The SNOWBALL will earn repeatable income this year of around £11,000 on invested capital of 100k, no new funds will be added to the SNOWBALL, only the income earned. The actual income figure will be higher as it includes some special dividends. Whilst no dividend is 100% secure, some dividends are more ‘secure’ than others.
Annuity
Option take out an annuity currently yielding 7% but you have to surrender your capital. A huge gamble as you are relying on a known unknown, interest rates at the time your retire.
Canada Life figures show the 65-year-old with a £100,000 pension pot could buy an annuity linked to the retail price index (RPI) that would generate a starting annual income of £3,896. That’s up from £2,195 in the New Year following a 77% spike in rates this year.
Oct 22
The 4% rule.
If interest rates are low at your retirement date you could use the 4% rule.
The SNOWBALL has a comparison share VWRP, where 100k of capital invested on the same date as the SNOWBALL is valued at £158,963. Not too shabby, so could be an option for the tax free part of your pension retirement plan. Not advice DYOR as buying near the end of a major bull run could be very expensive.
The equivalent income would be £6,358.00.
Let’s jump forward ten years to a retirement date.
The SNOWBALL will have income of 20k plus, the amount is predictable, the time scale may vary. Once you have achieved the income in your plan, you could re-invest your dividends into ‘safer’ Trusts, like Dividend Heroes especially when Mr. Market is helpful, or higher coupons Gilts where the income is risk free, if you hold to maturity. Or invest in REIT’s where the values fluctuate but the income is ‘secure’.
A pension of 20%.
To receive the same income using Rule4 VWRP’s value would have to be £500k. GL with that gamble.
If you invest for the long term, hopefully you will have one or two Trusts that you can withdraw your capital from, re-invest that capital in higher yielders, it may have to be ETF’s and continue to receive income from at a cost of zero, zilch, nothing.
Remember no dividend is completely ‘secure’ but some dividends are more secure than others. The more shares you own the bigger the risk of owning a clunker but that risk is even bigger if you own only a couple of shares.
The SNOWBALL aims to own around ten positions but as the SNOWBALL matures the number of positions could increase.
Managing your money in retirement comes with significant challenges, including the risk of overspending and running out of funds in old age. Cost-of-living pressures have only made things more difficult in recent years.
A comfortable retirement now costs a single person £43,900 per year, according to figures from trade association Pensions UK. This has risen from £33,000 in 2019, before the pandemic sparked the highest level of inflation in a generation.
These figures do not include housing costs, so anyone still renting or paying a mortgage in retirement could face even higher outgoings.
With this in mind, it is unsurprising that one in five adults worry their pension won’t provide enough income in retirement, according to research from Nottingham Building Society. This rises to more than one in four among over-60s (28%).
Some use their pension savings to buy an annuity, giving them a guaranteed income for life (depending on the product you buy). However, the amount you qualify for depends on the size of your pension pot.
Others opt for pension drawdown in the hope it will give them better value for money – but the risk is that they could outlive their savings.
“If you aren’t sure how to go about this, it’s worth considering employing a regulated financial adviser to help you navigate what can be complex choices.”
The lottery effect – overspending early on in retirement
Poor financial planning can create problems for those who opt for drawdown, with some retirees overspending early on in retirement and leaving themselves short towards the end – a time when outgoings can shoot up thanks to care costs.
Last year, a study by Legal & General (L&G) found that some retirees were at risk of emptying their pension pot a decade early, after taking large cash lump sums and withdrawing too much in monthly income.
Savers generally expect their pension pot to last 22 years from age 60, according to L&G’s analysis, taking them to around 82. But for those who may not have other sources of income, such as property wealth or a defined benefit pension, it typically runs out by age 77. Both fall short of the average life expectancy, which is 86 for those who are currently age 60.
“For most people, their pension pot is the largest sum of money they’ll have access to, and after decades of hard work and saving, it’s natural to view it as a well-deserved reward,” said Katharine Photiou, managing director of workplace savings at L&G.
“However, our research shows the sudden financial freedom can trigger ‘The Lottery Effect’ for some savers, which can lead to unsustainable spending.”
Golden rules to avoid retirement shortfall
1. Make a plan before taking your tax-free cash
Once you turn 55, you can access your pension and are entitled to take 25% of your savings as tax-free cash. Some rush to withdraw this straightaway as one lump sum, but that can be a mistake.
When you withdraw money from your pension, you take it out of a tax-efficient environment and move it into one where a tax bill may be generated – for example on savings interest, or dividends and capital gains if you decide to reinvest the money
Withdrawing your tax-free cash and sticking it in a savings account also means you miss out on the potential for future investment growth.
