to approve of the election of Donald Trump as the 47th US President. The S&P 500 has hit a record high in the wake of the election result, crossing over the 6,000 mark for the first time. This latest bump comes on the back of an exceptional run for US stocks, which has put other regional markets firmly in the shade, including the UK’s own stock market.

The historic performance differential is dramatic. £10,000 invested in the US stock market 10 years ago would be worth £42,248 now, compared to £18,186 if invested in the UK stock market.

Looking further back, £10,000 invested in the US market 20 years ago would now be worth £106,445 compared to £39,293 if invested in the UK (according to Morningstar total return in GBP to 31 October 2024). Other major markets have done a bit better than the UK, but neither European nor Japanese indices can hold anything resembling a candle to the S&P 500.

	10 year	20 year
S&P 500 (US)	322.5	964.5
TOPIX (Japan)	132.7	271.1
MSCI Europe Ex-UK	118.9	352.3
FTSE All-Share (UK)	81.9	292.9

Source: Morningstar to 31 October 2024

It’s no wonder investors have been pulling out of UK funds and ploughing their money into US funds, and also into global funds which have a high exposure to the US, thereby posting exceptional performance too.

Since the beginning of 2015, retail investors have pumped £8.5 billion into US funds, £32.2 billion into global funds, and on the other side of the ledger have withdrawn £54.7 billion from UK funds, according to Investment Association data.

No guarantee that markets will continue to do well

The US stock market has been on a sustained and rewarding winning streak, but investors still need to be wary of chasing past performance.

Buying what’s gone up has been a winning strategy for a long time, but history tells us when market trends change, they can do so with a vengeance.

The US is home to some of the most profitable companies in the world, most notably in the technology sector, and despite their mammoth size, these firms are still churning out exceptional levels of growth.

The AI boom has added another leg to the bull market in US stocks, and though not everyone is a believer, enough investors have bought into the artificial intelligence story to propel share prices in the US technology sector even further into the stratosphere.

The expected growth trajectory of the Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) means lofty valuations are attached to the shares of these companies.

So far, the tech titans have delivered on their promise, leaving the doubters choking on their words of disapproval. But high valuations mean a considerable amount of good news about the future is already in the price, which presents a risk. Should big tech companies post disappointing earnings, the market could rapidly reprice to take account of a lower growth trajectory.

The US represents a large part of the global stock market

Investors in the US stock market also need to be mindful of the concentration risk that has built up as a result of the narrow market leadership of a few stocks.

Currently 73% of the MSCI World Index, one of the most widely used benchmarks of the global stock market, is invested in the US. That means the many global passive funds which track the MSCI World Index are increasingly becoming US tracker funds.

Almost three quarters of these funds will be invested in the US stock market, with 22% invested in the Magnificent Seven technology stocks.

If you buy a S&P 500 tracker fund, 31% will be invested in the Magnificent Seven. These are relatively high weightings to individual stocks, and the risk is amplified by the US tech titans sharing overlapping characteristics and investment cases.

It’s certainly not a good idea to ignore the US stock market entirely, as anyone who has sat on the sidelines over the last decade will tell you, provided they can stifle their howls of anguish for a moment. But it’s important to recognise that investing in the US isn’t a one-way bet, no matter how compelling a story is laid out by historic performance.

The high valuations attached to a small group of tech companies, combined with the high weighting these stocks in global and US indices should give investors some pause for thought.

As ever, it’s important to look under the bonnet of funds you hold to make sure you’re happy with the investment philosophy and the risks taken. That even applies to passive investors in US and global tracker funds, who may be shocked to learn much money they have invested in a small number of companies.

Disclaimer: These articles are for information purposes only and are not a personal recommendation or advice. Past performance is not a guide to future performance and some investments need to be held for the long term.

Divi Up!

Enhanced dividend strategies are growing in popularity, what do they offer investors?

Ryan Lightfoot-Aminoff Kepler

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.

The growing prevalence of enhanced dividend strategies has been one of the investment trust industry’s low-key emerging trends in the past few years. Pioneered by European Assets (EAT) in 2001, this typically involves taking a contribution from the trust’s capital to top up the portfolio’s underlying revenue in order to boost the income paid out to shareholders. A tweak to the UK rules in 2012 has led to a steady increase of trusts adopting this approach, with over 20 now offering some level of enhanced dividend. With this approach growing in popularity, we look at what it offers boards and managers, how investors can benefit, and whether there are implications for a trust’s discount.

