This article provides a detailed perspective on planning for a comfortable retirement through passive income. It’s interesting how the author emphasizes the importance of tailoring retirement goals based on individual circumstances. The breakdown of income requirements for single and two-person households is quite eye-opening, especially the £43,900 figure for a single person. I wonder, though, how realistic it is for the average person to achieve such a high passive income through investments alone. The author’s strategy of investing in global stocks and maintaining a cash reserve seems balanced, but what about those who may not have the knowledge or confidence to invest in shares? Could there be simpler, less risky alternatives for people who are not as financially savvy? Also, how much of this plan relies on market stability, and what happens if the returns don’t meet expectations? It’s a thought-provoking read, but I’d love to hear more about how to mitigate risks for those who are just starting their retirement planning journey. What would you suggest for someone who’s hesitant to dive into the stock market?
If you buy a world tracker fund, as long as you can choose when to sell you will not lose money, it could be several years though, so if you are saving for a specific reason, like a deposit for a car or a house etc., compound your interest where cash is king.
You may have missed your window on this infrastructure trust’s share price
As the discount narrows to a fairer price, the potential upside has dwindled Markuz Jaffe
29 May 2025
Questor is The Telegraph’s stock-picking column, helping you decode the markets and offering insights on where to invest.
Investors after stable, inflation-linked returns backed by high quality counterparties could do worse than infrastructure. Sub-sectors of the asset class span social infrastructure, such as hospitals and schools, and more economically sensitive investments, such as power generation and transport.
More recently, the significant expansion in digital infrastructure, including data centres, towers and fibre, has captured headlines, driven by the explosion in data consumption globally.
One such access point is Pantheon Infrastructure (PINT), launched in late 2021 with the aim of offering a globally diversified portfolio of high-quality infrastructure assets, co-investing alongside leading private equity houses via individual deals selected by PINT’s manager. Since launch, the company has committed over £500m of investor capital across 13 investments.
PINT’s investment manager, Pantheon, has over 40 years of private markets investing experience, a global investment team and $71bn in discretionary assets under management across real assets, private equity and private credit, as at end-September 2024. This includes $23bn across over 230 private infrastructure investments, of which $4.5bn is invested across 56 private infrastructure co-investments – a significant resource benefitting PINT, despite the trust’s own modest size.
The portfolio is well diversified by sector, with almost half in digital infrastructure, a third in power and utilities and a quarter spread across renewables and energy efficiency, and transport and logistics.
It invests across Europe, North America and the UK, and enjoys a blend of revenue profiles – with the vast majority contracted, supported by almost a fifth in GDP-linked and regulated incomes. To further spread risk, the company makes use of an active currency hedging programme to help reduce portfolio valuation fluctuations due to FX movements.
PINT’s top investments by value highlight this diversification: Calpine, a principally gas-fired US independent power producer; Fudura, a Dutch provider of electricity infrastructure; Primafrio, a European temperature-controlled transportation and logistics firm; National Broadband Ireland, a network developer and operator for the nation; and National Gas, owner and operator of the UK’s sole gas transmission network.
Of these holdings, the most immediately attractive is Calpine, which is set to be bought by Constellation Energy Corporation (CEG). The deal, expected to complete later this year, will grant PINT a mix of CEG shares and cash, split 75pc and 25pc, respectively. While this has introduced some volatility into PINT’s portfolio valuation – the share price of CEG has ranged from a peak of around $350 to a low of $170 in 2025 alone – it also represents PINT’s first disposal, and a potentially significant exit from one of its top performing investments to date.
PINT targets a net asset value (Nav) total return of 8-10pc per annum, and declared dividends of 4.2p for FY24. Although dividend cover was relatively low for the year (0.7x), the manager expects this to improve as portfolio distributions continue to increase.
PINT’s method of accessing these deals via co-investing is a differentiator from peers and provides investors with a fee-efficient exposure to a basket of quality companies that stand to benefit from secular trends of digitisation, decarbonisation and deglobalisation. PINT itself charges a modest 1pc per annum management fee on the first £750m of net assets, with no performance or transaction fees. Additionally, the portfolio’s weighted average discount rate of 13.6pc as at end-December 2024 highlights the high level of return that the underlying businesses are expected to achieve based on their valuation modelling.
