Investment Trust Dividends
I’ve bought back for the Snowball 8802 shares in TFIF Twenty Four Income Fund for 10k.
With the UK stock market closing over the Xmas and New Year period, I would prefer to be making a small contribution to the Snowball rather than the cash sitting in the account earning nothing. All baby steps.
Current yield 8% which could be enhanced if they pay a higher dividend in April, trading at a small premium to their NAV.
Next xd in January for 2p
I’ve sold SEIT xd for a profit of £221.00
Brett Owens, Chief Investment Strategist
2026 is shaping up to be the best year for bond investors in many years. Washington wants rates down, housing up and borrowing cheap again.
This wish list is wildly bullish for bonds.
Fed Chair Jay Powell has delivered two rate cuts to end the year, with more to follow. Whether or not Powell personally delivers them doesn’t matter to us. Powell is on his way out. But the Fed show will go on, with a ringmaster ready to roll.
President Trump has confirmed his shortlist for the next Fed Chair is down to “The Two Kevins”: Kevin Hassett and Kevin Warsh.
The implication for bond investors is the same, regardless of which Kevin gets the nod:
Whichever Kevin gets the job, the result is already in the cards. More cuts are coming.
This “Kevin accommodation” is the catalyst our bond funds have been waiting for. PIMCO and DoubleLine don’t just buy bonds for their closed-end funds (CEFs)—they borrow money to buy more bonds.
This is called leverage. For the last three years, high rates made leverage a dead weight on these funds. In 2026, falling rates will burn that weight like rocket fuel. Every quarter-point cut lowers the funds’ borrowing bill and widens the spread between what they pay and what their portfolios earn.
The “pure plays” on lower borrowing costs are PIMCO Dynamic Income (PDI) and PIMCO Dynamic Income Opportunities (PDO). With more leverage than your typical bond fund, PDI and PDO have felt high rates more acutely than their peers.
They will be happy to see either Kevin in action and experience the relief of falling rates. PDI and PDO have been paying 5-6% on their credit lines. Cutting back towards 3-4% restores the profitability these funds enjoyed in their late 2010s bull run.
PIMCO is the 800-pound gorilla when it comes to bond trading. They don’t just buy bonds; they bully the market. PDI yields a massive 14.9% and uses 32% leverage. Yes, it has been paying the price for high rates, but now it is ready to run, thanks to Fed cuts. Its younger sibling PDO, meanwhile, employs 35% leverage and yields 11%. Not shabby!
If PIMCO is the bond bully, then Jeffrey Gundlach is the fixed-income sniper. The “Bond God” isn’t afraid to buy “unloved” assets for DoubleLine Income Solutions (DSL). His edge is simple: when emerging-market debt gets dumped, he buys it at 60-70 cents on the dollar and clips big yields while he waits for appreciation.
As the US dollar softens further from falling rates, these global bonds are positioned to bounce. They act as a high-yield hedge to greenback weakness. DSL yields 11.7% while its more conservative sister fund DoubleLine Yield Opportunities Fund (DLY) pays 9.6%. They use 22% and 15% leverage respectively—conservative numbers.
Speaking of a softer dollar, AllianceBernstein Global High Income (AWF) is a direct play on it. The fund owns high-income debt from around the world. In a falling-rate environment, the dollar typically weakens—making AWF’s foreign-bond income worth more when converted back into dollars. It’s a nice currency kicker on top of a 7.3% yield.
Finally, Muni Bondland is the place for leverage. Safe muni bonds take advantage of the security in their sector by borrowing to buy more. The leverage ratio for Nuveen Municipal Credit Income (NZF) is 41%, so this fund is about to save big time:
Plus, that 7.5% yield from NZF gets a tax “hall pass” from Uncle Sam. For a top-bracket taxpayer, that 7.5% tax-free income is worth 12.6% in taxable terms. It’s essentially an S&P-beating return from safe muni bonds.
With 12% to 14.9% yields in hand, we don’t need to chase AI moonshots or sweat over quarterly earnings reports. Retirement is no longer a spreadsheet problem. We just need to buy the right bonds before vanilla investors realize the leverage game has flipped.
When we can lock in 14.9% yields, our retirement math gets very simple.
Funds like these are the secret to retiring on as little as $500K. Let’s face it, the traditional “safe” income strategies touted by Wall Street are broken with the Fed cutting rates. Policy changes are gutting retirement plans. Which is why we are turning to the only reliable retirement solution—a “no withdrawal” portfolio that helps us retire on $500K
The Retirement Strategy That’s Failing Millions—Even the Ones Who “Did Everything Right”
In this exclusive briefing, you’ll discover:
Dear Reader,
You saved. You invested. You followed the “rules.”
And yet here you are—uneasy.
Wondering if you really can afford to retire. Or stay retired.
And who could blame you?
One minute, inflation’s the threat. The next, it’s recession.
A new headline from Washington sends markets whipsawing the very same day.
And the broader economy? It’s bloated with debt and only getting worse.
We touch new all-time highs, then the market zigzags like a drunk squirrel—making it feel impossible to plan, let alone sleep at night.
So you start looking for stability. Maybe trim a position here. Tap a bit of principal there. Just for now.
But that’s exactly how it begins.
And once you start selling shares to supplement your income, you’re on a slippery slope.
A slow-motion wealth drain most retirees don’t realize they’re in—until it’s too late.
I call it…
The Share Selling “Death Spiral”
Some financial advisors (who are not retired themselves, by the way) say that you can safely withdraw and spend, say, 4% of your retirement portfolio every year. Or whatever percentage they manipulate their spreadsheet to say.
Problem is, in reality, every few years you’re faced with a chart that looks like this.
Apple’s Dividend Was Fine – Its Stock Wasn’t
As you can see, the dividend (orange line above) is fine — growing, even — but you’re selling at a 25% loss!
In other words, you’re forced to sell more shares to supplement your income when they’re depressed.
Remember the benefits of dollar-cost averaging that built your portfolio? You bought regularly, and were able to buy more shares when prices were low?
In this case, you’re forced to sell more shares when prices are low.
When shares rebound, you need an even bigger gain just to get back to your original value.
The Only Reliable Retirement Solution
Instead of ever selling your stocks, you should instead make sure you live on dividends alone so that you never have to touch your capital.
