Category: Uncategorized (Page 238 of 369)

Have environmental and renewable energy investment companies just been given the green light?

Following the Bank of England’s decision to cut interest rates for the first time since March 2020 and Labour’s landslide victory in the UK General Election could the stars be aligning for London’s environmental and renewable energy investment companies?

Have environmental and renewable energy investment companies just been given the green light?
Following the Bank of England’s decision to cut interest rates for the first time since March 2020 and Labour’s landslide victory in the UK General Election could the stars be aligning for London’s environmental and renewable energy investment companies?

By
Frank Buhagiar
07 Aug, 2024

It’s been a tough few years for those London-listed investment companies that have a somewhat green hue. Whether heralding from the Association of Investment Companies’ (AIC) three-fund environmental sector or the 20+ funds in the renewable energy space, all have seen their share prices regularly trade at stubbornly high discounts to net asset value. As recently as 30 June 2024, the average discount in the renewable energy subsector stood at -24.6%. The three environmental funds’ average discount was around half that level, but was still in double digits.

Hard to square those steep discounts with the scale of the global environmental emergency and the collective effort being made to tackle it. As the United Nations Sustainable Development Goal 13 states “To address climate change, we have to vastly raise our ambition at all levels. Much is happening around the world – investments in renewable energy have soared. But more needs to be done. The world must transform its energy, industry, transport, food, agriculture and forestry systems to ensure that we can limit global temperature rise to well below 2°C, maybe even 1.5°C.”

As the above paragraph from the UN suggests, action is being taken. In the US, the Inflation Reduction Act (IRA), which became law in August 2022, and the Bipartisan Infrastructure Law, which was enacted in November 2021, are helping to channel billions of federal dollars towards the development of clean energy. The numbers are eye-catching. Originally, estimated at US$391 billion over ten years, the cost of the IRA, including tax credits, loans and loan guarantees, is now forecast to exceed US$1 trillion. And according to Goldman Sachs, the IRA is already having an impact. “A total of 280 clean energy projects have been announced across 44 US states in the IRA’s first year, representing $282 billion of investment.”

Closer to home, the UK has set itself the target to reach net zero by 2050. The deployment of clean power generation clearly key here and 100% zero-carbon generation is being targeted by 2035. Step up all those renewable energy investment companies and their wind, solar, hydro, biomass and battery storage assets. Progress is being made. According to the National Grid, “2020 marked the first year in the UK’s history that electricity came predominantly from renewable energy, with 43% of our power coming from a mix of wind, solar, bioenergy and hydroelectric sources.” The National Grid goes on to add that in 2023 wind power accounted for 29.4% of the UK’s total electricity generation; biomass energy (the burning of renewable organic materials) contributed 5% to the renewable mix; solar power 4.9%; and hydropower, including tidal, 1.8%.

The UK has come a long way – renewables accounted for just 2% of all electrical generation in the UK as at end of 1991 and just 14.6% in 2013. But, as impressive as the above numbers are, there’s still clearly a way to go before zero-carbon generation hits 100%. Plenty of room for growth then for both renewable energy infrastructure companies and those funds, such as Impax Environmental (IEM) and Jupiter Green (JGC), that invest in clean energy and other environmental technologies and solutions.

And yet, the share prices of these funds continue to languish at discounts to net assets, thereby cutting off a vital source of funding, particularly for renewable funds. Indeed, unable to issue new shares to raise funds, renewable companies have had to adopt and announce capital allocation strategies. These are largely centred around reducing debt levels, returning capital to shareholders via buy backs, securing strategic partners and selling assets.

In black and white

The environment may well be a structural growth story underpinned by government backing and targets, but it is one that, based on prevailing discounts, has been largely shunned by investors in recent years. As for why this has been the case, over to the latest Annual Report from CT Global Managed Portfolio Trust (CMPI/CMPG), a fund which invests in other investment companies, including renewables, “A common theme amongst the underperformers in the Income Portfolio was widening share price discounts, much of which was the result of rising interest rates and importantly higher discount rates which are used to value future cash flows and assets for many alternative investment companies. The renewable energy infrastructure sector has been particularly affected”.

