There are three end destinations for your plan, when you reach retirement and want to spend some of your hard earned.
One. Use your fund to buy an annuity, not a good option for your retirement as you have to surrender all your capital
Two. Using a TR plan you use the 4% rule to fund your retirement.
Three. Use a dividend re-investment plan and use the dividend stream to fund your retirement and access your capital if an unexpected emergency occurs.
The Snowball uses a 100k of seed capital and the dividends are re-invested.
The scores on the doors.
The current 2025 fcast for the Snowball £9,120.00
The control share for a TR plan is VWRP, the current value would be
118k and using the 4% rule would provide income of £4,720
VWRP could be higher or lower at the year end but remember with compound interest the gains accelerate every year you re-invest in your plan.
Any readers with time on there side may wish to have two pots, TR and a dividend re-investment pot and the earned dividends could be re-invested in either pot. Similarly if the TR pot was re-balanced any gains could be re-invested in the dividend pot. That depends on whether you are a gambler or an investor.
What do Britain’s 4,850 “ISA Millionaires” have in common ?
First, many are using Stock & Shares ISAs to save – collecting dividend income and potential capital gains tax free.
Second, they seem to prefer dividend paying shares.
Here’s a list of their top holdings – according to Hargreaves Lansdown:
Legal and General Group Plc Phoenix Group Holdings Plc Aviva Plc IG Group Holdings Intercede Group Plc Beeks Financial Cloud Group BP Plc Rio Tinto M&G Michelmersh Brick Holdings
And, as many ISA millionaires will tell you, you can reinvest your tax-free dividends, snowballing wealth over the long-term. I’d argue it’s the big secret of Britain’s “ISA millionaires.”
REITs often have higher-than-average dividend yields compared to other stocks, making them a solid choice to consider for passive income investors.
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Real estate investment trusts (REITs) offer a combination of high dividend yields, potential for growth, and diversification benefits, making them an attractive option to consider for investors seeking passive income.
Here are a handful owned across the Fool.co.uk contract writing team!
Primary Health Properties
What it does: Primary Health Properties specialises in purchasing and renting primary healthcare facilities within the United Kingdom and Ireland.
By Mark Hartley. Primary Health Properties (LSE: PHP) is a real estate investment trust (REIT) that benefits from stable revenue through long-term leases backed by the NHS and Irish government. This makes it a good candidate for passive income, as it’s low-risk and provides consistent dividend payouts
It has a long track record of dividend growth and has seen moderate price appreciation during strong economic periods. Dividends have increased consistently for over 20 years at a compound annual growth rate of 3.24%.
However, the price has suffered during periods of high interest rates, ramping up borrowing costs and impacting profitability. Recent concerns about the wider property sector and potential government healthcare policy change risk hurting the share price.
Despite a slight decline in performance over the past three years, revenue and earnings have typically been within 1% of expectations. This makes it attractive to income investors looking for stable and reliable performance.
Mark Hartley owns shares in Primary Health Properties.
Primary Health Properties
What it does: Primary Health Properties owns and lets out medical facilities like GP surgeries in the UK and Ireland.
By Royston Wild. Primary Health Properties offers investors the dream blend of long-term dividend growth and market-beating dividend yields.
Cash rewards here have grown every year since the mid-1990s. And City analysts expect this trend to continue until at least 2026, representing 30th consecutive years of rises.
As a result, the yields on Primary Health Properties for this year and next stand at 7.6% and 7.7% respectively. To put that into perspective, the current forward average for FTSE 250 stocks sits way below these levels, at 3.4%.
This REIT’s dividend durability reflects its focus on the ultra-defensive healthcare market, providing profits stability across the economic cycle. It’s also because the lion’s share of rental income is directly or indirectly guaranteed by a government body.
Looking ahead, future dividends could be hurt by NHS policy changes that impact earnings. But with successive governments working to strengthen the role of primary care in Britain, the outlook here for the short-to-medium term at least looks pretty solid.
Royston Wild owns shares in Primary Health Properties.
Supermarket Income REIT
What it does: Supermarket Income owns a £1.8bn portfolio of 74 stores, with the majority leased to Tesco and Sainsbury’s.
By Roland Head. Big UK supermarkets have regained their status as desirable retail properties since the pandemic. I added Supermarket Income REIT (LSE: SUPR) to my portfolio in July 2024, tempted by the 8%+ dividend yield and near-20% discount to book value.
Admittedly, there’s a risk that higher interest rates will put pressure on the dividend. But my sums suggest that this REIT will be able to refinance while maintaining its dividend.
Recent changes should deliver a sharp drop in management costs. This REIT also benefits from long leases and very reliable tenants. Occupancy is 100% and so is rent payment.
Property valuations also seem realistic – another area of possible concern. During the second half of 2024, Supermarket Income sold Tesco’s Newmarket store back to the retailer at a price 7.4% above its latest book value.
With a forecast yield of 8.3%, I’m quite happy to sit back and collect my quarterly dividends.
Roland Head owns shares in Supermarket Income REIT.