This is easier said than done, and obviously the more money you have, the better off you are. But with yields still pretty low, even rich folks are having a tough time living off of interest today.
And you can actually live better than they can off of a (much) more modest nest egg if you know where to look for lesser-known, meaningful and secure yield.
I’m talking about annual income of 8%, 9% or even 10%+ so that you’re banking $50,000 (and potentially more) each year for every $500,000 you invest.
You and I both know an income stream like that is a very nice head start to a well-funded retirement.
And it’s totally scalable: Got more? Great!
We’ll keep building up your income stream, right along with your additional capital.
And you’ll never have to touch your nest egg capital – which means you won’t have to worry about or running out of money in retirement, or even the day-to-day ups and downs of the stock market.
The only thing you need to concern yourself with is the security of your dividends.
As long as your payouts are safe, who cares if your stock prices swing up or down on a given day?
Most investors know this is the right approach to retirement.
Problem is, they don’t know how to find 8%, and 10% yields to fund their lives.
And when they do find high yields, they’re not sure if these payouts are safe. Will the company or fund have enough cash flow to pay the dividends into the future?
And how sensitive are these payouts to the latest headline, Fed policy change or unrest on the other side of the globe?
We’ll talk specific stocks, funds and yields in a moment.
But first, a bit about myself.
My name is Brett Owens. I first started trading stocks in college, between classes at Cornell.
I graduated cum laude with an industrial engineering degree — which is actually pretty popular with Wall Street recruiters.
But I couldn’t stand the thought of grinding it out in a cubicle for 80 hours a week. So I moved to San Francisco and got into the tech scene.
A buddy and I started up two software companies that serve more than 26,000 business users.
The result was a nice chunk of change coming in … and I had to decide what to do with my money.
I had seen plenty of young “techies” come into sudden cash and burn through their windfall in a year, ending up right back where they started.
That was NOT going to be me. I already had dreams of living off my wealth one day, decades before I retired.
I got plenty of cold calls from brokers wanting to “help” me. But I knew that nobody would care as much about my money as me.
So I went out on my own and invested my startup profits in dividend-paying stocks.
I’ve been hunting down safe, stable and generous yields ever since, growing my wealth with vehicles paying me 8%, 9%, even 10%+ dividends.
Over the past 10+ years, I’ve been writing about the methods I use to generate these high levels of income.
Today I serve as chief investment strategist for Contrarian Income Report — a publication that uncovers secure, high-yielding investments for thousands of investors.
Since inception, my subscribers have enjoyed dividends 5 times (and much more!) the S&P 500 average, plus big annualized gains!
And that brings me to a crucial piece of advice…
The ONE Thing You Must Remember
If I could leave you with just one nugget of investing wisdom today, it would be to NEVER overlook the incredible wealth-building power of dividends.
Few investors realize how important these unglamorous workhorses actually are.
Here’s a perfect example…
If you put $1,000 in the dividend-paying stocks of the S&P 500 back in 1973, you would have had $96,970 by 2023, or 97x your money.
But the same $1,000 in the non-dividend payers would have grown to just $8,990 — 91% less.
That’s why I’m a dividend fan.
The stock market is a fantastic wealth-building machine, but it doesn’t always go straight up!
There have been plenty of 10-year periods where the only money investors made was in dividends.
And that’s what gives us dividend investors such an edge.
When you lock in an 8%+ yield, you’re booking an income stream that’s bigger than the stock market’s long-term average return right off the bat.
Of course you can’t just buy every ticker symbol out there with a flashy yield, or you’ll get burned pretty fast.
So let’s wipe the false promises of mainstream finance from our minds and start thinking the “No Withdrawal” way…
Step 1: Forget “Buy and Hope” Investing
Most half-million-dollar stashes are piled into “America’s ticker” SPY.
The SPDR S&P 500 ETF (SPY) is the most popular symbol in the land. For many 401(K)’s, this is all there is.
And that’s sad for two reasons.
First, SPY yields just 1.1%. That’s $5,500 per year on $500K invested… poverty level stuff.
Second, consider 2022 for a moment (and only a moment, I promise!).
SPY was down nearly 20% that year. That is no bueno, because that $500K would have been reduced to $400K.
The last thing we want to do is lose the money we’re getting in dividends (or more) to losses in the share price. Which is why we must protect our capital at all costs.
Step 2: Ditch 60/40, Too
The 60/40 portfolio has been exposed as senseless.
Retirees were sold a bill of goods when promised that a 60% slice of stocks and 40% of bonds would somehow be a “safe mix” that would not drop together.
Oops.
Inflation — plus an aggressive Federal Reserve, plus a (thus far) persistently steady economy — drop-kicked equities and fixed income before they went on a serious bull run in 2023, 2024 and into 2025 (with a brief interruption for the April “tariff tantrum.”)
It just goes to show that bonds are not the haven guaranteed by the 60/40 high priests. They could easily plunge just as hard (or harder) than stocks in the next economic crisis.
Just like they did in 2022 (sorry, we’re only going to spend one more second on that disaster of a year). US Treasuries plunged, which resulted in the iShares 20+ Year Treasury Bond ETF (TLT) getting tagged.
Sure, it still paid its dividend. But even including payouts, the fund was down 31% — worse than the S&P 500. Ouch!
When stocks and bonds are dicey, where do we turn? To a better bet.
A strategy to retire on dividends alone that leaves that beautiful pile of cash untouched.
Step 3: Create a “No Withdrawal” Portfolio
My colleague Tom Jacobs and I literally wrote the book on a dividend-powered retirement.
In How to Retire on Dividends: Earn a Safe 8%, Leave Your Principal Intact, we outline our “no withdrawal” approach to retirement:
To make that nest egg last, and our working life worthwhile, we really need yields in the 7% to 10% range. We typically don’t see these stocks touted on Bloomberg or CNBC, but they are around.
Of course, there are plenty of landmines in the high-yield space. Some of these stocks are cheap for a reason. Which is why we need to be contrarian when looking for income.
We must identify why a yield is incorrectly allowed to be so high. (In other words, we need to figure out why the stock is priced so cheaply!)
As I write, the top 10 payers in my Contrarian Income Report portfolio yield about 10.6% on average.