The case for an enhanced dividend

The enhanced dividend strategy works by using a portfolio’s capital reserves to supplement the underlying income a portfolio generates and then paying this combined amount out to investors. It’s important to note that neither capital nor revenue reserves are pots of cash, a point that is often misunderstood. What we are talking about is accounting identity. Portfolio income is, in an equity investment trust, typically reinvested in the portfolio, and an amount is added to the revenue account. When a dividend is to be paid, the manager will sell some investments to raise the actual cash to be paid out, and then write down the revenue account. It’s the same process when paying from capital, meaning investments are sold to raise funds, except there is no requirement for the cash to be ‘raised’, or debited, from the revenue account.

To provide clarity to investors, many trusts implementing an enhanced dividend policy will set out an income goal for the year, such as Invesco Asia (IAT) w adopted a policy in 2021 to pay out 2% of NAV every six months. In the years since its adoption, IAT’s dividend per share has been on average just over double the earnings per share, showing that investors are receiving an income of almost double what they would have if such a policy wasn’t in place.

Whilst the income benefits for shareholders may seem obvious, an enhanced dividend policy also provides some perks when it comes to capital returns. With the trust’s income effectively taken care of, the managers have more freedom to invest in what they believe are the best opportunities from a total return perspective, without being beholden to income targets. This helps reduce the conflict managers may find themselves in when deciding whether to invest in stocks with high future growth potential or those offering high yields today. This could help improve the overall performance of the trust in the long term, as managers are under less pressure to generate income in the near term which may come at the expense of future capital growth.

With several trusts now offering attractive yields, despite investing in asset classes that are not typically high-yielding, income hungry investors have a wider range of asset classes to choose from. This not only creates opportunities for better portfolio diversification but also means investors are less reliant on traditional income asset classes such as bonds or value equities. JPMorgan has been one of the biggest adopters of enhanced dividend policies, which have been implemented in five trusts in their range. This includes trusts investing in China and UK smaller companies, not areas famed for their income potential. However, the enhanced dividend strategy has meant that these trusts could be useful for income investors and enable them to create a more diverse portfolio.

Moreover, this could provide style diversification benefits too, as several trusts with enhanced dividend policies are run with a growth mindset, meaning their portfolios will consist of very different companies to the value-orientated ones typically in an income portfolio. One example is JPMorgan Global Growth & Income (JGGI). Through a series of mergers and strong performance, JGGI has grown to one of the largest trusts in the global sector and is managed with a strong growth bias. This has led to top ten holdings including Microsoft, Nvidia, and Meta, which are unlikely to populate income portfolios. Despite this, the trust’s enhanced dividend policy of paying out at least 4% of the NAV per annum has meant it could have appeal to both income and growth investors. It also means income investors can balance JGGI’s growth bias with more traditional income assets in a portfolio, whilst still generating a good income.

Some trusts, such as JPMorgan UK Small Cap Growth & Income (JUGI), use the NAV at the end of the previous financial year to set the amount for the next four quarterly dividends, meaning investors can be more certain of what they will receive in absolute terms, although as the NAV may rise or fall throughout the year. On the other hand, some trusts, such as IAT, will calculate the dividend amount based on the NAV at different points in the year, meaning the amounts can fluctuate.

CT Private Equity Trust (CTPE) has a slightly different approach, with dividends set through a strict formula which has been consistently applied since 2012. The dividend formula gives shareholders a highly predictable and secure income stream, with the annual dividend set at a rate equivalent to 4% of NAV, based on the average of the last four quarterly NAVs. However, if in any quarter this figure implies a reduction in the dividend, the quarterly dividend payable will be maintained. A result of this approach is that CTPE is now a ‘next-generation dividend hero’, having increased its dividend for ten or more years.

For trusts that follow any of these approaches, it is not hard to see that the dividend itself is not as reliant on the prevailing dividend environment, as is the case in more traditional income portfolios. This was best demonstrated in the early days of the COVID pandemic, when many companies suspended their dividends which put a strain on many income-focussed mandates, particularly in the open-ended space. However, almost all equity income investment trusts managed to maintain or grow their dividend. This was either by using revenue reserves or in the case of trusts with enhanced dividend policies, capital reserves. As such, enhanced dividend strategies can also support income resilience which may be particularly attractive during periods of market weakness.