The updated Watch List for DYOR. I’ve added a few ‘safer’ lower yielders for anyone who is approaching their de-accumulation stage.
Some shares are winding down, so more risky than others.
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Earnings
We continued to see solid corporate earnings from the companies we invest in over the period. Whilst it was not a completely positive picture across all sectors, in aggregate the trusts’ earnings generated a total income of £28.1m. This was 1.1% above the £27.8m generated for the first half of the previous fiscal year. In terms of earnings per share (EPS), issuance of new shares over the equivalent period last year meant that the EPS reduced by 1.7% to 17.1p (2023: 17.4p).
Dividends
The positive earnings picture noted above has given the board confidence to announce an increased Merchants dividend whilst allowing us to continue rebuilding revenue reserves that were partially utilised during the pandemic. As a reminder, at the start of this financial year, revenue reserves per share stood at 18.1p. Not all trusts can or will provide such income support and smoothing, which is why Merchants is one of a handful of companies to be awarded the AIC’s coveted Dividend Hero status from a universe of well over 400 listed companies.
With the final dividend of the 2024 financial year approved by shareholders at the AGM, Merchants has raised its dividend for 42 consecutive years and, with the increased dividend noted in this report, we remain well positioned for the future.
The board has declared a second quarterly dividend for the current financial year of 7.3p per ordinary share, payable on 15 November 2024 to shareholders on the register at close of business on 11 October 2024. A Dividend Reinvestment Plan (‘DRIP’) is available for this dividend for which the relevant Election Date is 25 October 2024 and the ex-dividend date is 10 October 2024. This means that for the first half of the financial year ending January 2025, the aggregated dividend will be 14.5p compared with 14.2p for the same period last year, a 2.1% year-on-year rise.
MRCH
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Advantages of Investment Trusts in a dividend re-investment plan.
- Revenue reserves, used to pay the dividend in time of stress e.g. The Covid Crash
- May trade at a discount which means a bigger yield when u buy
- Covid crash – knowing it was AIC dividend hero, u could have bought when the yield was 8% which u should receive for as long as u own the Trust.
- Gently increasing dividends plus the chance of a capital gain.
- If u bought around the covid crash and simply re-invested the dividends, u could take out your stake and re-invest in another high yielder, whilst earning dividends on a share that sits in your account at zero, zilch, nothing.
Some property trusts and Reits for DYOR. If u particularly like any of the above but the yield is only 6%, u could pair trade it with a higher yielder.
RECI is included although it’s a loan company the loans are secured against property, xd today for 3p.
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Dividend Wealth Journal: REITs and Interest Rate Cuts, A Double Dipping Opportunity Hey folks, over the weekend I mentioned how dividends can be great for “Double Dipping” when you play them right. In other words, buying a stock that gains value in your portfolio and collecting passive income along the way. I want to follow up with a specific opportunity that could be primed over the next few months for a double dip. With the recent talks and actions around interest rate cuts, the spotlight is once again turning towards Real Estate Investment Trusts (REITs). Lower interest rates often breathe life into the real estate market, making REITs increasingly attractive (and potentially more profitable once again) for investors. Why do lower interest rates matter for REITs? Interest rate cuts have a direct impact on the real estate sector. Lower borrowing costs can lead to an uptick in purchasing and development activities, directly benefiting REITs that hold or manage these properties. As financing becomes cheaper, properties in the portfolios of REITs may increase in value, and their income potential can improve due to higher occupancy rates and rising rents. The infusion of lower rates can turn the REIT market bullish in several ways: Enhanced Property Values: As more investors and businesses find it affordable to finance real estate purchases or expansions, the demand drives property values up. Increased Occupancy and Rent: Lower interest rates generally boost economic activity… This leads to higher demand for both commercial and residential real estate. This increases occupancy rates, allows for rent hikes, and boosts REITs profits. Double Dipping Opportunity With those tailwinds giving REITs an opportunity to gain in underlying value, the next cycle of rate cuts present a unique “double dip” opportunity. But how? •Dividends: REITs are required by law to distribute at least 90% of their taxable income to shareholders in the form of dividends, offering investors a steady income stream. •Capital Appreciation: As the underlying properties appreciate in value due to increased demand and higher rental incomes, the value of the REITs themselves soar. This scenario allows investors not only to enjoy solid dividends but also to benefit from the appreciation of the stock itself. For dividend investors looking to leverage these benefits, considering REITs in sectors that are most sensitive to interest rate changes, like residential and retail, or those focused on regions with growing economies, might be particularly lucrative for this double dipping strategy. But, as always, the key to capitalizing on these opportunities lies in choosing solid dividends, specifically ones with strong fundamentals, strategic property holdings, and a solid leadership team. As interest rates decrease over the next year and a half, the relationship between interest rates and the real estate markets will grow increasingly important. We haven’t seen a great opportunity for real estate to gain inflows since 2020 when it took off, so now could be another double dip run. — Nate Tucci |
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pttogel
Thanks , I’ve recently been looking for information about this
subject for ages and yours is the best I’ve came upon till now.
But, what in regards to the bottom line? Are you positive concerning the supply ?
£££££££££££££££
Yes, there are currently 35 Investment Trusts paying a ‘secure’ yield above 7%, remembering that nothing is ever 100% secure.
7% re-investment is important as it doubles your income in ten years.
There is normally Trusts that the market have sold, for various reasons and u only need one to re-invest in.
The Snowball is currently not buying any new positions but re-investing in the portfolio to increase the income.
If there are no Trusts to buy at 7% or above, the current portfolio shares are trading at a blended discount of 30%, u would have funds to re-invest as well as your income. The income target is secure although u would have to extend the time line.
As the price rises the yield falls and vice versa.
The rules for any new readers, there are only three.
- Buy Investment Trust that pay a ‘secure’ dividend to buy more Investment Trust that pay a ‘secure’ dividend.
- Any Investment Trust that drastically changes its dividend policy must be sold even at a loss.
- Remember the rules.
Dividends can be more reliable than share prices as they’re driven by
the companies performance itself and not by the whim of investors.
As part of a total return / reinvestment strategy, this income could be
reinvested into income assets or back into the equity market
depending on the relative valuations.
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.
Warren Buffett