On every million dollars invested, this dividend collection is spinning off an incredible $106,000 every single year!
And you don’t have to be a millionaire to take advantage of this strategy.
A $750k nest egg will generate $79,500 annually…
$500K could hand you $53,000…
You get the idea.
The important thing is that these yields are safe, which creates stability for the stock (and fund) prices attached to them.
We want our income, with our principal intact.
It’s really the only way to retire comfortably, without having to stare at stock tickers all day, every day.
Now, many blue-chip yields are reliable. They just need to hit the gym and bulk up a bit. Here’s how we take perfectly good, yet modest, dividends and make them into braggarts.
Step 4: Supersize Those Yields
Mastercard (MA) is a near-perfect dividend stock. Its payout is always climbing, having nearly doubled over the last five years. (MA shareholders, you can thank every business that accepts Mastercard for your “pennies on every dollar” rake.)
Tap, tap, tap. Remember cash? Me neither. Another 2020 casualty, with Mastercard making a few dimes or dollars on every plastic transaction.
The cashless trend has been in motion for years. But international growth prospects remain huge. Just a few years ago, 80%+ of transactions in Spain, Italy and even tech-savvy Japan were in cash.
We expect more dividend hikes as more cash turns to plastic. Or skips plastic entirely and goes straight to e-transfers. Mastercard and close cousin Visa (V) nab a nice piece of that action, too.
The only chink in MA’s armor? Everyone knows it is a dynamic dividend stock. So it only yields 0.5%. Investors keep bidding it higher, knowing that the next dividend raise is just around the corner.
So, the compounding of those hikes makes MA a great stock for our kids and grandkids. You and I, however, don’t have the time to wait for 0.5% to grow. And $2,500 on a $500K investment simply won’t get it done.
Let’s instead consider top-notch closed-end fund (CEF) Gabelli Dividend & Income Trust (GDV), managed by legendary value investor Mario Gabelli.
Mastercard is one of Gabelli’s largest holdings. But we income investors would prefer GDV because it boasts a healthy dividend right around 6.4%, paid monthly, nearly 13 times what Mastercard pays (and this is low in CEF-land; other funds, like the next one we’ll talk about, pay nearly double that).
And as I write this, thanks to the conservative folks who buy CEFs, we have a rare opportunity to buy Mario’s portfolio for just 89 cents on the dollar.
Yup, GDV trades at an 11% discount to its net asset value, or NAV. It’s a way to boost MA’s payout and snag a discount, too.
Where does this discount come from?
CEFs are like their mutual fund cousins, with one exception: they have fixed pools of shares, so they can (and do) trade higher and lower than their NAVs, or “fair” values (the value of their holdings minus any debt).
As contrarians, we can step in when they are temporarily out of favor, like after a pullback, when liquidity is low, and buy them at generous discounts.
GDV holds more blue-chip dividend payers alongside MA, such as American Express (AXP), Microsoft (MSFT) and JPMorgan Chase & Co. (JPM). And with GDV, we have an opportunity to purchase them at an 11% discount.
These high-quality stocks wouldn’t normally qualify for our “retire on $500K” portfolio because everyone in the world knows they are strong long-term investments.
Even though these companies are constantly raising their dividends, constant demand for their shares keeps their prices high (and current yields low). So they never meet our current-yield requirement.
GDV does. The fund pays a monthly dividend that adds up to a nice 6.4% annual yield.
Let me give you one more idea (and this is where that much larger payout comes in): the Eaton Vance Tax-Managed Global Diversified Equity (EXG) is another CEF with a similar blue-chip dividend portfolio.
But EXG generates even more income than GDV by selling covered calls on the shares it owns.
More cash flow means a bigger dividend — and EXG pays an already terrific 8.9%!
So we buy and hold EXG and GDV forever, collecting their monthly dividends merrily along the way? Not quite.
In bull markets, these funds are great. But in bear markets, they’ll chew you up.
Step 5: Protect That Principal!
My CIR readers will fondly recall the 15 months we held GDV and EXG together, collecting monthly dividends plus price gains that added up to 43% total returns.
What was happening in that period, from October 2020 until February 2022? The Federal Reserve was printing money like crazy. Not only did the Fed stoke inflation, but we also enjoyed an asset-price lift.
Starting in 2022, we had the opposite situation. The stock market was topping, and we didn’t want to fight the Fed. We sold high, and by late 2022, both funds were down sharply:
We Sold EXG and GDV Just Before They Plunged
For whatever reason, “market timing” is a taboo phrase among long-term investors. That’s a shame because it is quite important.
By aligning our dividends with the market backdrop, we can protect our principal from bear markets.
Step 6: Start Here to Retire on $500K
So if the “tried and true” money advice — like the 60/40 portfolio and the 4% rule — has been properly exposed as broken…
Where do we go from here?
Well, imagine your portfolio in just a few days or weeks from now spinning off 8%, 9% and even double-digit dividends with the reliability of a Swiss watch… with many of my recommendations paying every single month no less!
No more worrying how much is coming in next month.
No more worrying about the Fed’s next move. Or the next inflation or jobs report.
No more worrying about outliving your nest egg.
Let me tell you more about my solution — what I call the 11% “No-Withdrawal Portfolio.”
Better yet, I want to give you the names of my favorite stocks and funds to buy right now…
Yields Up to 11%, With Upside
To make it easy to transition into this new way of investing… where you are buying “bird in the hand” cash flows… instead of stocks that you just hope will go up… I’ve prepared two in-depth guides that hone in on the strategies I mentioned above…
Special Report #1:
Monthly Dividend Superstars: Yields Up to 11%, With Double-Digit Upside
This is where you’ll find the bargains that investors are leaving on the table in their misplaced fear of the Fed.
Inside you’ll find the ticker symbol, my buy-up-to price and in-depth backstory on my three favorite CEFs:
Special Report #2:
The Perfect Income Portfolio
In this guide, you’ll get all the details of what I call the “Perfect Income Portfolio.”
Step-by-step, I’ll show you exactly how to set up your portfolio for maximum income without taking on additional unnecessary risk.
And, if you follow the simple steps laid out, I’m confident you’ll be able to enjoy an income stream that far exceeds what most folks who buy the typical S&P 500 stock earn.
