Real Estate Credit Investments Limited (the “Company”), a non-cellular company incorporated in Guernsey, is pleased to announce that its Investment Manager’s monthly Fact Sheet as at 31 March 2024 is now available on the Company’s website.
As at 31 March 2024, the Company was invested in a diversified portfolio of 31 investments with a valuation of £304.8m.
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An interim dividend of 3p per share was declared on 22 February 2024, to be paid to shareholders on the register at the close of business on 15 March 2024; the ex-dividend date was 14 March and it was paid on 5 April.
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During March, RECI was fully repaid at par its position in a senior facility for a UK industrial site development. RECI received net proceeds of c.£12m and achieved an IRR of 9.2% for a deal with an LTV at inception of 59.3%.
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RECI continues to use its cash to invest in its existing commitments in highly accretive wider opportunities in senior mortgage lending.
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Cash Balance as at 31 March 2024 was £23.9m. Net effective leverage currently stands at 1.2%.
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Current portfolio holding yielding 10.5% trading at a discount to NAV of 20%. A strong hold as the loans are secured against property.
Getting rich slowly. To sum up then, my strategy is to invest money regularly into quality income Trusts by reinvesting my dividends along the way. This will add fuel to the fire.
Once this pot is hopefully large enough, I’ll live off the passive income my dividend stocks pay each year. As I want the dividends to provide a ‘pension’ the portfolio stocks cannot be sold so their value in ten years time is of no interest whatsoever.
Forget buying lottery tickets! I’d rather follow Warren Buffett and build passive income The Motley Fool
UK adults spend over £2bn on lottery games every year despite never winning. As investing legend Warren Buffett once said: “No-one wants to get rich slowly.”
Like most people, I buy the odd line. But I don’t delude myself that it’s likely to result in serious wealth (even though it could). After all, the odds of scooping the Lotto jackpot are currently 1 in 45,057,474.
Therefore, I reckon investing in dividend stocks is a far better bet long term. I can become a shareholder and instantly have a claim on part of a company’s cash flows and dividends.
No extreme luck needed!
Dividend increases One thing Warren Buffett’s holding company Berkshire Hathaway is noted for is investing in companies likely to raise their annual dividends for many years (potentially decades). Buffett favours strong brands that sell timeless products and services. And his ideal holding period is “forever“.
A famous example here is Berkshire’s stake in Coca-Cola, which it started accumulating in the 1980s.
Fast-forward to today, the global beverages giant has just increased its annual dividend for the 62nd consecutive year.
And Berkshire’s stake, which cost $1.3bn in total, is now returning approximately $776m each year. Or $1.3bn every 20 months. Then there’s the 1,766% share price appreciation too. Incredible.
A high-yield UK stock One FTSE 100 stock I’ve been buying recently is insurance group Aviva (LSE: AV.).
Despite the shares rising 25% over the last six months, the dividend yield is still 6.7%. That’s well above the FTSE 100 average of 3.9%.
Now, I should point out that Aviva is no Dividend Aristocrat like Coca-Cola. Its payout record has been a bit up and down in recent years. There might be more lumpiness ahead. Or no divided at all (that’s a risk).
Plus, business could always start suffering if the economy nosedives.
Nevertheless, the forecast payouts and yields look attractive to me.
The company has been streamlining and selling off assets overseas to concentrate on its UK, Ireland and Canada markets. As a result, Aviva has strengthened its balance sheet considerably.
Its Solvency II capital ratio – a key measure used to assess financial strength – fell a little last year but remained at 207% in December. That’s excellent.
Moreover, the firm is benefitting from a boom in private health insurance. In 2023, sales here rocketed 41% year on year as NHS waiting lists hit record highs.
The figures for January showed the NHS backlog was still 7.58m cases. So Aviva could see more take-up in individual policies and businesses paying to cover their employees.
Getting rich slowly To sum up then, my strategy is to invest money regularly into quality income stocks like Aviva and reinvest my dividends along the way. This will add fuel to the fire.
