The Company also expects in the coming weeks to issue a further circular providing details of the expected initial capital return, which is proposed to be carried out by way of an issue and redemption of bonus shares to all shareholders (the “B Share Scheme“), including a summary of the UK taxation consequences for shareholders. The circular will convene a general meeting to seek the further shareholder approvals required to be granted for the implementation of the B Share Scheme. Subject to these further shareholder approvals being granted and the required Court approvals being received, it is expected that the initial return of capital will be implemented around the end of June 2024.
Many people dream of building substantial wealth over the long term. From paying school fees to buying a dream home, it could help.
Why I’d snap up bargain UK shares to try and build wealth
Many people dream of building substantial wealth over the long term. From paying school fees to buying a dream home, it could help!
But finding a way to make that aspiration come true can be challenging. I think buying bargain UK shares could potentially be what I am looking for.
How shares can build wealth. There are two key ways in which owning shares could help me build wealth. One is an increase in the share price and the other is receiving dividends.
Neither is guaranteed though. Indeed, the share price may fall. So selecting the right shares is critical to long-term success in investing.
Finding the right shares to buy So how would I try to do that? If I was to summarise in a single word the thing I would most look for when hunting for UK shares to buy for my ISA, it would be value. Value does not necessarily mean a low share price, though it can. Rather, it means paying less for something than it is worth.
Ideally, I would be paying substantially less than it is worth, as that would increase what Warren Buffett refers to as a margin of safety.
But when looking for value, I would also be keeping an eye out for enduring quality. So my focus would be on finding companies with a competitive advantage (or multiple advantages) within an industry I expect to have strong customer demand for the long term.
One share I’m eyeing As an example, consider Unilever (LSE: ULVR). The company’s focus on everyday products like bleach and washing up liquid means that its potential market is huge and likely to remain that way. Indeed, every day, several billion consumers use a Unilever product.
By building a portfolio of premium brands like Cif, the company is able to differentiate its offer from rivals and so charge a price premium. That means the company is able to earn sizeable profits that can be used to fund its quarterly dividend.
Despite that, this UK share has fallen 8% over the past five years.
I do see risks, such as inflation pushing up the cost of everything from chemical ingredients to packaging materials. That could hurt the company’s profit margins.
Over the long run though, I think Unilever is the sort of UK share that might help me build wealth, through a combination of potential price gain and also dividends.
Bargain-hunting But while I am eyeing Unilever, for now at least I do not own it. Its price-to-earnings ratio of 19 strikes me as reasonable, but not exactly a bargain.
Like Buffett, rather than investing in lots of companies I think look somewhat attractively priced, I would ideally prefer to wait for what I see as screaming bargains to come along.
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How I’d turn £100 a month into a lifetime of passive income Story by Charlie Keough
Building streams of passive income is a goal for many and making extra funds outside of my main source of income will provide me with an extra layer of financial security.
I don’t need an abundance of money to start doing this. With just £100 a month, here’s what I’d do
Choosing the best
I’d put my money to work in the stock market. Some savings accounts may offer relatively attractive returns at the moment. However, with my money sitting in the bank, I’m missing out on the growth opportunities that the market provides.
More specifically, I think the FTSE 100 is a strong entry point. Many of its constituents are household names whose products are used every day. And as Warren Buffett says, it’s best to invest in companies we understand.
On top of that, the Footsie provides some of the best passive income opportunities. After all, its average dividend yield is around 4%. For comparison, the S&P 500’s is under half of that.
Within the index, I’d look for companies that have a track record of providing stable growth. While past performance is no indication of future returns, this will offer me greater confidence that the companies I invest in will be able to withstand any economic downturn, such as what we are seeing right now.
I must also do my due diligence. For example, I’d be looking at the financial health of companies, more specifically their balance sheets. A firm with high levels of debt may be at risk should it come under financial pressure. What’s more, with interest rates amplified, and predictions the UK base rate won’t decrease to 2%-3% until the tail end of next year, debt will be more expensive to finance.
I’d also look for businesses that have a history of returning value to shareholders, such as Dividend Aristocrats. These are companies that have paid and increased payouts to shareholders for a prolonged period.
How much can I make?
£100 a month is equivalent to £25 a week. And by cutting back my spending, for example, by a coffee every day, I could more than easily afford this.
With an average annual return of 8%, £100 a month after 30 years would equate to a portfolio worth around £125,000. At a 4% dividend rate, I’d be earning just over £9,500 a year in passive income by year 30.
Of course, I’m aware these returns aren’t guaranteed. The stock market is volatile and historical performance may not repeat itself. Nevertheless, nearly 10 grand a year in passive income is not to be sniffed at, even with the impact of inflation. And this additional money could pave the way to a more comfortable retirement.