This report includes investments that have passed my strict due-diligence process—including one of the best ways I’ve ever seen to invest in utilities (which I’ve picked for strong gains as interest rates move lower).
This fund pays a rich 7% today, holds some of the strongest electrical utilities in the country and trades at a bargain valuation (even though most investors don’t realize it). Its bargain status won’t last as rates inevitably tilt lower, pulling more investors toward its healthy payout!
I’ll walk you through each recommendation, giving you a clear, concise and easy-to-understand breakdown of exactly why I see these as “perfect” income plays.
How to Get Both Reports Absolutely Free
To access both reports, Monthly Dividend Superstars and The Perfect Income Portfolio, at no cost whatsoever, I simply ask that you take a risk-free trial of my research service, Contrarian Income Report.
I created Contrarian Income Report to help investors uncover overlooked and underappreciated income plays before Wall Street and the mainstream herd bid them up.
People often ask me, “I get the income part, but where does ‘contrarian’ fit in?”
My answer is simple: You’ll never beat the market by following the herd.
If you buy the same investments as everyone else, you’re going to have the same results as other people — which are always mediocre. This is why my advisory is defiantly contrarian.
It all boils down to one simple principle: If you want to make money, really big money, do what nobody else is doing.
Contrarian investing is probably the simplest, sanest, most powerful and reliable money-making technique ever devised to buy low and sell high. It works in any market, from stocks and bonds to gold and real estate — because human nature is the same everywhere.
You don’t need special training. All you need is an independent mind, a bit of patience and an ounce of courage.
If you want to buy low and sell high, you must force yourself to buy when everybody, including yourself, is feeling discouraged — when the news is bad. That’s likely to be the bottom. And you should sell when everybody is excited and the news is good, because that’s likely to be the top.
Right now, we’re holding a diverse collection of these high-yielding stocks and funds, and you’ll get instant access to each one the moment your no-risk trial starts.
And every new investment you get in Contrarian Income Report comes with a simple goal: it will pay a reliable 5% dividend — or better.
In fact, some holdings in our portfolio go way further than that, delivering 12%+ income right now.
So just by “swapping out” your anemic blue chips for these cash cows, you could double, triple — or even quadruple — your income. And you could do it TODAY!
That sort of money can upgrade your lifestyle in a hurry.
We’re all told to save into a pension, but there’s widespread confusion about how to take an income from our savings and investments at retirement, a new study has found. We look at your retirement income options.
By Laura Miller
What are my retirement income options?
(Image credit: Getty Images)
Retirement income today is rarely generated from a single source. It is typically built from a combination of the state pension, workplace or personal pensions, and other assets, each playing a different role.
Understanding how these different pension and non-pension income streams work – and the risks attached to each – can help you approach retirement with clearer expectations, financial advisers say.
Middle-aged Brits are sleepwalking into retirement without a plan, and time is running out, a survey has warned. Retirement income options are not being considered by 73% of 45-60 year olds, according to the study by pension provider LV.
Stay ahead of the curve with MoneyWeek magazine and enjoy the latest financial news and expert analysis, plus 58% off after your trial.
A third (33%) of respondents to the survey aged 45 to 60 said they are unaware of financial products or strategies available to help protect their retirement income or boost their pension savings.
Sue Allen, chartered financial planner at Chester Rose Financial Planning, said: “When you retire, one of the key questions is how you will take an income. Many people find they spend more at the start of retirement as they enjoy their newfound freedom and tick off bucket-list experiences.
“Once early retirement has passed, your spending may settle down, but you might also want to prepare for higher costs in your later years in case you need to pay for care. Setting out your retirement goals could help you understand how to create an income that suits your lifestyle at different points in time.”
We look at the different retirement income options – like the state pension, defined benefit pensions versus defined contribution pensions, workplace pension and SIPPs as well as annuities, cash savings accounts, ISAs and property rental income – and how they can work together to fund your later years.
The state pension provides a guaranteed, inflation-linked income for life and forms the baseline of retirement income for most people.
The full new state pension (for most post-2016 retirees) is now £230.25 per week for 2025/26, or £11,973 per year, while the full basic state pension (for those born before April 1953) is £176.45 weekly – amounting to £9,175.40 a year – both increased under the triple lock, with payments made every four weeks.
Eligibility and amounts depend heavily on National Insurance contributions, requiring 35 years for the full new state pension and around 30 for the basic. You can begin claiming the state pension at 66, but the state pension age is rising.
Jude Dawute, managing director at financial advice firm Benjamin House, said: “While it provides an important level of security, the state pension on its own is generally designed to meet basic living costs, rather than support a broader retirement lifestyle.”
Pensions UK, a trade body, estimates a single person household needs £13,400 a year post-tax income to cover the basics in retirement – excluding housing costs – so while most of this will be covered by the new state pension, some other savings or income will be needed besides.
Defined benefit (DB) pensions provide a pre-determined income for life, usually payable from a scheme’s normal retirement age (commonly 60 or 65). The income is not affected by market movements and continues for as long as you live. You can usually take 25% tax-free as a lump sum, with the rest of the income taxed at your marginal rate.
DB pensions are typically used to meet core, ongoing expenditure, because the income is known in advance and often includes inflation protection.
So if a person, aged 65, had a defined benefit pension paying £18,000 per year and gets the full new state pension of £11,973 per year, their total guaranteed retirement income would be £29,973 per year.
“This income would be paid regardless of investment conditions or how long the person lives, providing a stable base from which other retirement decisions could be made,” said Dawute.
Defined benefit pensions are usually inflexible regarding how income is taken and at what level. However, many allow a tax-free lump sum in exchange for lower income.
Allen, from Chester Rose Financial Planning, said: “The decision whether to take a tax-free lump sum or not needs careful consideration, as once taken, it cannot be reversed. In most cases, maximising guaranteed income is preferable unless the lump sum is genuinely required.”
Defined contribution pensions work differently to defined benefit pensions. Instead of providing a guaranteed income, they build up a pension pot, which can usually be accessed from age 55 (rising to 57), with no requirement to retire at a fixed age.
This flexibility allows income to be tailored to individual circumstances, but it also means retirees remain exposed to several risks.