It is better to have a plan for what you are going to do with the money. Some use it to pay off their mortgage, for example, so they can retire debt-free. Everyone’s personal circumstances are different, so it is worth seeking financial guidance or advice.
Remember: you don’t need to take all of your tax-free cash in one go. You can take it in instalments if you prefer. This means the money remains invested for longer and can hopefully continue to grow.
2. Build up your emergency savings
Everyone should have an emergency savings pot to cover unforeseen costs. Those who are working should have enough to cover one-to-three months’ worth of essential expenses, but this rises to one-to-three years among retirees. It is generally advisable to keep this in an easy-access account.
If you haven’t got enough in emergency cash savings as you head into retirement, should you use your pension tax-free cash to top it up? Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown, says it depends on your circumstances.
She told MoneyWeek: “If someone is in drawdown and needs a buffer to help them maintain income during periods of market volatility, then they could look at having 1-3 years’ worth of emergency savings.”
If they also have income from an annuity or a defined benefit pension, they might be able to keep less in their emergency cash reserve, leaving more invested in their pension.
“The decision to take tax-free cash to top up emergency funds will also depend on wider issues such as access to other assets, size of estate given the upcoming inclusion of pensions as part of people’s estate for inheritance tax, as well as wider planning issues,” Morrissey said. “If in doubt, people should seek financial advice.”
3. Think about how much income you need
A cash management strategy is important. How much income do you need to live on, and is your pension pot big enough to sustain you for as long as you might live? Some people adopt the 4% pension rule – a guideline that can be used to help you draw a sustainable retirement income for around 30 years.
This rule suggests you can withdraw 4% of your pension in your first year of retirement. In all subsequent years, you can withdraw the same amount but adjust for inflation. If you had a £500,000 pension, this would mean taking £20,000 in the first year. If inflation was around 2%, you would then take £20,400 out the second year, £20,808 out the third year, and so on.
There are pros and cons to the rule, as we explore in a separate piece. If you are in a position to seek tailored financial advice, that is usually the best approach, as a financial adviser will be able to help with cash-flow modelling.
4. Consider combining drawdown with an annuity
Pension drawdown is a more popular option than buying an annuity, based on FCA data. While the idea of guaranteed income is appealing, many dislike the idea that an insurer will profit from their life’s savings if they die shortly after purchasing the annuity contract. Meanwhile, your loved ones can inherit any unused pension savings.
That said, annuity rates currently look attractive and can give you peace of mind, offering guaranteed income until you die. Recent data from Hargreaves Lansdown’s annuity search engine shows a 65-year-old with a £100,000 pension can get up to £7,793 per year from a single-life level annuity with a five-year guarantee.
Savers don’t need to choose between the two approaches. A combination of the two can be a good strategy. “This mix and match approach means you can secure the income you absolutely need from an annuity, and also keep some invested for growth in a drawdown plan which provides a more variable, flexible income,” said Laith Khalaf, head of investment analysis at AJ Bell.
Investment trusts with wide discounts can use tenders and buybacks to close the gap. But these aren’t a sustainable solution and don’t produce the best outcome for investors.
By Cris Sholto Heaton
(Image credit: Getty Images)
Many investment trusts have become very rattled by the threat of activist investors and are concerned about reducing their discount to net asset value (NAV). This is mostly good: some boards had become too dozy about putting the interests of their investors first and more attention to structural discounts was overdue.
Still, it is also clear that many investment trust boards are convincing themselves that regular share buybacks and tender offers (an offer to buy shareholders’ shares) are the best way to keep discounts down. As a shareholder in a number of investment trusts, I am far from convinced that this always produces the best outcome for investors like me.
The rules for investment trusts with wide discounts
Wide discounts can reflect a range of factors, including poor performance, doubts about the reported NAV, being in a sector that’s out of favour, or the investment trust being too small and/or illiquid. Tenders and buybacks can do nothing for the first three: if the problem persists, you may need to change manager, change strategy, find ways to prove the NAV, or just wait for your market to become popular again.
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Meanwhile, the fourth scenario is why too many buybacks and tenders can even be actively harmful. They shrink the size of the fund, which will make it less attractive to many investors. Even an investment trust that starts at a healthy size can shrink itself into irrelevance if it gets hooked on buybacks and tenders in a vain attempt to control a discount driven by other factors. Consider Bellevue Healthcare (now CT Healthcare), which peaked at around £1 billion in 2021, but had dwindled to under £300 million by 2025, without really reducing the discount.