There it is in black and white – higher interest rates a major contributor to those wide discounts. As Jupiter Green’s Jon Wallace recently explained in an update recorded with doceo fund manager video update, “interest rates affect not just the rate at which a company will pay to finance itself but also ultimately the discount rate in the market place that’s applied to the long-term growth and structural growth for businesses.” Higher discount rates lead to lower valuations for the assets held by renewable funds and also for the growth stocks that environmental funds invest in.

But, if higher interest rates are to blame for the steep discounts, it follows that lower interest rates are key to an improvement in sentiment. CMPI/CMPG Chairman, David Warnock, agrees “Investors have been disappointed by the ‘higher for longer’ approach to combat sticky inflation. It may require actual cuts to be delivered for sentiment to improve”.

Welcome news

If that’s the case, then the 25-basis point cut in UK interest rates to 5% announced by the Bank of England on 01 August 2024, the first cut since March 2020, ought to be welcomed with open arms. And while the Governor of the Bank of England cautioned the market not to expect a flurry of further cuts in the coming months, he did nevertheless describe it as “an important moment in time”. Certainly, in the investment company space – a change in the direction of travel for interest rates should help narrow discounts and, eventually, reopen a much-needed source of funding.

That first cut in UK interest rates, not the only positive change for the environmental and renewables AIC sectors. So too, the more stable political backdrop in the UK, following the landslide victory for the Labour Party which, during the campaign, pledged to make Britain a clean energy superpower: “The climate and nature crisis is the greatest long-term global challenge that we face. The clean energy transition represents a huge opportunity to generate growth, tackle the cost-of-living crisis and make Britain energy independent once again. That is why clean energy by 2030 is Labour’s second mission.”

Back to Jon Wallace’s video update,

“Given the change in the UK Government and also the scale of the victory for the Labour administration, there is now an opportunity to add back some of the commitments around addressing climate change. In principle, that’s about decarbonising power systems. The commitment around onshore and offshore energy, in particular wind energy, is notably a positive for us.” As at 30 June 2024, Jupiter Green had 18% of its assets invested in clean energy. The election result is presumably a positive too for renewable energy companies such as Greencoat UK Wind (UKW) and The Renewables Infrastructure Group (TRIG).

On the up

Add the more favourable political backdrop and the first cut in UK interest rates to the global structural growth story that is the transition to net zero and the stars could well be aligning for London’s environmentally focused investment companies. And based on a recent narrowing in discounts, it would appear the market agrees. As the table below shows, current discounts in the environmental sector have bounced off their year highs (or lows depending on one’s perspective):

Fund

Current discount

52-week high discount

Impax Environmental (IEM)

-8.6%

-12.6%

Jupiter Green (JGC)

-18.0%

-33.4%

Menhaden Resource Efficiency (MHN)

-38.5%

-41.9%

Interestingly, all three funds’ discounts set their year-highs in May. Round about the time Rishi Sunak called the General Election, despite trailing heavily in the polls to Labour, and round about the time it was reported that inflation had fallen back to the Bank of England’s target rate of 2%, thereby opening up the possibility of a first rate cut. Market sensing change was in the air perhaps. It’s a similar story with the renewables sector. Earlier in the year when higher for longer was the prevailing interest-rate narrative, renewables regularly contributed the most names to Doceo’s Discount Watch List of funds trading at year-high discounts. For weeks now, no renewables have featured on the list.

So, it seems with share prices bouncing off the bottom and discounts narrowing, the environmental and renewables sectors may well have just been given the green light investors have been waiting for. And with discounts still on the steep side and with much work to do to put the world on a more sustainable path, there’s arguably a lot more to come from both sectors.

The Results Round-Up – The Week’s Investment Trust Results

Among this week’s results, Allianz Technology clocks up a +28% NAV total return in just six months; while Murray International is surprised at the strength of equity market returns; and The Renewables Infrastructure Group’s interims trigger a flurry of positive broker commentary.

ByFrank Buhagiar

Among this week’s results, Allianz Technology clocks up a +28% NAV total return in just six months; while Murray International is surprised at the strength of equity market returns; and The Renewables Infrastructure Group’s interims trigger a flurry of positive broker commentary.

Fidelity European (FEV) gearing up for a difficult environment
FEV’s+7.6% NAV total return for the half year beat the +7.1% posted by the FTSE World Europe (ex UK) Index. Share price total return fared even better, up +10.6%. Portfolio managers put the outperformance down to the positive effect of the fund’s gearing in a rising market. Having large holdings in ASML and Novo Nordisk also helped, allowing the fund to jump on the AI and anti-obesity bandwagons.