“Unless funds are converted into guaranteed income – by buying an annuity – DC pensions remain invested. Their value can therefore rise or fall with markets,” Dawute said.
A key consideration is sequence risk, he pointed out. This is the impact of taking withdrawals during periods of poor market performance, particularly early in retirement.
Dawute said: “Losses at this stage can have a disproportionate effect on how long a pension pot lasts. Diversified portfolios can help manage volatility, but investment risk cannot be removed entirely.”
Many people reach retirement with multiple defined contribution pensions, built up over different jobs.
Consolidation brings these pensions together, often into a self-invested personal pension (SIPP) or a workplace pension scheme. This can make it easier to understand your overall retirement income, manage investments consistently, and plan withdrawals.
“In some cases, individuals may also explore pension transfers from older arrangements and defined benefit pensions into newer ones with greater flexibility,” said Dawute. But he added where protected benefits exist – like guaranteed income rates – these decisions require careful consideration.
Deciding how much to withdraw from your pension can seem like a balancing act and there are often many factors you need to consider.
Allen said: “For example, when you access your pension, you can usually take up to 25% as a tax-free lump sum. You might be tempted to withdraw the money to travel, renovate your home, or indulge your hobbies. However, withdrawing a lump sum at the start of retirement could affect your long-term finances.
“You don’t have to take a lump sum at the start of retirement to benefit from the tax-free money – you may spread it out over several withdrawals, for instance,” she said.
Drawdown allows pension funds to remain invested while income is taken as needed. It is often used to support discretionary spending, such as travel or irregular expenses, and to keep funds accessible. You typically take your 25% tax-free cash upfront.
Drawdown income is not guaranteed and is exposed to:
When you are in drawdown the sequence of your investment returns is of vital importance. In the scenario shown below, which shows a retiree with a portfolio of £100,000, taking annual withdrawals of £5,000, their portfolio could be 22% worse off if they experienced losses in the first two years of retirement, compared to having these same losses in years four and five.
| Portfolio 1 | Portfolio 2 | ||||
|---|---|---|---|---|---|
| Year | Withdrawal | Annual returns | Annual portfolio value (£) | Annual returns | Annual portfolio value (£) |
| 1 | £5,000 | 25% | £120,000 | -25% | £70,000 |
| 2 | £5,000 | 15% | £133,000 | -15% | £54,500 |
| 3 | £5,000 | 0% | £128,000 | 0% | £49,500 |
| 4 | £5,000 | -15% | £103,800 | 15% | £51,925 |
| 5 | £5,000 | -25% | £72,850 | 25% | £59,906 |
Source: Quilter. Table shows a 22% difference between portfolio 1 and portfolio 2 after five years
Uncrystallised funds pension lump sums (UFPLS) allow individuals to take payments directly from their pension, with 25% tax-free and 75% taxed as income each time, unlike flexi-access drawdown where the whole tax-free amount is usually taken upfront.
It’s a way to get money bit-by-bit without setting up a full drawdown plan, triggering the money purchase annual allowance (MPAA) on the first withdrawal and allowing the rest of your fund to keep growing.
UFPLS is commonly used for:
Dawute said: “Because each withdrawal is taxed, timing and frequency can significantly affect your overall tax position.”
An annuity converts pension savings into a guaranteed income, usually payable for life.
People often use annuities to cover essential spending, reducing reliance on investment markets and removing the risk of outliving their savings.
“However, annuities involve annuity risk – once an annuity is purchased, the income is typically fixed based on market conditions at that time and cannot be changed later,” said Dawute.
Inflation risk and annuities:
Drawing income from a range of assets can help diversify risk and improve financial resilience in retirement.
Matt Finch, director of wealth management at Bentley Reid, pointed to some non-pension assets that can boost your retirement income:
ISAs
“ISAs offer highly tax-efficient income, with withdrawals, income and growth free from tax. In many cases, it can be advantageous to utilise taxable income first to maximise allowances before drawing on ISA wealth,” said Finch.
Cash
Cash savings can provide liquidity and short-term security, reducing the need to sell long-term investments during periods of market volatility, he said.
Rental property income
Finch said: “Rental income can continue to provide a steady income stream in retirement, although it remains taxable and carries ongoing management responsibilities, which should be considered in the context of lifestyle objectives.”
Part-time work
“Part-time or consultancy work can offer a phased transition into retirement, maintaining income and reducing reliance on pensions in the early years,” he added.
The most effective retirement income plans combine guaranteed income, flexible withdrawals and long-term growth, according to the experts.
Chartered financial planner Sue Allen said: “They are built around spending needs, health and attitude to risk – and are reviewed regularly as circumstances and tax rules change. Retirement income planning is not about finding the perfect product. It is about structuring your money so it supports the life you want for as long as you need it.”
A 65-year-old with a full state pension, NHS pension, a SIPP valued at £400,000 and an ISA of £100,000, who is continuing to work until 67, could have a retirement income portfolio that looks something like the below, she said.
In early retirement, income is topped up from the SIPP and ISA to support higher spending. Once the state pension and NHS pension payments begin, reliance on the SIPP reduces.
Later in life, income needs decline further, and guaranteed income covers most spending, while modest withdrawals continue to provide flexibility.
“The aim is not to maximise income early on but to keep the income sustainable and tax-efficient,” Allen said.
| Age (years) | Income per year required (gross, i.e. before tax) |
| 65-75 | £60,000 |
| 75-85 | £45,000 |
| 85-100 | £30,000 |
| Income source | Income per year (gross, i.e. before tax) |
| Part time work | £20,000 |
| SIPP drawdown | £30,271 (assumed tax-free cash already taken) |
| ISA | £9,729 |
| Total | £60,000 |
| Income source | Income per year (gross, i.e. before tax) |
| State pension | £11,973 |
| NHS pension | £15,000 |
| SIPP drawdown | £23,771 |
| ISA | £9,729 |
| Total | £60,000 |
| Income source | Income per year (gross, i.e. before tax) |
| State pension | £11,973 |
| NHS pension | £15,000 |
| SIPP drawdown | £18,000 |
| Total | £45,000 |
The dividend total for the Snowball will be £11,621.00
Next years target remains 10k.
What might we learn from the ‘dot com’ era that we can apply to today’s markets ?