Who benefits the most from buybacks and tenders?
The other question is who benefits most from buybacks and tenders. Buybacks are at least accretive to remaining shareholders if the price is genuinely below net asset value. Still, I am cautious about trusts that decide to sell illiquid assets in weak markets to fund buybacks, because they may be selling the best assets and leaving the fund with the junk that is less likely to be worth its carrying value.
Since tenders typically happen near NAV, they are not directly accretive. True, long-term investors could take up each tender offer to the limit allowed, take the proceeds, and use them to buy shares more cheaply in the open market again – but many won’t. So the beneficiaries here are often influential shareholders – activists or institutions – who want a chance to exit at a preferential price. If the discount does not then shrink and the trust becomes smaller and less viable, long-term holders have been left worse off by the whole process.
This does not mean that tenders and buybacks are always bad – but they need to be structured in a way that limits these disadvantages. A large exit opportunity every five years, perhaps triggered only if the fund underperforms, is fairer to all investors – not just those who want to cash out – than constantly shrinking the assets.
The written plan for the SNOWBALL was to buy Investment Trusts that yielded 5% or above.
Mr. Market has been very benevolent and the plan has been increased to a base of 7% or above. This means the Snowball will achieve its ten year plan early.
I’ve therefore increased this year’s fcast to £11,200 and the target to £12,000.
The target includes some special dividends and all though it’s likely there will be more special dividends in the financial year 2027, these are not a given.
Current income for the SNOWBALL
Dividends to date £4,548. Fcast dividends for first the six months £7,681 and the fcast figure for the year £13,400.
The figure of 12k is very important as that means income of 1k a month for re-investment.
The fcast for 2027 has been raised to £12,000 and the target £12,869.
If the fcast and the target is met it will mean the ten year plan has been achieved ahead of the plan.
A question I get asked a lot. Are you sure of the supply ?
Whilst when I predict the future I am often wrong, I expect that there will be a lot of consolidation in the Renewables sector so the next ten year plan could include some pair trading, investing in some higher yielding ETF’s balanced out with some safer lower yielding Investment Trusts, such as CMPI and the Dividend Hero Trusts.
A plan without an end destination, whilst better than no plan is still a bad plan as your retirement income depends on the end destination.
My friend the choice is yours. GL
A history lesson.
Canada Life figures show the 65-year-old with a £100,000 pension pot could buy an annuity linked to the retail price index (RPI) that would generate a starting annual income of £3,896. That’s up from £2,195 in the New Year following a 77% spike in rates this year. Oct 22
Finally another popular question is selecting high income funds and we can use ETFs as an example. I would typically apply my other usual criteria on cost, currency and size but there are some other things to think about in this case. If we filter based on minimum 12 month yield the problem is this selects funds where the price has crashed recently. Dividend yield is income divided by price so a suddenly much smaller price can result in huge yields. This means looking at recent return for the fund over the last 3 months, say, can be helpful. By choosing funds where the 3 month return is above a threshold you can omit these funds. I find volatility helpful here too because a fund that generates more yield (income) for the same amount of risk (volatility) is preferable. In ShareScope this is “Deviation of Returns” and I usually choose a period covering the last year measured with a daily sample frequency. If you filter by latest Close date being recent (last week or so) you can also ensure that this is not a fund that is not priced regularly and that the fund hasn’t been closed down.
AEW UK REIT PLC ex-dividend date BioPharma Credit PLC ex-dividend date CQS Natural Resources Growth & Income PLC ex-dividend date CQS New City High Yield Fund Ltd ex-dividend date Custodian Property Income REIT PLC ex-dividend date Diverse Income Trust PLC ex-dividend date Edinburgh Investment Trust PLC ex-dividend date European Smaller Cos Trust PLC ex-dividend date Global Opportunities Trust PLC ex-dividend date Henderson Far East Income Ltd ex-dividend date M&G Credit Income Investment Trust PLC ex-dividend date Sequoia Economic Infrastructure Income Fund Ltd ex-dividend date
GCP Infra is pleased to announce a dividend of 1.75 pence per ordinary share for the period from 1 January 2026 to 31 March 2026. This is in line with the Company’s annual dividend target of 7.00 pence per ordinary share. The dividend will be paid on 8 June 2026 to holders of ordinary shares recorded on the register as at the close of business on 8 May 2026.