As for the outlook, the portfolio managers are cautious and see the stock market as being vulnerable if the outlook worsens and sentiment shifts to be more negative. What’s more, “Ageing populations, low productivity, high and growing levels of government debt, etc., will mean that growth is likely to remain anaemic.” Because of the uncertainty, “We will continue to focus on attractively valued companies with strong balance sheets that should be resilient, and able to grow dividends, even in a more difficult environment.” Numbers good for a 5p rise in the share price on the day of the results – shares closed at 384.5p.

Winterflood highlights “the attractiveness of FEV’s quality growth bias, which in our view provides it with defensive characteristics to withstand an uncertain macroeconomic environment.”

Numis: “This is our favoured fund among the Europe ex UK peer group”.

Rights and Issues (RIII) hunting for value
RIII Chairman, Andrew Hosty, described the UK small-cap fund’s half-year performance as “robust”. Easy to see why when NAV grew +13.2% and total shareholder return increased +15.8%, both outperforming the FTSE All-Share’s +7.4% total return. The outperformance can be traced back to “the work started eighteen months ago to thoughtfully diversify and modestly reduce concentration of the portfolio.”

According to the Investment Managers “the macroeconomic backdrop appears to be improving, with inflation under control and the potential for lower interest rates. This should create better conditions for equity investors. Clearly macroeconomic risks remain, however, we approach the remainder of the year with a degree of optimism and continue to look for attractively valued investment opportunities in our market.” Shares lost 30p on the day. Sounds worse than it is, as the shares are trading at the 2400p level. So, barely a 1% fall that was more than made up the following day.

Winterflood: “Outperformance driven by stock selection. As previously announced, at the end of the period RIII co-manager Dan Nickols, Head of Jupiter’s UK Small and Mid-Cap (SMID) equities team, retired. Co-manager Matt Cable will assume role of lead manager, ensuring continuity.”

European Assets (EAT), a leader in more ways than one
EAT’s+3.5% NAV total return over the half year period to 30 June 2024 beat the benchmark’s +3.1% with room to spare. That’s not the only way the fund is leading the pack – EAT offers a peer-group leading 7.0% dividend yield based on a 5.9 per share dividend and 84.4p closing share price as at 6 August 2024. Good start for new lead manager Mine Tezgul who took over the reins on 2 May 2024. What’s more, according to Chair, Stuart Paterson, “there are reasons to remain optimistic. Earnings have been resilient despite higher interest rates and, over the longer-term, share prices tend to follow earnings. Good companies continue to grow, and we see opportunities in the current market.” Share price barely moved on the day – market adopting the wait and see approach perhaps.

Winterflood: “Share price TR +0.1%, as discount widened from 8.8% to 11.8%. Technology-related names drove outperformance.”

Allianz Technology (ATT) outperforms
ATT posted a +28% NAV total return for the half year, outperforming the Dow Jones World Technology Index +27% in the process. The Portfolio Manager’s Report notes “The Company was a beneficiary of a number of tailwinds from exposure in key technology segments, including AI, cyber security, Internet of Things (IoT) and digital commerce, among others, and outpaced the benchmark due to stockpicking.” The outperformance is all the more impressive as the fund was underweight the mega-tech stocks “From a market capitalisation exposure perspective, our bottom-up selections in mega-caps overcame headwinds from a relative underweight to the segment, with bottom-up results in large caps also aiding performance. Meanwhile, our emphasis on mid-caps detracted from relative results due to the first half narrowness of the market.”

That “emphasis on mid-caps” could soon pay off though, as “We anticipate a potential broadening of performance across industries and market caps, consistent with a more normalised environment.” Share price tickled 2.5p down to 349p but resumed its upward path the following day to close at 359p.

Numis: “ATT takes a bottom-up stock picking approach driven by exposure to key themes, with relatively high turnover in what is a dynamic, fast-moving sector, and we believe that this approach and its mid/large cap bias may serve it well.”