Alan Ray
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.
One of the profound differences between today’s investor and the investor of 25 years ago is that it is much easier today for us to imagine that a very large company can grow at extremely high rates than it was at the turn of the century. That statement may contradict many investors’ recollection, lived or otherwise, of what happened 25 years ago. After all, didn’t everyone’s imagination run wild, inventing new financial ratios to justify valuations that were absurd then and absurd today? Well, yes, if one focuses on the very narrow period of 1999 to 2000. But in the aftermath of the bubble bursting, perhaps embarrassed by our irrational exuberance, it took many of us years to get comfortable with the idea that a few very large companies could grow at a rate that had only been thought possible for a small business. The old ‘elephants don’t run’ adage was often recited, and for a sustained period after the bubble burst, investors in what came to be called ‘old economy’ businesses did much better than their ‘new economy’ counterparts. In the end though, investors grudgingly accepted that it was possible that a handful of large companies were ‘special’. And over time, it became increasingly meaningless to identify ‘old’ and ‘new’ economy companies as technology became ordinary and ubiquitous.
Indeed, long-time investors in the investment trust sector may recall that the transformation of Scottish Mortgage (SMT) to its status as a leading investor in high growth businesses took several years to complete. Whereas the manager at the time had arrived at the above conclusion early on, the process of persuading shareholders of what was a relatively traditional global equity trust took some time. What we have no trouble imagining today was, for many, a huge leap of faith.
Back in 1999, bankers were run ragged by dozens of new IPOs of increasingly outlandish businesses with no obvious route to profitability. These were eagerly bought by investors who wanted to own anything and everything that embraced the new technology of the day. This approach missed the vital point that many established businesses were transforming to embrace the internet but doing so at a measured pace and using their traditional brands and customer bases to anchor them while they made the transformation. For example, retail has been changed out of all recognition by the internet, but some ‘pre-internet’ brands have made a successful transition, learning from the mistakes of startup rivals. It’s taken the best part of a quarter of a century for the logistics and infrastructure that supports that transformation to catch up, and having existing ‘bricks and mortar’ has proved, for smart management teams, a bigger advantage than having the slickest website. For example, the resulting transformation of the property market is, today, a key theme in the portfolios of REITs such as Picton Property Income (PCTN) or Schroder Real Estate (SREI).
Today, bankers are less focused on IPOs and more on funding rounds for large private companies that are at the heart of the next wave of AI-related technology. We no longer have difficulty imagining that the eye-watering valuations of those companies will eventually be justified because we have all witnessed it happening before. It would be wrong to say that this is the sole focus of investors looking for AI ‘angles’, with businesses involved in the infrastructure behind power and data networks being a popular theme in many equity trusts, as one example. But in contrast to 1999, there are few high-profile IPOs presenting investors with absurd business models. At least, not yet.
So, while it is tempting, and quite sensible, to draw parallels to 1999/2000, there are some significant differences in what we know now compared to then. But once again we seem to have trouble imagining that the products and services that the same very large companies are developing might, if they are to succeed, transform the rest of the corporate world. The chart below shows how this lack of imagination is manifesting itself in stock market terms. This is the S&P 500 Index we are all familiar with plotted against the ‘equal weighed’ S&P 500 Index. For readers not familiar with the difference, while the S&P 500 Index weights each company according to its market cap, the ‘equal weight’ applies the same weight to every company. When a few very large companies perform well, the regular S&P 500 Index will perform well too, but the equal weighted version will perform less well. Which is exactly what has happened recently. As ever, we represent those indices in the charts using ETFs that track them, since those are real-world instruments that any investor can buy.
Source: Morningstar
Past performance is not a reliable indicator of future results
What this means is that we have a pattern where our ‘version 2.0’ imagination has no problem with future success for a handful of businesses, but this seems to be entirely at the expense of the rest of the market. For investors with a contrary nature or who are interested in the ‘only free lunch’ of diversification, this has the potential to be a very interesting opportunity. Again, we have no problem imagining that some of these large companies will get larger, but to do so they will need to provide products and services that others want to buy. Will all the other companies left behind in the index buy their products if they aren’t helpful to their business?
Speaking of diversification, to conclude the point on the two versions of the index, the next two charts show the sector exposure for the S&P 500 Index and its equal weighted neighbour. The largest ten constituents of the S&P 500 Index are about 40% of the overall index, which puts it right up there with active ‘focus’ funds in terms of its ‘conviction’. Technically, the equal weighted version doesn’t have ten largest constituents given the nature of its construction, although it’s likely one will find slight variations in position sizes for ETFs tracking the index. But one should expect any ten holdings to add up to 3% or less of the total. It’s also worth noting that US equities are over 70% of world indices, so even those investors who prefer global over US-specific trusts will likely find they are experiencing a similar concentration risk.
The first of the two charts shows the sector exposure for the equal weight index and is, perhaps, a good representation of what, in our imagination, the US equity market looks like.
Source: Morningstar
The second chart, the market cap weighted index we are all familiar with, shows in sector terms just how concentrated things have become in the US market. And again, global indices will be subject to the same influence.
Source: Morningstar
In the investment trust world, there are a couple of good mainstream ways to alleviate concentration risks in respect of US equities. First, JPMorgan American (JAM) deservedly holds the status as the leading ‘core’ US equity trust, combining elements of large-cap growth and value, together with a smaller (<10%) combination of small-cap growth and value, to achieve a more balanced mix of the US’s leading companies, including some of those mega-cap names. By dint of its equity income mandate, North American Income (NAIT) provides a very different set of exposures. Whereas its mandate is by no means akin to the ‘equal weight’ index, it’s very interesting that, as the chart below shows, an active mandate that is naturally underweight those mega-cap growth companies has performed very similarly to that index. In a scenario where investors decided to dust down the ‘old economy’ vs ‘new economy’ idea, one could imagine NAIT being very well positioned to benefit.