Once this pot is hopefully large enough, I’ll live off the passive income my dividend stocks pay each year.
According to historical data, the average annual return of the S&P 500 with dividends reinvested over the last 30 years is around 10.2%.
If the historical average continues (which it might not), investing as little as £75 per week could grow into £1m in just under 34 years.
I’ll take those odds every week!
The post Forget buying lottery tickets! I’d rather follow Warren Buffett and build passive income appeared first on The Motley Fool UK.
If u buy into a Trust like CTY/MRCH or other income Trusts some of the underlying shares in the Trust have been held for many years and the yield they receive is way ahead of the headline yield as with Coca Cola.
The Board of The City of London Investment Trust plc announces that:
A third interim dividend of 5.25p per ordinary share of 25p, in respect of the year ending 30 June 2024, will be paid on 31 May 2024 to holders registered at the close of business on 26 April 2024. The Company’s shares will go ex-dividend on 25 April 2024.
The Board intends to declare a fourth interim dividend of 5.25p per share for the year to 30 June 2024. The fourth interim dividend will be declared in July 2024. This would make a total dividend for the year to 30 June 2024 of 20.6p per share, an increase of 2.5% on the previous year and the Company’s 58th consecutive annual increase.
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The current yield of the Trust is 5%, this is below the current target of the blog of 7%, so if u want to own, for the long term, one of the safest yields in the market but still want to earn a yield of 7%, u could pair trade it with another Trust yielding 9%. 50/50 or 40/60 depending on your risk tolerance and how many years before u need to start spending your dividends.
How I’d aim to make millions the Warren Buffett way
Story by Cliff D’Arcy
Thanks to decades of share-buying, my wife and I had amassed enough assets to retire in 2021. But I love financial writing and she’s great at her job, so we keep working. I also know that if I’d listened to my guru Warren Buffett earlier, we’d have millions more pounds today. Thanks to his success as an investor, Buffett’s fortune exceeds $115bn. As a committed philanthropist, he’s already donated $55bn to good causes — and plans to give away 99% of his pot.
What I’ve learned Though I’ve read so much about Warren, it took me way too long to learn from him. Here are five ‘Buffett bullet points’ that I wish I’d absorbed earlier.
Don’t lose money Investing is as much about avoiding losers as picking winners. Boy, have I backed some flops in my time: my three worst investments cost me around £1m. If I’d not bought this trio of losers, I’d have perhaps £2m+ more now. My biggest failures were caused by investing too heavily in a favoured stock, so I had too much concentration risk. Never again. Today, I make sure our money is spread widely across companies, sectors and countries.
Bet big on America Buffett has repeatedly warned investors: “Never bet against America.” How I regret not taking this advice to heart when young.
Nowadays, our family wealth is heavily skewed towards the US — including our global trackers, may of which are weighted 60% to 70% towards American stocks.
Buy businesses, not stocks In my early years of investing, I behaved more like a gambler or trader than a proper investor. In this effort to ‘get rich quick’, I made many mistakes.
One fundamental Warren Buffett lesson I’ve now absorbed is to buy companies rather than shares. Now I behave like an owner by only buying into businesses that I’d be willing to own for, say, a decade. And it’s this boring, long-term approach that has delivered my best returns from investing.
Investing is a marathon, not a sprint Chasing short-term gains when I was younger probably cost me more money than any other blunder. I’d buy shares, aiming to flip them for quick profits. Surprise, surprise, this tricky tactic kept backfiring.
Warren Buffett has said: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” This is my motto today when it comes to owning shares. I only buy stocks in solid businesses run by competent managers. And like Buffett, my ideal holding period is forever.
Don’t let a crisis go to waste These days, I’m not afraid of stock-market crashes, because they give me opportunities to buy into sound businesses at rock-bottom prices. As Warren Buffett urged in October 2008: “Be fearful when others are greedy, and greedy when others are fearful.”