Murray International (MYI) staying wary
MYI Chair. Virginia Holmes. opens her half-year statement with something of a puzzle, “If a primary driver of solid equity market returns in 2023 was the expectation of easing inflationary pressures and central banks cutting interest rates, one could be forgiven for being slightly surprised at the strength of equity market returns, particularly in developed markets, in the first half of this year. Inflation has eased in some areas, proved stubborn in others and the six or seven interest rate cuts expected in the United States at the end of last year have yet to come to pass.” And yet, markets performed strongly, including MYI’s reference index, the FTSE All World TR Index which rose +12.2%. Go figure. The global equity income fund’s NAV total return meanwhile couldn’t match that, finishing the half up +5.5%.

The investment managers aren’t being fooled though, “while there are positive signs of economic recovery and growth in specific sectors, the global economy faces several significant risks and uncertainties. Inflation, geopolitical tensions, market concentration and consumer confidence are all factors that could derail equity markets trading at lofty levels and lead to increased volatility.” Because of this, the managers will “continue to seek companies robust enough to preserve capital in periods of market weakness, with attractive, growing, and sustainable dividends, exposed to strong structural drivers for long-term growth.” With the shares moving higher on the release of the report, market appears to have liked what it heard.

Winterflood: “Board optimistic that progressive dividend can be maintained. Bruce Stout has now departed; Martin Connaghan and Samantha Fitzpatrick have taken joint responsibility for the portfolio.”

Numis: “Martin and Samantha worked with Bruce for over 20 years and therefore, unsurprisingly, there are no significant changes to the portfolio. The results show a period of underperformance, primarily driven by a lack of exposure to mega cap US tech and the funds ‘value’ bias relative to the market.”

The Renewables Infrastructure Group (TRIG) in it for the long haul
TRIG reported a 4.3p reduction in NAV per share to 123.4p for the six months to 30 June 2024 (31 December 2023: 127.7p). A combination of factors cited for the NAV decline: lower near-term power price forecasts, lower forecast inflation and below budget generation. Chair Richard Morse doesn’t sound too concerned though, “TRIG continues to offer investors scale, diversification and value.”

And in terms of shareholder value, the renewable fund continues to deliver “TRIG’s attractive dividend, which has been increased by 12.5% over the past five years, is being supplemented by a £50m buyback programme in recognition of the Company’s robust cash flows, balance sheet strength and the premium to carrying value achieved by the management team across £210m of successful divestments signed during the past 12 months.” Finally, the Chair reminds investors that TRIG’s balanced portfolio has been designed “to deliver long-term value to shareholders.” Shares opened largely unchanged. Steady as she goes, the name of the game.

Jefferies: “The previously flagged generation difficulties weighed on the NAV and cash flow generation during the half. However, progress continues to be made on the balance sheet side, with further disposals and possibly a terming out of a portion of the RCF expected over the course of the next 18 months.”

Investec: “The company has a stable and predictable revenue profile with 75% of forecast revenues fixed for the next 12 months and 70% fixed through to December 2028. We reiterate our Buy recommendation.”

Numis: “In our view this remains an attractive entry point for a portfolio that is diversified by both geography and technology managed by an experienced team.”

Liberum: “We view the 19% discount and 7.5% dividend yield as an attractive entry point for a company with a high degree of inflation linkage and strong track record.”

Due
The Retiree’s Guide to Dividend Investing: Creating a Sustainable Income Stream
Story by Shane Neagle

Unlike other forms of investment income that fluctuate wildly with market conditions, dividends provide a more stable and predictable income stream, which can be particularly appealing for those in retirement.

The beauty of dividend investing is that it preserves the potential for income generation and capital growth. By carefully selecting companies with a strong track record of dividend payments, retirees can benefit from regular, reliable payments that help cover living expenses without eroding the principal investment.

To sweeten the pot further, if you reinvest your dividends, you can use compound growth, potentially adding large sums to your gains over a long timeframe.

That said, for all the benefits, dividend investing is far from a simple strategy. We’re talking about significant benefits here—steady payments, long-term sustainability, and the ability to maintain or enhance your lifestyle without savings—and that requires a bit of legwork.
However, the payoff is well worth the reward—and we will do our part to help you achieve those goals. Without further ado, let’s delve into how dividends work, how to identify the best dividend-paying investments, and how to keep your portfolio profitable and balanced in the long run.

Understanding Dividends
Dividends are payments a business makes to its shareholders, usually derived from the company’s profits.