Source: Morningstar
Past performance is not a reliable indicator of future results
At our recent online event, Real Dividend Heroes and Growth Giants, a range of fund managers gave their own views on this topic, and all the presentations are available to watch back, and the accompanying presentations are available to download. One particularly interesting slide can be found in the presentation given by the manager of the global growth trust Brunner (BUT), which has been reducing exposure to the most highly valued companies in the US in favour of first or second derivative beneficiaries. If one downloads and views slide 17 of the presentation one will see a couple of eye-watering statistics that bring the issue of valuations to life. First, South Korean auto manufacture Kia has similar net income to Tesla, but the latter company has an enterprise value 87x (not a typo) that of the former. Second, US AI defence stock Palantir’s market cap is c. $430bn on revenues of $3bn. Whereas, the next five largest defence stocks in the US have a combined market cap of $550m on revenues of $262bn. Once again, our 2025 version of imagination probably feels quite casual about that and can easily fill in the growth case for the difference. But can we really be so confident that we aren’t missing out on the other side of these trades?
One of the toughest places to be a fund manager in the last couple of years has been US small caps. Both the specialist investment trusts in this space, Brown Advisory US Smaller Companies (BASC) and JPMorgan US Smaller Companies (JUSC) identify as ‘quality growth’ investors and this has been a very difficult place to be. Earlier we noted that there isn’t the same mania for IPOs of companies with only very sketchy business models, but in US small-cap land there certainly has been a more recent mirror of the S&P 500 Index’s experience, where a handful of stocks attached to the AI theme have dominated small-cap indices. Many of these businesses are unprofitable and therefore don’t meet the ‘quality growth’ threshold. This has been a major contributor to both of these trusts’ underperformance, but again, can we really be so confident that there aren’t opportunities on the other side of this trade?
Stock markets are more complicated than we’ve portrayed above, of course and the US and other markets are influenced by other big factors of the day. While the so-called ‘hyper scalers’, or mega caps, or whatever we choose to call them, are proceeding at pace with their capital expenditure plans to build the infrastructure required to power AI, much of the rest of corporate America has delayed its own spending and investment while it ponders the implications of trade tariffs. The UK has just been through its own arguably unnecessary period of uncertainty around the budget, with similar results for corporate spending. No doubt this very distinctive contrast is skewing earnings reports, and as we note above, has led to a very polarised smaller-companies market in the US. But uncertainty is waning as the US administration moves on to other matters. With greater certainty we may see a more balanced cycle of expenditure across other businesses.
It’s very difficult for many of us to imagine, and perhaps confront, the transformative effect AI will have on our lives and on businesses. It’s far less difficult for us to imagine that a few large companies will end up fully justifying the valuations we’ve placed upon them, and that belief has profoundly influenced the composition of US and global stock markets. But it seems far harder for us to imagine that, for that to happen, all the other companies need to have a reason to buy their products. In our imagination, that’s where the opportunity increasingly lies.
Brett Owens, Chief Investment Strategist
Updated: December 16, 2025
Today I have a sweet dividend “double shot” for you: The first? A 2.8% payout set to grow thanks to AI—and take the stock price up with it.
The second gives you high payouts now, in the form of a monthly-paid 7.8% divvie that also looks set to head higher.
Both of these tickers are cheap. In fact, they (and the sector they’re in) could very well be the last bargains on the board as the bull runs into its fourth (!) year.
Pharma Goes From “Dead Money” to the Next AI Winner
These two dividend plays are on sale because they’re often lumped in with drug stocks—a sector that’s lagged for years.
There have been exceptions, like Eli Lilly & Co. (LLY), whose Mounjaro and Zepbound GLP-1 weight loss drugs have helped the stock overtake that of Novo Nordisk (NVO) maker of Ozempic and Wegovy. Beyond that, breakthroughs have been thin on the ground. That’s why pharma has been “dead money” for years now.
Well, that and politics.
Remember, Trump 1.0 kicked off the insulin caps. Biden’s Inflation Reduction Act followed with price limits on 10 blockbusters starting in 2026—a potential $160-billion profit hit. Then Trump returned and aimed to tie US drug prices to the lowest in the world.
But on cue, pharma did what it always does: It lobbied. The lobbyists not only slowed the political avalanche—they pushed it back up the mountain.
Sure the White House struck headline-friendly deals with Pfizer (PFE), AstraZeneca (AZN) and other big pharma firms. The optics looked tough on pricing. But the fine print rewarded these companies for their co-operation with faster FDA reviews and more predictable reimbursement structures.
Now, drugmakers are looking to AI, which could cut drug development by up to nine years.
A Building Wave of Breakthroughs
Pharma is one place where we can clearly say there’s no AI bubble. Which is funny, because it’s where the tech can drive some of the biggest gains.
What’s the potential here? Enormous.
Right now, designing a drug and getting it through clinical trials takes 10 to 15 years and costs around $2.5 billion, according to research from Springer Nature. With AI, pharma companies can develop new treatments with far less “trial and error” than human scientists alone. That cuts risk and cost and amplifies these experts’ work.
As a result, industry experts now say the drug-discovery cycle will likely be chopped from 10 to 15 years to just six! That’s critical because patents only last 20 years, so the faster a drug gets out the door, the more its maker can sell before generics eat its lunch.
The bottom line? Pharma profits are poised to pop!
But we’re not going to try to pick the next big winner. Why bother when we can buy into companies that make what every drugmaker needs? I’m talking medical-equipment makers, our favorite “pick-and-shovel” plays on AI-driven drug research.
BDX Is Cheap—and Headed for a Unique “Value Unlock”
Let’s start with Becton, Dickinson & Co. (BDX), whose products are hospital mainstays: syringes, needles, catheters and the like, as well as blood-flow monitors.
Those give BDX revenue that will float higher as the population ages. Then it adds growth from its Life Sciences division, maker of products pretty well every lab needs, like flow cytometers, used to analyze immune cells, cancer cells, and biomarkers.
BDX also makes specimen-collection systems, as well as devices for cell imaging, analysis, genetic testing and other critical lab functions. As AI helps scientists develop more new drugs, demand for these products will grow.
Waters Deal Adds Growth, Streamlines BDX
The company is merging its bioscience and diagnostics businesses with Waters Corp. (WAT), where they’ll match up nicely with Waters’ gear. Waters focuses on equipment in areas such as chromatography (separating and identifying components in a mixture), lab automation and mass spectrometry (breaking down a molecule’s structure).