The company has a conservative balance sheet, with no debt drawn at the trust level. PINT’s £115m revolving credit facility provides liquidity but was undrawn at yearend and, combined with £24m in cash against outstanding investment commitments of £19m, marks a robust position for this strategy.
Currently a yield around 4% and the price up 20% since the start of the year, so currently not of interest for the Snowball
Most investors approach dividend paying stocks backward.
Here’s how it usually works …
An investor will scan the markets looking for stocks paying a high dividend. After all, if a company is currently paying a high yield, it’s a great investment, right?
Dead wrong!
In fact, looking at the CURRENT yield is one of the slowest ways to grow your money.
You see, if you’re focused on current yields, you’re too late to the party. All the major gains have already been made. You’ll need to settle for earning a paltry 4%, 5%, maybe 6% per year … with minimal stock-price appreciation, too.
Sure, chasing high current yields will provide you with instant gratification, but it won’t give you the recession-resistant income … or the 15% year on year returns we want.
Instead, you need to focus on consistent dividend hikes.
In my opinion, selecting companies with a proven track of increasing their dividend payments is one of the safest, most reliable ways to get rich in the stock market. You see, every time a company raises its dividend, you start earning more from your original investment.
For example:
On a $1,000 initial investment, $30 in dividends equals a 3% return. Later, if the dividends go up to $40 a year, you are effectively earning 4% on your initial $1,000 investment.
As this trend continues, you could easily be earning 10%, 15%, even 20% per year just from rising dividends, as your initial investment never changes.
However, this ever-growing income from dividend hikes is just ONE part of the puzzle. To engineer real growth and quickly double an initial investment, we must combine Pillar #1 with the next two pillars of “Hidden Yield Stocks.”
Pillar #2 – Lagging Stock Price
After years of active investing, I’ve only ever found one surefire way to predict whether a stock will go up or down.
I call it the “Dividend Magnet,” and here’s how it works …
After you’ve identified stocks that are built on the foundations of Pillar #1 (consistently hiking their dividends), you want to narrow your search to companies whose share price LAGS behind the rate of dividend increase.
Why? Well, it’s simple really …
Share prices almost always increase as dividends increase.
This is because as a company hikes its dividend, mainstream investors tend to flock to the stock, chasing the new, higher yields. And this inevitably bids up the share price.
Let me give you a few examples where the dividend acts like a floor to keep bumping the share price higher:
UnitedHealth Group: Dividend Up 460% Share Price Gains 510%
Mastercard: Dividend Up 500%, Share Price Gains 532%
Cisco Systems: Dividend Up 111%, Share Price Gains 113%
As you can see in these examples, the stock price lags behind the dividend increases at some point in time …
However, as more investors notice the company’s soaring dividend and buy in, the price lag closes—sending the share price soaring.
So, by investing in the right companies whose share prices have fallen behind despite consistent dividend hikes, you can buy the stock, safe in the knowledge the Dividend Magnet will eventually pull the price up.
Now, investing with Pillar No. 1 and No. 2 alone would stand you in great stead.
However, there’s one final Pillar of a “Hidden Yield Stock” that can rapidly accelerate both the share price and dividend payouts …
Pillar #3 – Stock Buybacks
Uncovering companies that are buying back their stocks is one of the fastest ways to accelerate your gains.
You see, when a company buys back its stock, it is improving every single “per share” metric investors watch (earnings, free cash flow, book value, etc.).
After all, if a company reduces the number of its shares by 50%, its earnings per share will automatically DOUBLE without any actual increase in profits. And I probably don’t need to tell you what will happen next …
Investors quickly bid up the stock’s price to bring it back in line with the value it was trading at before. Indeed, my research shows that simply investing in stocks that are reducing their share counts can help you beat the broader market’s performance.
And it’s important to bear in mind that S&P 500 companies are sitting on huge piles of CASH (more than $1 trillion in all!). They’re rolling out fresh buybacks amid continued economic growth post-pandemic, and they’re getting a nice upside kick in return.
You can see this just by looking at the shares of Union Pacific (UNP), which took an impressive 31% of its stock off the market in 10 years, helping drive a 100% gain in the share price!