When a company earns a profit, it can choose to reinvest it in the business (called retained earnings) or distribute it to shareholders as a dividend. These payments are often made regularly (monthly, quarterly, biannually, or annually) and can be issued in cash or as additional shares of stock.

This declaration includes the size of the dividend, the record date (the date you must be on the company’s books as a shareholder to receive the dividend), and the payment date.

Once dividends are declared, they become the company’s liability and must be paid out on the scheduled payment dates. Dividends are typically paid per share, meaning that the more shares you own, the larger your payout.

Dividends are divided into three subtypes:

Regular dividends — distributed as part of the typical cycle of dividend payments according to the company’s established dividend policy.
Special dividends — occasionally, a company might pay a dividend not part of the regular cycle, often to distribute unusually high profits from a windfall.
Stock Dividends — companies may issue additional shares instead of cash as a form of dividend.
Why Dividends Are a Viable Option for Income
For retirees, dividends offer a particularly attractive income source. They provide a steady stream of income, which can be a great boon for managing living expenses—without depleting the principal investment. Here are several reasons why dividends are a popular choice for income:

Predictability: Dividends provide regular income, which can be predicted and planned for, unlike capital gains, which can be irregular and unpredictable.
Lower Volatility: Stocks that pay regular dividends tend to be less volatile than non-dividend-paying stocks.
Tax Advantages: In many jurisdictions, dividends are taxed at a lower rate than other forms of income, such as interest income or capital gains.
Compounding: Reinvesting dividends can lead to compound growth, increasing the value of your investment over time.
Why Choose Dividend Stocks
Dividend stocks are a cornerstone for generating passive income, particularly attractive for retirees or those seeking consistent cash flow.

By investing in dividend-paying companies, investors receive regular payouts that can supplement other sources of income. This passive income stream requires little to no day-to-day management, making it an ideal strategy for those who wish to focus on enjoying retirement rather than managing complex investments.

One significant advantage of dividend stocks is their potential to hedge against inflation. As the cost of living increases, companies that generate higher revenues can afford to increase their dividend payouts.

Many dividend-paying companies are established, financially stable, mature businesses that can raise dividends over time. This increase in dividends can help maintain the purchasing power of your investment returns during inflationary periods, protecting your income against the erosion of value that inflation can cause.

Favourable Tax Treatment
Dividend income often benefits from more favourable tax treatment than other income types, such as interest or non-qualified stock gains.

In many jurisdictions, qualified dividends are taxed at a lower rate than ordinary income, which can significantly enhance the after-tax return on these investments. This tax efficiency makes dividend stocks attractive for investors looking to maximize their investment income while minimizing tax liabilities.

Additional Points to Keep in Mind
Dividend-paying stocks often belong to industries and sectors known for their stability and steady growth. Investing in these stocks can provide a reliable income stream and the potential for capital appreciation.

Another appealing aspect of dividend stocks is their role in portfolio stability. Dividend payouts can act as a cushion during market downturns. When stock prices fall, the dividend yield effectively increases, providing a higher return on the lower price. This can make dividend stocks particularly attractive during volatile market periods, offering a semblance of income stability in an otherwise uncertain investment landscape.

Furthermore, dividends can be reinvested to purchase additional shares, compounding the benefits by increasing the potential future income and growth of your investment portfolio.

Criteria for Selecting the Right Stocks
When selecting dividend-paying stocks, the first criterion to consider is the overall health and performance of the company.

Look for companies with a consistent track record of profitability and strong financial health. Financial stability is crucial because it indicates a company’s ability to sustain and potentially increase dividend payouts.

Keep your eye on key financial metrics such as earnings growth, return on equity, and debt-to-equity ratio to ensure the company stands on solid ground.

Understanding Dividend Yield
Dividend yield is critical in choosing the right stocks for income generation. It represents the percentage of your investment that you receive back each year from dividends alone.

While a high dividend yield may seem attractive, it’s essential to consider it in the context of the market and other stocks in the same industry. Extremely high yields can sometimes be a red flag for financial distress or a dividend that may not be sustainable in the long term.

Aim for companies with yields that are competitive yet realistic within their sector. Investors should consider the dividend coverage ratio, which measures a company’s ability to pay its current dividend based on its net income.

A higher coverage ratio indicates a more sustainable dividend, showing that the company is not overextending itself by paying out more in dividends than it earns. This metric can provide an added layer of security for retirees seeking reliable income streams from their investments.