For example, during the Covid-19 crash of spring 2020, my wife and I poured everything into shares after the US and UK stock markets had crashed by a third. And the returns from this one brave bout of buying have been life-changing.
With lots of sophisticated investors poring over the market though, not everything that looks like a bargain may in fact be one.
It could be, for example, that some UK shares are cheap precisely because their long-term prospects seem less attractive now than they did before.
Even if I earn juicy dividends, I could lose money if the value of my portfolio falls.
Buying into Direct Line for its handsome shareholder payout five years ago, for example, I would now be earning no dividends. They have been cancelled. To boot, my shareholding would be worth 43% less than I paid for it.
So when looking for shares to buy, my focus is on finding companies with promising long-term commercial prospects and a share price I think significantly undervalues them.
Key Points A dividend yield is an expression of a company’s dividend expressed as a percentage of its stock price. Stocks with a higher yield become attractive because these stocks increase the payout you receive for the same amount of money invested. Many analysts suggest that a good dividend yield is a yield that is higher than a corresponding index. Dividend yield is frequently the first metric you will use when considering buying one or more dividend stocks.
A common strategy for investors interested in maximizing the benefits of dividend stocks is to buy the dividend stocks that return the highest yield.
In many cases, dividends with a high yield equate to financially stable companies with the ability and willingness to increase their dividend over time. These companies typically have strong balance sheets that hold up in both good and bad financial conditions. That stability means the companies are more likely to maintain or increase their dividend over time. Companies that have increased their dividends the most are known as Dividend Aristocrats or Dividend Kings.
However, there are exceptions to this theory, which is why it’s important to understand the factors that go into a dividend yield. This article will review the significance of a stock’s dividend yield for investors.
What is Dividend Yield? A dividend yield is an expression of a company’s dividend expressed as a percentage of its stock price. The formula for calculating dividend yield is:
Dividend yield = Current annual dividend (per share)/Current stock price
Let’s look at two examples:
Verizon Communications Inc. (NYSE: VZ) pays an annual dividend of $2.61 per share. If Verizon’s stock price is $35.48 on the day it declares its dividend (the declaration date) you could calculate the dividend yield would as follows:
2.61/35.48 = 0.07356 or 7.36%
Procter & Gamble Co. (NYSE: PG) pays an annual dividend of $3.76. The PG stock share price on the declaration date is $145.06. The dividend yield is:
3.76/145.06 = 0.0259 or 2.59%
Now, let’s look at what that would mean if you bought $5,000 of each company’s stock.
If you bought $5,000 of VZ stock at $35.48 per share, you would own 140.9 shares. Since Verizon pays its dividend quarterly, you would receive $0.6525 per share (2.61/4). Your payout would be:
140.9 x 0.6525 = 91.94
That means you would receive $91.94 as a cash payout or to reinvest in VZ stock.
Now let’s look at Procter & Gamble. If you bought $5,000 of PG stock at $145.06, you would own 34.4 shares of PG stock. Procter & Gamble also pays its dividend quarterly, so you would receive 0.94 per share (3.76/4) for every share you owned. Your payout would be:
34.4 x 0.94 = 32.34
That means you would receive $32.34 as a cash payout or to reinvest in PG stock.
Benefits of Dividend Yield Income-oriented investors choose dividend stocks because they are counting on the income they receive from dividends to supplement their retirement savings. Therefore, stocks with a higher yield become attractive because, for the same amount of money invested, these stocks increase the payout you receive.
If you don’t need the income for immediate expenses, a major benefit of owning dividend stocks is the benefit of compounding. You receive this benefit by reinvesting your dividends into a dividend reinvestment plan (DRIP). Because dividends pay out on a regular schedule, usually quarterly, you’ll continue to buy shares regularly.
This, in turn, allows you to buy more or fractional shares, which increases the size of your next payout. Over time this is a proven way to build wealth over time.
What is a Good Dividend Yield? What constitutes a good dividend yield will depend on many factors. However, many analysts suggest that a good dividend yield is a yield that is higher than a corresponding index.