Warehouse REIT
What it does: Warehouse REIT owns and leases a portfolio of well-positioned warehouses across the UK catering primarily to the e-commerce industry.Zo
By Zaven Boyrazian. In a world where e-commerce continues to slowly take market share from brick-and-mortar retail, demand for well-positioned warehouses is growing. This is a trend that Warehouse REIT (LSE:WHR) has been busy capitalising on since its IPO in 2017.
However, with interest rates rising rapidly in 2022, real estate investment trusts have had to endure much higher financial pressures. In the case of Warehouse, that ultimately culminated in property disposals to keep debt in check.
Despite this, dividends have kept flowing. And while elevated interest rates are still a cause for concern, the sell-off by investors seemed a bit overblown. It seems the private equity markets have also come to the same conclusion since acquisition offers began flying in February 2025. So far, they’ve all been rejected.
Even after the recent rise in stock price, the shares continue to offer an attractive 6.5% dividend yield. And with demand for warehouses unlikely to slow down in the long run, the passive income potential for Warehouse REIT continues to look rock solid, in my opinion.
By a simple re-investment strategy, you would have achieved the holy grail of investing where you can take out your stake and receive income on a Trust that sits in your account at zero, zilch, nothing.
You could either spend your stake or re-invest it in the market and try to do it all over again.
Dividend Announcement
The Directors of TwentyFour Income Fund Limited (“TFIF”), the FTSE 250 listed investment company targeting less liquid, higher yielding UK and European asset-backed securities, have declared that a dividend will be payable in respect of quarter end 31 December 2024 as follows:
Ex Dividend Date 16 January 2025
Record Date 17 January 2025
Payment Date 3 February 2025
Dividend per Share 2.00 pence per Ordinary Share (Sterling)
Current yield 8.9%
Current discount to NAV 1.3%
The final dividend announced this month usually includes any surplus cash, if there is any, making it an enhanced dividend.
The emotional benefits of dividend re-investment. In fact, with this investment strategy you can actually welcome falling share prices.
There seems to be some perverse human characteristic that likes to make easy things difficult. WB
Whilst all days are good days to have a dividend re-investment plan, including weekends and holidays, some trading days are much better days than others.
Is a £333,000 portfolio enough to retire and live off passive income?
A third of a million pounds can generate a serious amount of passive income, but relying on this sum alone for retirement would be risky.
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When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.
You’re reading a free article with opinions that may differ from The Motley Fool’s
Many investors dream of becoming stock market millionaires to retire early and live off the passive income generated by their portfolios. For instance, an average 4% dividend yield across a diversified mix of dividend shares would produce a healthy £40,000 in cash payouts each year from a £1m portfolio.
But, could this goal be achieved with a more modest sum? How about nearly a third of that glorious £1m mark? That’s a challenging conundrum. An investor with a very spartan lifestyle might make it work, but most have some expensive commitments or want a few more luxuries than beans on toast every night.
So, let’s look at what a £333,000 portfolio could realistically generate in passive income.
Extra cash, but don’t quit work yet
The passive income a stock market portfolio can produce hinges on its average dividend yield. This can frequently change. Companies often cut, cancel, or suspend dividend payments due to challenging circumstances or evolving priorities. A recent example was the Covid-19 pandemic, when many businesses halted shareholder payouts.
Relying on the income produced by a £333,000 portfolio alone leaves little leeway. This raises the risks for investors who think it’s a sufficiently large nest egg to leave their jobs and sail off into the sunset.
For instance, the average dividend yield for FTSE 100 shares is currently 3.52%. If our theoretical investor’s portfolio matched that, they’d earn £11,721.60 in annual shareholder distributions. That’s a tidy sum, but it’s well below the National Minimum Wage for a full-time worker.
That said, investing in some of the highest-yielding UK shares could boost an investor’s passive income earnings. At a punchier 8% average yield, a £333,000 portfolio could produce £26,640 in annual dividends. Now, that’s more like it !
However, investors lured by the appeal of high-yield shares risk falling into dividend traps. Some market-leading payouts are unsustainable, particularly when they’re funded by debt or a business has cash flow difficulties.
For extra comfort, I’d want to spend a bit longer on the treadmill and fatten my portfolio with a decent buffer. Fortunately, at a third of a million pounds, compound returns really start to kick in. By reinvesting dividends into more stocks, investors can accelerate the process further.
A high-yield stock to consider
For those unsatisfied with the FTSE 100 average, the index offers several attractive high-yield candidates. One worth considering is Land Securities sports a juicy 7.3% yield.
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
This Real Estate Investment Trust (REIT) offers investors exposure to commercial property spanning offices, retail, and leisure spaces. It’s made a remarkable recovery from the pandemic as office working makes a comeback. Impressively, occupancy for its central London portfolio hit 97.9% in its first-half results.
Despite this, the group’s keen to pivot to growth opportunities in residential property and shopping centre acquisitions. It’s aiming for a 20% uptick in earnings per share from 50p to 60p by 2030. Landsec’s purchase of a 92% stake in Britain’s largest open-air shopping complex, Liverpool ONE, is a testament to these efforts.
Forecast dividend cover of just 1.2 times earnings is below the two-times safety threshold for reliable passive income. If the company encountered financial difficulties, a dividend reduction could be on the horizon. Nevertheless, Landsec’s near-term future looks bright for now.
