RM Infrastructure Income Plc

(“RMII” or the “Company”)

Dividend Declaration

The Directors of the Company, an investment trust specialising in secured debt investments, have declared an interim dividend of 1.625 pence per ordinary share in respect of the period from 1 January 2024 to 31 March 2024:

Ex-Dividend Date – 6 June 2024

Record Date – 7 June 2024

Payment Date – 28 June 20

I’d aim for an annual second income of £34k with high-yield dividend stocks

I’m looking for the best way to start earning a second income with very little effort. Is it by investing a large sum into high-yield dividend stocks ?

Mark David Hartley

Published 30 May

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

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

There are several strategies when it comes to investing for a second income. Some aim for slow-but-reliable gains over a long period. Others aim for high returns from undervalued shares with growth potential.

I think buying stocks with high yields and reinvesting the dividends to compound the returns is a good strategy. But while some of the highest yields go up to 15% or more, they aren’t necessarily reliable. It’s best to choose stocks with a long track record of making payments and increasing the yield.

A good example is Greencoat UK Wind  (LSE:UKW) , a FTSE 250 real estate investment trust (REIT) that invests in the renewable energy sector.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Harnessing the power of wind

Greencoat UK Wind specialises in onshore and offshore wind farms. With renewable energy on track to reach a goal of triple capacity by 2030, demand for wind power should remain high. The company’s assets already supply 10Mw of power to UK homes and last month it signed a new 10-year Power Purchase Agreement (PPA) for its Ballybane Phase 1 wind farm.

With a 7.5% dividend yield, it’s double the FTSE 250 average yield of 3.23%. It’s been paying a dividend consistently for over 10 years, during which time it has mostly been between 5% and 6%. However, the share price of £1.35 hasn’t changed much in five years, other than a brief increase during 2022. But that wouldn’t concern me much. It’s fairly common of income shares, which focus on providing returns via dividends

While the trust’s dividends are steady and reliable, earnings and revenue are in decline. Projections indicate it could become unprofitable next year. With increased investment pushing up the share price, its price-to-earnings (P/E) ratio is now at 25 times. That’s a lot higher than the industry average of 16.8.

This also means earnings per share (EPS) has decreased to 5.5p — well below the current 13.7p dividend. As a result, the yield might be reduced later this year or next. However, based on the prior 10-year track record, payments should remain consistent.

The bottom line

Greencoat UK Wind has a solid balance sheet that seems stable enough to handle a period of losses. It’s debt of £1.8bn is well-covered by equity and assets significantly outweigh liabilities. Its debt-to-equity (D/E) ratio is 47% and interest coverage is 3.1 times.

With strong industry growth and an exceptional track record, I believe the trust will continue to pay reliable dividends for the indefinite future. And I’m not alone. On 22 May, Barclays put in an overweight position for the stock, indicating it believes the stock will outperform its sector average over the next eight to 12 months. 

As such, I think it would make a great additional to a dividend portfolio aimed at building a second income stream. If I invested £20,000 into a portfolio with an average yield of 7% and a 2% annual price increase, it could grow to near £400,000 in 30 years. It’s not guaranteed, but that amount would pay out a second income £34,500 in dividends per year.

I’m using this strategy to generate a second income stream for a comfortable retirement

With only £100 a month, this Fool UK contributor is aiming to secure a comfortable retirement with a second income stream.

Mark David Hartley

MotleyFool

Published 1 December, 2023

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

With as little as £100 a month, I plan to capitalise on the compounding interest of an ISA to secure a second income stream for my future.

While a pension scheme is the most common hands-off way to save for retirement, it does come with some pitfalls. Should I wish to retire early, I’d have to pay a fee for early withdrawal. It’s also not uncommon for governments to increase the age to claim state pension. With that in mind, I think it’s a good idea to have a second income plan that ensures I can access my money if and when I need it.

I think the best way to do this is through a Stocks and Shares ISA.

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over ?

Or you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Currently, I can invest £20,000 a year into a tax-free  Stocks and Shares ISA, if I stay below this amount I won’t pay any tax on interest, capital gains, or dividends. This enables me to harness my ISA as a means to cultivate income, such as through dividend payments, with the added advantage of tax-free withdrawals for the entirety of my life.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

The beauty of compounding interest

With some carefully selected shares, I’m aiming for 10% annual returns. This may seem unremarkable at first, with the initial £100 monthly investment yielding a modest £174 profit after the first year. However, after 10 years, this will have grown to around £20,000, and after 30 years compounding interest will have secured me approximately £200,000 in savings. (These are only projections and could change significantly based on inflation rates and market volatility.)

If I can maintain my goal of 10% returns, my £200,000 nest egg should now be accruing interest of £20,000 a year on average. Even if I stop making monthly contributions at this point, it should increase to around £30,000 a year after another five years. At this point, I could potentially live off the interest alone without even having to rely on my pension. However, on top of my pension, this interest would equate to a sizeable amount of disposable cash for a comfortable retirement.

In 2044, the UK retirement age for state pension is set to increase to 68, so I think there’s still lots of time to capitalise on this strategy — even for those in their mid-to-late 30s.

Admittedly, such a long time frame lacks the excitement of making quick money off growth stocks. But for only £100 a month, I can still afford to make short-term investments in the stock market with some additional cash, if I so wish.

I’m aware that while my 10% return target aligns closely with historical averages, inherent risks such as poor investing or economic stagnation could make this goal challenging. But with my pension as a backup, I see this as a low-risk strategy to potentially secure a very comfortable retirement.

££££££££££££

Whilst achieving a yield of 10% on dividends, at the time of this post, is achievable but is at the high end of a risk plan.

The same 10% could be achieved buy adopting a lower risk plan (owning shares will always has risk attached to them) and re-investing the earned dividends to increase the yield on your portfolio. It will take longer but could be safer.

Different strokes for different folks.

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Dr Martens declared a final dividend of 0.99p, taking the total dividend to 2.55p, down from 5.84p. It said it plans to pay the same again in financial 2025 before returning to its normal dividend policy of 25% to 35% of earnings from financial 2026 onwards.

Expected dividends for the next three months are £2,251.00 which would achieve the 2024 target of 9k.

There is always the chance for a dividend to be reduced but for balance most dividends are gently increasing and there will be some extra cash as dividends are re-invested, with the full benefit in the calendar year 2025.

Income of £9,175.00 is the plans target for the year ending 2027 which means the Snowball would be on target for a yield at the end of the ten year period of 16%.

A lot of water to flow under a lot of bridges before then, so stick to your plan until it sticks to u.

Accumulation portfolio

By Christopher Ruane

Investing like Buffett
By following this simple approach of using my earnings from investments to buy more shares, I hope I can accelerate the long-term process of building wealth.

That could involve a combination of compounding dividends and putting any capital gains I earn in my Stocks and Shares ISA back into buying more shares.

The post Warren Buffett got rich doing this appeared first on The Motley Fool UK.

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I’ve bought for the snowball another 1157 shares in JLEN for 1k.

Another £90 of income p.a. added for re-investment.