The post How I’d turn £100 a month into a lifetime of passive income appeared first on The Motley Fool UK.
U decided u wanted to buy a Dividend Hero Trust and u would have bought the yield as without good ole hindsight u wouldn’t know if the price was going to keep falling after u bought.
A belt and braces buy, the yield plus a better than average chance of making a capital gain. Of course it’s doubtful u would have a lump sum of money waiting to be invested, unless u had a stop gain policy.
By sitting u have doubled your money and now have multi options to continue to grow your Snowball. The current yield is 4.85%, so u could take out your stake or sell all. I’m not authorised to give buy or sell advice, so different strokes for different folks.
Let’s assume u invested 10k and simply re-invested the earned dividends, your shares are now worth £23,800.00.
U could re-invest 10k into a near year government gilt, which should provide income and be near the value u paid if/when the next market crash occurs. The other £13,800 could be re-invested in a Trust yielding 9%, there are better yields on offer but a higher yield is accompanied by a higher risk. As this is now all profit u may want to take on more risk, especially if u are still in the early accumulation phase. This would give u a blended yield of 7% and a cash sum to invest if/when Mr. Market gives u the opportunity. The yield on your initial investment is now 16.66%, so your Snowball should start to grow quicker.
Or u could re-invest in 2 new Trusts with a blended yield of 8%, income of £1,904, a yield of 19%, on your initial investment.
Although history doesn’t always repeat, it often rhymes, everything crossed for the next market crash.
I invest in dividend shares because they give me a healthy second income. I use this cash to buy more stocks, compounding any gains.
When I come to retire, the same high-yielding shares should give me some additional income to supplement my pension.
Ground zero
If I started my investing journey again, I’d give myself 30 years to build a portfolio of stocks. Assuming a retirement age of 65, I wouldn’t have to start until my mid-thirties. Beginning earlier would be better but I know this isn’t always possible.
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 most that can be invested in an ISA in any one tax year is £20,000. I’m therefore going to assume that this amount is available to kick-start my portfolio.
Picking winners
There are no hard and fast rules when deciding on the number of Footsie stocks to buy. Initially, I’d divide my lump sum between five.
Generally speaking, the more individual positions that are held the more likely it is that a portfolio will replicate the performance of the index as a whole.
The average yield of the FTSE 100 is expected to be 3.8% in 2024.
If this continued for 30 years — and I reinvested all of the dividends received — my hypothetical £20,000 would turn into £61,228. This ignores any capital growth that I might achieve.
Unfortunately, dividends are never guaranteed. And share prices can move up and down. But history tells me that, over the long term, the stock market should do better than cash savings.
Better than average
Although a yield of 3.8% is attractive, I think I could do better. The average of the top five FTSE 100 shares is currently 9.3%.
One of these is Legal & General (LSE:LGEN).
The financial services provider is hoping to acquire £8bn-£10bn of new pension schemes each year. As well as earning a fee based on the amount transferred, it invests the assets hoping to achieve a return higher than what it needs to pay in pensions.
Encouragingly, the company has increased its dividend in 13 of the past 14 years.
Source: Legal & General annual reports Provided by The Motley Fool
Also, analysts are expecting earnings per share of £24.66 in 2024. This implies a forward price-to-earnings ratio of 10, which is below the Footsie average.
However, despite these risks, I recently added the stock to my portfolio. I think it has the balance sheet strength and growth opportunities that should enable it to continue paying a generous dividend.
If I could achieve a 9.3% return on an initial lump sum of £20,000, after 30 years I’d have £288,161.
I could then draw down some of this each year. Alternatively, I could take the annual income of £26,799 and spend it on things other than shares.
A £1,000 passive income just from buying shares? Yes, it’s possible.
Story by Christopher Ruane
Warren Buffett at a Berkshire Hathaway AGM
Capital requirement
First, the need for money. Very few passive income ideas require zero cash at all. But some are more capital-intensive than others.
Imagine I want to make a £1,000 passive income annually and invest in shares with
As an example, if I invested only £5,000 now and compounded the 7% dividends annually, after 16 years I ought to be earning £1,000 each year in passive income.
Finding income shares to buy
What about one of the other challenges? Finding shares that will hopefully not lose value and also generate dividends?
The short answer is, there are no guarantees in the stock market.
Even a great company can run into unforeseeable difficulties. That is why seasoned investors like Buffett spread their portfolios over a range of different shares – and I would do the same, even with a modest amount to invest.
Different passive income ideas have their own pros and cons. Take buying shares as an example. It is an idea that gets bandied around a fair bit – and some people have built huge passive incomes doing it. Indeed, some leading billionaires generate a sizeable part of their income from shares.