Considering Dividend Growth and Consistency
Beyond the current yield, look at the dividend growth rate and the consistency of payouts. Companies with a history of steadily increasing their dividends are often financially healthy and confident in their future cash flows.

These companies are typically regarded as Dividend Aristocrats or Dividend Kings, having consecutively raised dividends for 25+ years. Consistent dividend growth can not only counteract the effects of inflation but also indicate a commitment to shareholder returns.

Another crucial criterion for selecting the right dividend-paying stocks is the company’s market position and competitive advantage, referred to as its economic moat. Companies with a wide economic moat have sustainable competitive advantages that protect them from losing market share to others in their respective sectors or industries.

These advantages could include brand recognition, proprietary technology, regulatory licenses, or a dominant market share. Such attributes make it more likely for the company to maintain profitability and continue its dividend payouts, which is essential for long-term investment strategies.

Evaluating Risk Tolerance
Individual risk tolerance is a pivotal factor in stock selection. If you prefer lower risk, consider stocks in stable industries with a long history of dividend payments.

Utilities and healthcare are traditionally less volatile. However, if you are willing to accept higher risk for potentially greater returns, you might look into sectors like technology or consumer discretionary, which can offer higher growth potential but with more significant price swings and less predictable dividends.

Building a Diverse Dividend Portfolio
Diversification is a fundamental investment strategy to reduce risk by spreading investments across various sectors and industries.

For dividend investors, diversification helps mitigate the impact of sector-specific downturns, ensuring a more stable income stream. Investing in a broad array of companies reduces the risk that a failed investment could significantly harm your financial health.

When building a dividend portfolio, consider including a mix of sectors known for reliable and growing dividends, such as utilities, consumer staples, healthcare, and real estate — with REITs, in particular, being a strong choice when talking about real estate investments.

Expanding beyond traditional sectors, investors can also consider incorporating emerging industries that show potential for stable and increasing dividends in the future.

Sectors like renewable energy, expected to grow due to increasing global energy demands and a shift towards sustainable practices, could be a strategic addition. While these sectors may currently offer lower dividends, their growth potential could lead to substantial dividend increases as the industries mature.

Geographic diversification is another essential factor in building a robust dividend portfolio. By investing in dividend-paying companies across different countries, investors can tap into varying economic cycles and opportunities that might not be present in their domestic market.

Balancing High-Yield and Growth Stocks
Achieving a balance between high-yield stocks and growth stocks is crucial. High-yield stocks offer higher dividends but can sometimes have slower growth in stock price. They are attractive for immediate income but carry risks if the high yield is not sustainable. Growth stocks may offer smaller initial dividends but have the potential for significant price appreciation and dividend growth over time.

Investors should aim for a portfolio that provides a good return in the form of dividends and has the potential for capital appreciation. Adjusting the mix according to market conditions and personal financial goals is essential, as this balance will shift depending on economic environments and life stages.

Continuous Portfolio Assessment
It is vital to regularly review and adjust your portfolio. Market dynamics and company fundamentals can change, influencing which stocks are favorable for dividend income and growth potential. Keeping abreast of these changes and rebalancing your portfolio accordingly will help maintain its health and profitability over the long term.

It’s also crucial to consider the liquidity of dividend stocks in your portfolio. Highly liquid stocks can be bought or sold quickly in the market without a significant price change.

This can be particularly important for retirees who might need to adjust their portfolios quickly in response to personal financial needs or market changes. Stocks with higher liquidity typically have more stable prices, which can help reduce the overall volatility of your investment portfolio.

Risk Management
Managing risks in dividend investing involves a strategic approach to selecting and maintaining a balanced portfolio.

High-yield stocks, while tempting due to their potential for substantial income, can also present significant risks. These stocks might be delivering high dividends not from operational strength but from a struggling business trying to attract investors, which could lead to unsustainable payouts and possible cuts in the future.

To mitigate these risks, thorough due diligence is essential. Analyzing a company’s payout ratio, which compares the dividend per share with the net income per share, provides insight into how much income the company is returning to shareholders versus what it retains for growth while looking at historical volatility will give you an idea as to how the stock reacts to market changes.

A very high payout ratio could signal that dividends are at risk if earnings fall. Similarly, assessing the company’s debt levels is crucial; companies with high debt may not sustain high dividends if financial conditions deteriorate.