And that’s just one example. By targeting cash-rich companies that either continue to buy back shares now or have a long record of doing so (even if they’re holding off today), you can set yourself up for HUGE price gains.
DIY Investor Diary: why this is the only fund in my SIPP
A DIY investor explains how he is investing during retirement, naming his top tips for younger investors, and explaining why he has opted for just one fund in his self-invested personal pension (SIPP).
24th October 2023
by Kyle Caldwell from interactive investor
In our DIY Investor Diary series, we speak to interactive investor customers to find out how they invest in funds and investment trusts, what their goals and objectives are, current issues and concerns regarding their portfolio, and what they’ve learned along the way. The premise is to try and provide inspiration for other investors, and we would love to hear from more people who would like to be involved.
When it comes to fund investing, one of the most common questions is whether there’s an ideal number of funds for a portfolio to strike enough balance between risk and reward.
However, as is common with other investment-related questions, there’s no “magic number” that investors should be aiming for.
Although, there is a pitfall to avoid: buying too many funds or investment trusts. If you treat funds like sweets and have too many, you risk ending up doing damage through over-diversifying and unwittingly replicating the market. This is known as “diworsification”.
For example, if you own half a dozen or more UK funds, you could potentially end up owning hundreds of different companies. That makes it harder to beat the stock market because your portfolio ends up looking like it.
If you want to invest in hundreds of UK shares, this can be done much more cheaply through a passive fund – either an index tracker or exchange-traded fund (ETF).
Therefore, it is important to ensure that each fund is bringing something unique to the party in terms of how it invests and what it is investing in.
The individual profiled in this DIY Investor Diary article ensures that there are no obvious areas of overlap in his fund holdings. He and his wife havehad a stocks and shares ISA for around 20 years, and during this time typically held half a dozen funds in each.
He said: “I invest in different regions to have diversification, but at the same time I want to avoid being over-diversified, which is why I don’t have a high number of funds. I don’t want to have funds owning the same stocks.
“It is also important to have a manageable number of funds in order to be able to concentrate on them at any one time.”
Longevity and consistency of performance are among the main qualities he looks for when sizing up funds.
He says: “I like to invest in fund managers who have been running money for a while and those that have a decent track record over three, five and 10 years. I don’t pay much attention to the one-year figure, as anyone can shoot the lights out over the short term.”
However, for his self-invested personal pension (SIPP), just one fund is held: Vanguard LifeStrategy 100% Equity. This passive fund provides diversified exposure to global stock markets by investing in 10 index funds managed by Vanguard. It is considered a potential one-stop shop holding, or a core holding, due its approach.
One of the main reasons why our DIY Investor has opted for just one passive fund is “to keep things simple”.
“It is a very straightforward fund, so I don’t have to think about it much. If I had chosen an active fund or a couple of them, I would need to monitor their performance more closely. I want to enjoy my retirement and focus on that rather than chop and change fund holdings.”
While there are lower-risk options available in the LifeStrategy range, with the four other funds having lower equity content and the balance in bonds, our DIY investor is prepared to accept higher risks in pursuit of potentially greater rewards.
He prefers equities as shares are a growth asset, which is why he went for the 100% option as he doesn’t want exposure to bonds. While the income that bonds offer is more reliable than company dividends, the disadvantage is that as the income is fixed, it does not rise with inflation.
Our DIY investor says that while he is withdrawing from the SIPP, he still wants to see the money that’s remaining growing over time. In addition, he likes the Vanguard fund’s home bias, which is a 25% weighting to UK equities.
He says: “Our occupational pensions are available in full in 2.5 and four years respectively. However, both could be taken immediately if needed. The SIPP withdrawals can reduce at that point if necessary or, more probably, reduce at age 67 when our full state pensions become available, to keep our respective incomes below the 40% tax thresholds. The SIPPs can then grow in the background as part of our inheritance tax planning.”
Our DIY Investor points out that due to having the workplace pensions and state pensions further down the line he is “happy to take on the risk” of having the SIPP invested in one passive fund and 100% in equities.
In addition, to the ISA, SIPP, and workplace pensions, three bank shares are held: Barclays , Lloyds Banking Group and NatWest Group . He views this separate pot as “fun money”, and notes that the “UK banking sector is one we are familiar with investing in.”