Expected timetable:
Shares quoted ex-dividend
7 May 2026
Record date for dividend
8 May 2026
Dividend payment date
8 June 2026
Market Update
The Company notes the recent UK Government announcements relating to: (i) the removal of carbon price support (“CPS”) from 2028; and (ii) the increase to the tax rate on the electricity generator levy (“EGL”) from 45% to 55%; and (iii) the intention to introduce the option for low carbon generators that do not benefit from an existing contract-for-difference (“CfD”) to bid for a wholesale CfD (“WCfD”) (the “Announcements”).
The Company does not expect any material impact on the valuation of the Company’s investment portfolio as a result of the Announcements. The Company’s independent electricity price forecaster had, in their long-term forecasts, already assumed the phasing out of the CPS alongside the increased alignment of the UK and European Union carbon markets. Further, such electricity price forecasts are below the level at which the EGL applies. The Company and its Investment Adviser will continue to review proposals relating to the WCfD as they are developed to assess the extent to which the WCfD would benefit any projects in its investment portfolio.
Net Asset Value, Dividend and Government Policy Announcements
Net Asset Value
Net Asset Value / Net Asset Value per share
£2,897 million / 134.2 pence
Dividend / Dividend per share
£57.9 million / 2.68 pence
The Company announces that its unaudited Net Asset Value (“NAV”) as of 31 March 2026 is £2,897 million (134.2 pence per share), including a 2.1 pence per share reduction as a result of a post period adjustment for the removal of Carbon Price Support from April 2028.
The performance of the Company’s assets for the quarter was strong, with wind generation 4.2 per cent above budget, and power prices ahead of expectations. Continued delivery of the Company’s structurally robust cashflow will fund its 2026 capital allocation priorities and, in line with its initial priority of reducing gearing, the Company repaid £30 million of its Revolving Credit Facility at the end of March 2026.
The past two months have presented a compelling opportunity to enter into power price hedging arrangements for a portion of the Company’s merchant volume. At the start of 2026, the Company had merchant power exposure of 4.5TWh pa. Over the past quarter, the Company entered into hedges for 1TWh of power sales through to March 2027. As a result, for the next 12 months, 68 per cent of the Company’s cashflows are fixed in nature.
These hedges have secured power prices at NAV accretive rates, and together with above budget generation, serve to further underpin full year dividend cover expectations, whilst retaining a balanced exposure to merchant power prices in the near term.
Dividend
The Company also announces a quarterly interim dividend of 2.68 pence per share with respect to the quarter ended 31 March 2026, in line with the annual dividend target of 10.70 pence per share for 2026.
Dividend Timetable
Ex-dividend date 14 May 2026
Record date 15 May 2026
Payment date 29 May 2026
Government Policy Announcements
Last week the Government released a number of UK energy policy statements, including changes to the Electricity Generator Levy (“EGL”), the introduction of Wholesale Contracts for Differences (“Wholesale CFDs”) for operational renewable energy projects and its Reformed National Pricing Delivery Plan.
EGL
The EGL was introduced in January 2023 and applies a 45 per cent tax to exceptional revenues from the sale of power. The electricity price above which the tax applies currently stands at £82.61 / MWh. The rate of tax has now been increased to 55 per cent with effect from 1 July 2026 and the tenor of the EGL, which was due to expire on 1 April 2028, will be extended.
In 2023, the Company (and its group) paid £14 million of EGL in respect of elevated power revenues received in 2023. At today’s forecast power prices, the net power price that the Company expects to receive for all future forecast periods is lower than the threshold.
Wholesale CfDs
The Company, and Schroders Greencoat LLP the (“Manager”), have for some time advocated for the introduction of a Wholesale CfD mechanism. It has the potential to address the long-term challenge of how the wholesale electricity market functions as low marginal cost generators become the majority. It could provide both meaningful savings to consumers and attractive, inflation-linked cashflows conducive to sustained investment in UK renewables.
The Company and the Manager will continue to engage with the Government to ensure a balanced outcome for both consumers and generators. The Manager’s view is that, if implemented carefully, this mechanism could be a constructive option to use in composing the Company’s revenue profile. The Company will judge how it will participate in the mechanism as conversations with the Government progress and further detail is provided.
Reformed National Pricing Delivery Plan
Following the Government’s decision to retain a single wholesale electricity market, the Reformed National Pricing Delivery Plan (the “Plan”) sets out how the Government plans to approach electricity market reform. It includes proposals to reduce constraint costs, improve system operability and solicits views on reforms that could sharpen locational investment signals. In considering forward-looking reforms, the Plan recognises the need to not undermine confidence in the sector. The Company will continue to engage with the Government through the consultations that follow, in particular to preserve existing investments and investor confidence.