But share prices can fall, meaning that overall one makes a loss even after considering the dividend income. Dividends are never guaranteed. On top of that, it takes money to make money – buying shares is not free, after all.
Here are some of the things I like and dislike about owning shares as a way to earn passive income.
Capital requirement First, the need for money. Very few passive income ideas require zero cash at all. But some are more capital-intensive than others. Imagine I want to make a £1,000 passive income annually and invest in shares with an average dividend yield of 7%. To hit my target, I would need to invest around £14,300.
I could drip feed money into a share-dealing account or Stocks and Shares ISA over time. So while I may not hit my £1,000 passive income target in year one, I could achieve it down the line.
Another option is I could start to earn dividends on my dividends. This is known as compounding and is a well-known approach of billionaire investors such as Warren Buffett. He compares it to pushing a snowball downhill so the snow starts to pick up snow, increasing the size.
As an example, if I invested only £5,000 now and compounded the 7% dividends annually, after 16 years I ought to be earning £1,000 each year in passive income.
Finding income shares to buy What about one of the other challenges? Finding shares that will hopefully not lose value and also generate dividends?
The short answer is, there are no guarantees in the stock market.
Even a great company can run into unforeseeable difficulties. That is why seasoned investors like Buffett spread their portfolios over a range of different shares – and I would do the same, even with a modest amount to invest.
The number of investment companies trading at a 52-week high has fallen for the fifth week in a row. With just eight funds making it into the latest Discount Watch.
ByFrank Buhagiar•07 May
We estimate there to be eight investment companies which saw their discounts hit 52-week highs over the course of the week ended Friday 03 May 2024 – two less than the previous week’s 10.
The number of 52-week high discounters has now fallen for five weeks in a row. Just eight funds make it on to the list this time round compared to 10 previously.
What’s behind the ever-diminishing list of names, particularly as a high degree of uncertainty remains over the timing and depth of any interest rate cuts this year? Could it be that investment company discounts are seasonal?
For the last two years, the weekly number of 52-week high discounters has followed a very similar pattern. Only two years of data, true, but could there be something that causes a significant drop off in year-high discounters around end of March/beginning of April? Well, there just might be.
Hipgnoisis Songs continues to play a merry tune and Gresham House Energy Storage keep the party going. Both find themselves occupying the top spots on Winterflood’s list of monthly movers in the investment company space. Which other funds are performing well and what’s the update on Scottish Mortgage?
ByFrank Buhagiar•07 May
The Top Five Hipgnosis Songs (SONG) still holding onto top spot on Winterflood’s list of monthly movers in the investment company space. The shares’ +54.3% gain on the month, a little below the previous week’s +67.1%_ but still comfortably ahead of the rest of the pack. Week ended Friday 26 April 2024, Concord Chorus’ announcement that it had upped its cash offer to US$1.25 a share stole the headlines. Just days later on 29 April and Blackstone Europe trumped Chorus with a US$1.3 (104p) bid of its own. What will Concord do next?
Gresham House Energy Storage (GRID) held onto second place as the shares extended their monthly gain to +34.7% compared to +22.5% previously. Shares still benefiting from a flurry of positive updates, including one on 24 April which highlighted a meaningful improvement in revenues. GRID clearly on a run in terms of press releases – the full-year results were subsequently put out on 29 April. Be interesting to see if the company has another update up its sleeve for the week ahead.
Seraphim Space (SSIT) jumps one place to third and at the same time increases its monthly gain to +24.2% from +16.3%. The space investor followed up its well-received sale of early-stage portfolio companies announcement on 22 April 2024 with its regular monthly newsletter. Enough in there to keep the momentum going it seems.
Regional REIT (RGL) still in the top five but drops from third to fourth and that’s despite increasing its gain on the month to +24.2% from +20.5%. Last week, Weekly Gainers highlighted how RGL was in need of a positive trading update of its own to stay in Winterflood’s top five. Lo and behold, the office landlord announced a positive letting update on 1 May.
Schiehallion (MNTN) completes the top five with a +19.1% monthly gain. The growth capital investor has been something of a regular on the Winterflood list this year. That’s largely down to its ongoing share buyback programme. Right on cue, the fund announced another share repurchase on 30 April.
Scottish Mortgage Scottish Mortgage’s (SMT) share price made up lost ground over the course of the week ended Friday 03 May 2024 – shares finished the week up +0.5% on the month, having been down -5.7% previously. NAV followed suit – up +0.3% compared to -3.8%. As did the wider global investment trust sector which ended the week up +1.1%, seven days earlier it had been off -1.4%. The combination of the Nasdaq rising during the week and SMT’s ongoing share buyback programme, enough to push the shares into positive territory for the month.