The couple also have Premium Bonds and cash savings that are kept below interest tax allowances.
He views the state pension as a “nice to have”, rather than as central to retirement planning. “We are deliberately not relying on the state pensions, regarding them in our overall planning as ‘nice to have’ rather than guaranteed,” he says.
Taking money out of the ISA is being prioritised, due to ISA money typically forming part of an individual’s estate for inheritance tax (IHT) purposes. A SIPP, however, does not form part of an estate for IHT purposes. If you die before age 75, the beneficiary pays no tax. For those who die after 75, beneficiaries will pay tax at their marginal rate on any income they receive.
Our DIY Investor adds: “This is all money set aside for our retirement and we are making a point of enjoying it while we are still fairly young. Our children are all planning and investing towards their own retirements with our support and guidance, although they will get some kind of legacy of course (within overall IHT limits).
“We’re currently drawing slightly over the natural yield from the SIPPs in the knowledge that we have no mortgage or debts, with other savings and investments to fall back on if needed.”
His top tips for fellow investors, and in particular for those who are younger, is to “start as early as possible” to benefit from the wonder of compound interest. “Even if it is only £25 a month, it is worth doing. Also if you are younger, don’t go for cash, go for the stocks and shares ISA instead,” he says.
Another tip is to increase your monthly investments when a pay rise comes into effect to “help keep pace with inflation”.
After spending a lifetime at work, we all hope to enjoy the kick back and enjoy the fruits of our labours. But exactly how much passive income will we need to live comfortably? This can vary substantially from person to person.
The good news is that investors today have more opportunities than ever before to hit their retirement goals. Here’s how I’m confident of achieving a luxurious retirement.
The target
As I mentioned, the exact amount a person needs in later life will vary, depending on factors like their retirement goals, where they live, and their relationship status.
Yet it’s worth considering what the Pensions and Lifetime Savings Association (PLSA) says the average person needs for a comfortable retirement to get a rough ball park estimate.
Source: PLSA
Its latest research shows that the average one-person household requires a £43,900 yearly income for a comfortable lifestyle. This level of income would provide for essentials and extras like a a healthy budget for food and clothes, a replacement car every three years, and a two-week holiday in the Med and frequent trips away each year.
The figure for a two-person household is £60,600.
A £38k+ income
There are many paths individuals can take to hit that goal. They can invest in property, develop a side hustle, or put money in dividend- and capital gains-generating shares, for instance.
I’ve personally chosen to prioritise investing in global stocks to make a retirement income, with some money also put aside in cash accounts to manage risk. With an 80-20 split across these lines, I’m targeting an average annual return of at least 9% on my share investments and 4% on my cash over the period.
Let me show you how this works. With a monthly investment of £400 in shares and cash, I could — if everything goes to plan — have a £641,362 nest egg to retire on.
If I then invested this in 6%-yielding dividend shares, I’d have an annual passive income of £38,482. Added to the State Pension (currently at £11,975), I could easily achieve what I’ll need to retire in comfort.
Of course, investing in shares is riskier than putting all my money in a simple savings account. However, funds and trusts like the iShares Core S&P 500 UCITS ETF (LSE:CSPX) can substantially reduce my risk while still letting me target the strong long-term returns the US stock market can provide.
Remember, though, that performance could be bumpy during broader share market downturns.
This exchange-traded fund (ETF) has holdings in all the businesses listed on the S&P 500 index. As well as providing me with excellent diversification by sector and region, it gives me exposure to world-class companies with market-leading positions and strong balance sheets (like Nvidia and Apple).
Since 2015, this iShares fund has provided an average annual return of 12.5%. If this continues, a regular investment here could put me well on course for a healthy passive income in retirement. It’s why I already hold it in my portfolio.
As the Snowball rolls down a hill it gathers more snow.
The blog gathers more shares every time it re-invests the dividends.
When the market crashes most shares fall at the same time, you could always sell your shares but easier with hindsight and if your are out of the market you will not have dividends to re-invest.
The Snowball is going to build, over time one position that can be sold to buy a market bargain. Without hindsight you can only buy at the bottom with luck but you can buy the yield when it falls to a yield you would be happy to earn forever.
The yield will be less than 7%, so it will be a drag on performance, that is until the market crashes but the income for the Snowball will still equal this year’s fcast of a yield of 9%. Cash for re-investment to be received on Thursday.