For example, as of March 31, 2023, the average dividend yield of stocks included in the S&P 500 Index was 1.66%. However, historically, the index has had an average yield between 3% and 5%, so any stock with a dividend yield within that range is said to be a high-yielding dividend stock.
How to Evaluate Dividend Yield Because dividend yield is based on the company’s current stock price, it will change daily and even several times throughout a trading session. This makes it an imperfect standalone metric for evaluating dividend stocks.
Therefore, investors need other ways to evaluate if a company’s dividend yield is a green light or a caution signal. Here are some factors to consider when evaluating a dividend yield.
Consider the Yield to Other Stocks in the Company’s Sector When many investors think about dividend stocks, they may think about the blue-chip stocks their grandparents or parents owned. These companies, such as The Coca-Cola Company (NYSE: KO), grow consistently over time. Still, the real benefit to owning these stocks is the ability to collect a regular dividend over time. That’s one reason Warren Buffett likes KO stock.
However, Mr. Buffett also has an affinity for Apple Inc. (NASDAQ: AAPL). The tech giant is the definition of a growth stock consistently using its profits to branch into new areas. However, it also generates so much cash that it does manage to pay a small dividend.
Is the Dividend Sustainable? Many dividend investors have suffered hefty losses after falling into a yield trap, which occurs when the company has an appealing dividend yield not supported with a strong balance sheet. That’s why investors must perform some basic fundamental analysis to understand how healthy a company is.
Are they growing earnings? Do they carry too much debt? Some companies can get away with borrowing money to pay a dividend. But over time, that’s not a sustainable strategy.
Look at the Company’s Dividend Payout Ratio Next to dividend yield, a company’s dividend payout ratio (DPR) is probably the second most important metric to consider. The DPR measures how much profit a company uses to pay its dividend measured as a percentage. Any number above 60% is generally considered unsustainable, but that is sector and company-specific. For example, real estate investment trusts (REITs) and master limited partnerships (MLPs) must pay at least 90% of their profits through dividends.
Look For a History of Increasing Dividends The best dividend stocks are companies with a proven history of increasing their dividends over time. The best of the best are considered dividend aristocrats and dividend kings. These companies have increased their dividends for at least 25 and 50 consecutive years, respectively. While past increases do not guarantee future increases, companies that commit dividend increases will tend to prioritize the dividend because they know that investors see it as a compelling reason to own the stock.
Dividend Yield isn’t Perfect, but it’s a Good Start One of the many benefits of dividend investing is the annual dividend yield, typically paid out quarterly. For income-oriented investors, reliable and predictable regular income from dividends can make a difference in the quality of life in their retirement.
The dividend yield formula is: Dividend yield = Current annual dividend (per share)/Current stock price
So, a company that pays a total annual dividend of 80 cents per share with a stock price of $20 will have a dividend yield of 4%. Although there is no perfect answer to “What is considered an acceptable dividend yield?” most investors consider a 3%-4% annual dividend yield a good target, particularly if they plan to reinvest their dividends.
A limitation of using the dividend yield as a metric for investors is that it can misrepresent a company’s financial health based on its stock price. For example, a company with increased revenue and earnings per share that falls short of analysts’ recommendations may see its stock price —and therefore its dividend yield — decline even though they are operating a healthy business. Conversely, there are times when a company may proactively announce a reduction in its dividend to take care of some pressing financial issues. However, if analysts perceive this action as one that can help the company’s long-term health, they may increase its stock price.
One of the best Traders around is the Naked Trader, now u could splash out on a course or buy his book, he has several to choose from and re-invest the saved cash in the market.
It’s very difficult to copy trade his share picks as he doesn’t update regularly.
The last post on trading now it’s back to the knitting.
There are two emotions in the market fear and greed, the problem is we hope when we should fear and fear when we should hope.
William J O’Neil
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We hope that the market will rescue us from a poor trade and fear that the market will take back all of our profit. I started trading dividend Investment Trusts because my stop loss policy wasn’t resolute enough.