Furthermore, diversification across various sectors and industries can help reduce the risk of exposure to a single economic event impacting all your investments. This strategy spreads out potential negative outcomes across a broader array of assets, thereby reducing the impact of a single failing investment.

Regular portfolio reviews are also critical in risk management. This practice involves evaluating each investment’s performance and role within the broader portfolio context, adjusting to align with changing market conditions and personal financial goals.

Tax Planning and Cost Control
Tax planning and cost control are crucial for maximizing the efficiency and returns from dividend investing. Dividend income can be taxed as qualified or non-qualified, with qualified dividends benefiting from lower tax rates akin to long-term capital gains, contingent on specific holding periods and the type of company issuing the dividend.

Investors should optimize their tax exposure by holding dividend stocks in tax-advantaged accounts such as IRAs or 401(k)s, where dividends can grow either tax-deferred or tax-free, depending on the account type.

To minimize investment costs, selecting low-fee brokerage platforms is essential. Frequent trading not only triggers trading fees and commissions but can also lead to higher tax liabilities.

Employing a buy-and-hold strategy not only minimizes these costs but also aligns with the favorable tax treatment of long-term investments. Additionally, investors should choose mutual funds and ETFs without transaction fees and low expense ratios to avoid eroding their dividend gains.

Investors can also reduce costs by planning their trades around tax events, taking advantage of tax loss harvesting, and strategically timing the buying and selling of securities to optimize tax implications. Keeping informed about changes in tax laws and understanding how they affect investment activities is also vital for long-term success.

Long-Term Planning
An effective long-term strategy involves evaluating and selecting dividend-paying stocks that offer immediate returns and sustainable growth, supporting current and future financial needs. This involves understanding the historical performance of these stocks and their potential to increase dividend payouts in response to inflation and changing economic conditions.

Investors should also assess their risk tolerance regularly, especially as they approach retirement. A portfolio that was suitable in earlier years might need adjustments to reduce risk and ensure more stability. Investors should balance their need for immediate income with the potential for long-term capital appreciation.

Adapting to reflect changes in personal circumstances, market conditions, and financial goals is essential. Investing might mean shifting from high-yield stocks to those with stronger growth potential or vice versa, depending on the current economic outlook and personal risk profile. If you’re a business owner, it could mean pivoting to alternative cash flow solutions like invoice financing, expanding into new markets, or even downsizing. It could also entail finding a side job or additional income streams.

Regular portfolio reviews and adjustments ensure that investments align with an individual’s retirement timeline and financial objectives. This dynamic approach to portfolio management not only protects against potential downturns but also positions investors to capitalize on growth opportunities, ensuring that their retirement savings continue to work effectively for them as their needs and the external economic environment evolve.

Conclusion
Dividends are often underappreciated—however, numbers don’t lie, and dividends have contributed just short of a third (32%) to overall S&P 500 returns since 1926. Not tapping into such a significant source of returns would be a huge and costly mistake.

Exactly how much of your portfolio you will commit to dividend-paying investments is up to you — but with economic cycles, recessions, and the volatility of equities, having a stable source of passive income is a prudent choice—for all of us.

Regarding retirement, this regular income provides a steady cash flow, dependable payments, and the ability to maintain your lifestyle without worrying that you’ll be jeopardizing your future.

Although it isn’t exactly a walk in the park, with meticulous planning, a reasonable, grounded plan, and ongoing reviews, you can reap the advantages of passive income and compound interest, making a stable retirement free from worries one step closer to becoming a reality.

The post The Retiree’s Guide to Dividend Investing: Creating a Sustainable Income Stream appeared first on Due.

https://quoteddata.com/research/jlen-environmental-assets-vote-against-discontniuation-qd

JLEN Environmental Assets Group Limited

(“JLEN” or the “Company”)

Net Asset Value and Dividend Announcement

Net Asset Value

JLEN, the listed environmental infrastructure fund, announces that its unaudited Net Asset Value (“NAV“) at 30 June 2024 is £748.1 million (113.1 pence per share), a decrease of 0.5 pence per share since 31 March 2024 after paying the quarterly dividend of 1.89 pence per share.