A UK share, investment trust and ETF to consider for an £870 second income this year
The London stock market’s a great place to invest for a second income, in my opinion. Here are three top dividend stocks on my radar.
Posted by Royston Wild
Published 8 June
Image source: Getty Images
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.
Diversification’s critical when seeking a reliable second income over time. A broad portfolio can absorb individual dividend shocks better than one containing just a handful of stocks.
Spreading risk over a number of investments doesn’t mean settling for inferior returns either. Take the following shares, investment trusts and exchange-traded funds (ETFs), for example:
StockForward dividend yield
Target Healthcare REIT8.6%
iShares World Equity High Income ETF9%
Phoenix Group (LSE:PHNX)8.5%
As you can see, the dividend yield on each of these stocks comfortably beats the FTSE 100 average (currently around 3.4%). It means a £10,000 investment spread equally across them could — if broker forecasts are accurate — provide an £870 passive income over the next year alone.
What’s more, a portfolio containing just these three stocks would provide (in my view) exceptional diversification. In total, these investments deliver exposure to 346 different companies spanning multiple sectors and global regions.
Here’s why I think they’re worth serious consideration today.
The investment trust
Real estate investment trust (REIT) Target Healthcare’s set up to deliver a steady stream of dividends to shareholders. These entities must pay at least 90% of annual earnings out this way in exchange for juicy tax breaks.
By focusing on the care home sector — it owns 94 in total — this trust has exceptional long-term potential as the UK’s elderly population booms. It also benefits from the sector’s highly stable nature, while inflation-linked leases boost earnings visibility still further.
Be mindful though, that labour shortages in the nursing industry could dent future returns.
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.
The ETF
The iShares World Equity High Income ETF is focused primarily on high-yield and dividend growth stocks. In total, it holds 344 different businesses around the globe, from tech giants Nvidia and Microsoft to insurers like Axa, telecoms such as Deutsche Telekom and banks such as JPMorgan.
However, it also earns income from safe havens like cash and US Treasuries, which provides strength during economic downturns.
The fund’s focused primarily on US shares. In total, these account for 67.8% of total holdings. I don’t think this is overly excessive, but bear in mind that this could impact the fund’s growth potential if sentiment towards US assets more broadly cools.
The share
Phoenix Group, like Legal & General and M&G, is a highly cash-generative financial services provider. And so like those other businesses, it offers one of the three highest forward dividend yields on the FTSE 100 today.
In fact, Phoenix has a sound track record of beating its cash generation forecasts and providing subsequent meaty windfalls to shareholders. During 2024, total cash generation was expected at £1.4bn-£1.5bn. In the end it came in at a whopping £1.8bn!
Like Target Healthcare, I believe it’s well-placed to capitalise on Britain’s growing older population. I’m optimistic demand for its savings and retirement products will grow steadily.
On the downside, this year’s predicted dividend is covered just 1.1 times by expected earnings. However, a Solvency II ratio of 172% could give it scope to meet analysts’ dividend forecasts, even if this year’s profits disappoint.
Combination with Henderson International Income Trust plc
Results of the Scheme and Issue of Scheme Shares
Results of the Scheme and Issue of Scheme Shares
The Board of JPMorgan Global Growth & Income plc (the “Company” or “JGGI“) is pleased to announce that the Company will acquire substantially all of the net assets from Henderson International Income Trust plc (“HINT“) in exchange for the issue of 64,261,713 new shares in the capital of JGGI (“SchemeShares“) in connection with the voluntary winding up of HINT pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986 (the “Scheme“) following the passing today of the resolution proposed at the Second General Meeting of HINT.
28 May 2025
The dividend policy is to make quarterly distributions with the intention of paying dividends totalling at least 4 per cent. of its NAV per Share as at the end of the preceding financial year, funded by distributable reserves where necessary. This policy provides the Investment Manager with the flexibility to adapt the portfolio to meet different market environments, which aligns favourably with HINT’s recently enhanced investment and distribution policy. JGGI’s policy has resulted in an annualised dividend growth rate of 7.2 per cent. since the start of the 2018 financial year.
Until the amalgamation of HINT completes there will be some churn.