Management sees the deal doubling the size of the market open to Waters, to $40 billion, and teeing up 5% to 7% yearly growth. BDX’s shareholders will hold 39.2% of the merged company, and Waters investors will hold the rest. That’s just fine; it keeps BDX in the game as AI paces drug development higher. And it lets BDX tighten its focus, too.
The topper? When the deal closes around the end of the first quarter, BDX will get $4 billion in cash. Management will send half of that to shareholders as share buybacks and use the rest to pay down debt.
Buybacks cut the number of shares outstanding, boosting earnings per share and dividends, as they leave BDX with fewer shares on which to pay out. That should help BDX’s share price close the gap with its payout growth, which it had been tightly tracking until a disappointing earnings report in May sent the stock tumbling.
BDX’s “Dividend Lag” Says It’s Oversold
As demand for Becton’s products rises, through both its remaining products and its Waters stake, it’ll support dividend growth. Investors will notice (they always do!) and bid the stock up, closing the gap between BDX’s price and dividend.
While we wait, we can be assured that BDX’s payout is built on a strong foundation, accounting for just 45% of free cash flow. That makes now a good time to consider the stock. But if you’d prefer a more diversified medical-device play, we’ve got one teed up for you. It pays more than BDX’s 2.8% yield, too.
An “All-in-One” Medical Device Play With a 7.8% Dividend
I know a lot of readers prefer closed-end funds (CEFs), for good reason: big dividends! And CEF-land has given us a fund perfect for this “dumpster-dive” moment in pharma: the 7.8%-paying BlackRock Health Sciences Fund (BME).
BME’s portfolio is a who’s-who of medical-device makers. What’s more, Becton Dickinson is not a top-10 holding (it’s No. 16, at 1.88% of assets), so you could pick up BME and BDX without overly exposing yourself to that one stock.
Meantime, BME’s top holdings do include medical-device kingpins like Abbott Laboratories (ABT), Thermo-Fisher Scientific (TMO) and Boston Scientific (BSX). Drugmakers like Lilly and Amgen (AMGN) also show up.
We love CEFs because they generally have a fixed share count for their entire lives, so they can trade at a premium or discount to their net asset values.
It’s here that we see how much investors have lost the plot on pharma. As I write this, BME trades at an 8% discount to NAV, far below its five-year average of 2.9%. That primes it for gains from our “AI-powered” drug-development wave, boosting its lead on the benchmark iShares US Pharmaceuticals ETF (IHE) since the ETF’s inception in May 2006:
BME’s Closing Discount Could Widen This Healthy Lead
Let’s wrap with that 7.8% divvie, which pays monthly. It’s also grown nicely in the last five years.
A (Monthly-Paid) 7.8% Dividend That Grows
Source: Income Calendar
As AI boosts drug development, I expect BME’s payout to climb higher. That would draw in investors, closing its “discount window” and putting upward pressure on the share price. Buying now lets you lock in a 7.8% dividend before that happens.
BME is a terrific example of what we love about CEFs: They let us tap trends like the AI-driven pharma boom while paying us huge dividends—at a discount, to boot!
Monthly payouts are key, too. No matter what markets are doing, we know our next cash payout is only 30 (or 31) days away, and our yield is much higher than most investors get from “mainstream” stocks.
With little more than a week to go before the big day, Wall Street is showing little sign of festive cheer. It’s not much better here. ii’s head of markets explains why.
16th December 2025 08:21
by Richard Hunter from interactive investor
Time is running out for any hopes of a Santa rally, as investors continue to fret about the AI trade, which for the moment has fallen sharply out of fashion.
The rotation into what are seen as relatively stable sectors compared to the previous AI euphoria rumbles on, to the benefit of the likes of industrials, consumer discretionary and healthcare.
Meanwhile, Oracle Corp ORCL
and Broadcom Inc AVGO
continue to be at the eye of the AI storm, falling further with losses of 2% and 5% respectively and, while poster-child NVIDIA Corp NVDA0 managed a small gain, Microsoft Corp MSFT also drifted.
It remains to be seen whether the imminent slew of economic data will be too stale to be meaningful. A combined October/November non-farm payrolls is expected to show an increase of 50,000 jobs, which would compare to 119,000 in September, although the quality of the data could be called into question given the effects of the government shutdown.
Retail sales are also expected, again possibly too historic to be of use given that they will relate to October, although overall the numbers could at least provide some further clues as to the Federal Reserve’s thinking for next year. There is currently a disconnect between market expectations of two cuts and the Fed’s current dot plot, which suggests a solitary reduction.
In the meantime, with no obvious positive catalysts on the immediate horizon, the main indices are in consolidation mode. In the year to date, gains of 13.8%, 15.9% and 19.4% for the Dow Jones, S&P500 and Nasdaq respectively reflect what has become a positive year despite the ever-present headwinds which have variously threatened to upset the investment applecart.
Asian markets also failed to enter into any kind of festive cheer, with technology stocks under pressure given the Wall Street read across. Domestic issues also remained in focus, with the Nikkei 225 declining as preliminary factory data pointed to a slight slowdown, while private sector growth cooled as services declined in Japan. The data comes ahead of a widely expected rate hike from the Bank of Japan at the end of the week, which could further dampen sentiment.
China echoed a subdued economic theme, with retail sales growing by just 1.3% year on year in what was the weakest reading since during the pandemic, while investment and lending numbers were also tepid, inevitably leading for calls of further stimulus from the authorities to revive growth meaningfully.
Domestic issues were also in focus in the UK, where a rise in unemployment to 5.1% in the three months to October should be the final piece of the jigsaw in ensuring that the Bank of England cuts interest rates on Thursday. The reluctance of businesses to invest, hire and plan for the immediate future was already evident leading up to the Budget, let alone in the aftermath, with a moribund economy now patently in need of some immediate stimulus.
The FTSE250 drifted lower at the open, but has still managed a gain of 6.7% so far this year. The FTSE100 was also bereft of any sustainable positive momentum after a stronger showing in the previous session.
The ongoing US tech weakness weighed on the likes of Polar Capital Technology Ord PCT
while a dip in the gold price led to rare losses for the likes of Endeavour Mining EDV2 and Fresnillo FRES. The premier index is also consolidating its strong gain of 19.2% so far this year, with a large exposure to the likes of the banks, miners and defence sectors having been major tailwinds.
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