Summary of changes in NAV:

The table below summarises the changes in NAV since 31 March 2024, with the main drivers being payment of the aforementioned dividend partially offset by an increase in near term power forecasts and reflection of actual asset performance and unwind of the discount rate.

	NAV per share
NAV at 31 March 2024	113.6p
Dividends paid in the period	-1.9p
Power price forecasts	0.7p
Other movements (including actual performance)	0.7p
NAV at 30 June 2024	113.1p

Dividend

The Company also announces a quarterly interim dividend of 1.95 pence per share for the quarter ended 30 June 2024, in line with the dividend target of 7.80p per share for the year to 31 March 2025, as set out in the 2024 Annual Report.

Dividend timetable

Ex-dividend date	5 September 2024
Record date	6 September 2024
Payment date	27 September 2024

2 shares for setting up big passive income streams after 50
Our writer explains the approach he would take if he wanted to set up passive income streams despite no longer being in the first flush of youth.

Christopher Ruane

Motley Fool

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.

Passive income can be a welcome financial boost at any stage in life. After 50, though, one’s planning timeframe is unlikely to be the same as it was at 30 or even at 40. Time, ever more, is of the essence.

So at that point my own focus when choosing income shares for my portfolio would be on jam today rather than jam tomorrow.

While I would still focus on buying into quality companies at attractive prices, I would be hunting for ones that offer me sizeable income streams today rather than others that I think could do so a decade or two from now.

Here are a couple of passive income ideas that match that description I would happily buy now if I had spare cash to invest.

Phoenix: 9.9% dividend yield
Insurer Phoenix (LSE: PHNX) has a 9.9% dividend yield.

That means, that for every £10,000 I invested today I would hopefully earn £990 a year in dividends. (A bigger investment could give me bigger passive income streams overall).

In fact, the passive income prospects here could turn out to be even better than that, as Phoenix has what is known as a progressive dividend policy. That means it aims to increase its dividend per share each year.

It has done that recently, but dividends are never guaranteed and a company can always change them as it chooses. Phoenix has a number of strengths as I see it, from a customer base stretching into millions to a specialist expertise in certain types of complex financial products.

But it also faces risks, such as a market downturn forcing it to reassess asset valuations, hurting earnings. Even considering the risks, though, I like the passive income prospects of Phoenix not only in the future but right now.

Legal & General: 9.1% dividend yield
Another share that has strong passive income prospects right now, not just in the future, is financial services provider Legal & General (LSE: LGEN).

We will likely hear in the next fortnight how the business has performed in the first half and what that means for its interim dividend.

I am not expecting any surprises: like Phoenix, Legal & General has a progressive dividend policy and has already set out the increase in its per share dividend expected for the full current year (5%).

As it is buying back its own shares at the moment, the FTSE 100 firm could potentially raise its dividend per share in future (it is foreseeing 2% annual growth) without needing to spend more money than now in total.

The firm benefits from an iconic brand in a pensions and retirement product market that I expect to benefit from resilient client demand over the long run. Weak markets are a risk, partly because they can lead to clients pulling out funds but also because changes in asset values could hurt earnings. Legal & General held its dividend flat in 2020 and cut it during the last financial crisis.

But with a long-term mindset when assessing business prospects alongside a focus on passive income in the short term as well as further out, this share would easily make my shopping list.

The Early Bird
A Message from WealthPress

Dividend stocks are possibly the only investment where you have the opportunity for capital growth as well as income.

It’s truly empowering once you see the impact that dividend stocks can make on any account size.

Imagine the peace of mind that could give you, knowing that your nest egg could be growing without having to make massive annual contributions.

Or slaving away at the computer screens trying to pick some miracle stock.

The key ingredient is DIVIDENDS.

And when you look at it over the scope of time, the difference dividends make is truly mind boggling.

Just visualize a $10k investment in the S&P 500 since 1960 with me.

Without the dividend payments…Your account would have grown to:

$641k

That’s not bad… But it’s certainly not enough to retire worry-free.

But during that SAME time period…With that SAME starting stake…

If you reinvested the DIVIDENDS:

$4 million

That means dividends were the ONLY difference between not having enough to make it through retirement.

Or retiring in the TOP 1% of all U.S. Households.

And the best part is, there’s no extra legwork on your end to collect these dividends – just sit back and watch.

As long as a company doesn’t cut its dividend, you’re guaranteed cash.