U should make more in the last years of your Snowball, whatever time frame u use, so that’s why lifestyling is detrimental to your final retirement ‘pension’.
Remember falling markets are a plus as the price of Investment Trusts fall the yield rises.
Note: although it’s possible to have a Snowball yielding 8% at present it may not be possible to re-invest your dividends at the same rate.
In a rising market your Trusts should increase in value and u may be able to re-invest any profits back into your Snowball, thus achieving 8% compound growth. Of course any Trusts already in you Snowball will return the same amount of dividends gently increasing, hopefully, overtime.
Are dividend stocks the best way to earn passive income? Mark Cuban is a fan. by Mark David Hartley
The Motley Fool
Nasdaq recently published an article detailing Mark Cuban’s ideas on passive income. The world-famous investor is known for his role on Shark Tank and as the owner of the NBA basketball team, the Dallas Mavericks.
He made his fortune selling a tech startup during the dot-com bubble and has gone on to become a well-known and respected investor. The article outlines his preferred investment options, such as private equity, AI companies, and the S&P 500. As a contrarian investor, many of his ideas go against traditional advice.
But his feelings on dividends struck a chord with me.
He notes how their regular cash payments equate to real-world value. The best part is, that these payments can be reinvested to maximise gains through the miracle of compound returns.
With two dividends to be announced next week the Snowball fcast of 8k and target of 9k should be confirmed.
The fcast/target for next year can also be made an increase of 1k.
The current indication for dividends earned this year is around 10k but will depend on when the December dividends are paid, as some may be held back to be paid in January for tax purposes. This of course would give a boost to the 2025 fcast total.
If income of 9.8k is received this year that equals the year 2028 fcast so the Snowball will be well ahead of the plan and halfway to doubling the income.
Literacy Capital, BBGI Global Infrastructure, CT Private Equity and Chelverton UK Dividend Trust all reported this week, but which of the four is ranked No.1 out of ALL UK-listed investment companies in terms of NAV performance over the three years to June 2024?
By Frank Buhagiar•30 Aug, 2024
Literacy Capital (BOOK) Tops the Charts
BOOK’s Interim results for the six months ended 30 June 2024 opens with a one-line summary “Strong first half; celebrates third year anniversary with NAV performance ranked #1 out of all UK-listed investment companies.” As for what a strong first half looks like, how about a +4.4% NAV increase and +9.9% share price rise. That compares to the FTSE Investment Company Index’s +5.8% increase and the FTSE All-Share’s +7.4%.
And according to CEO, Richard Pindar, for the three years to June 2024 the fund was ranked #1, with its NAV performance being comfortably ahead of all other UK-listed investment companies. A thumbs up for BOOK’s strategy of “focusing on smaller businesses that are poorly served or ignored by traditional private equity funds, as well as the benefits that our fund structure can deliver to portfolio companies and BOOK’s shareholders. We believe it is worth continuing to emphasise these points, as they are still not widely understood by the market.” And right on cue, share price was unmoved on the day of the results. But more numbers like the above and likely won’t be too long before the market sits up and takes notice.
Winterflood: “Manager sees signs of UK domestic trading conditions improving. NAV TR +49% p.a. since IPO in June 2021; top performer across all UK investment trusts.”
BBGI Global Infrastructure (BBGI) Keeps Delivering
BBGI reported a +2.4% NAV total return for the six months to 30 June 2024. Other financial highlights at the half-year stage include zero drawings on the revolving credit facility; net cash of GBP20.6 million; and a 6% dividend increase. And it was the dividend that Chair, Sarah Whitney, chose to focus on “Our high-quality inflation-linked cash flows generated by our portfolio of availability-style core infrastructure assets has enabled us to meet consistently or exceed dividend targets since the IPO in 2011, providing our shareholders with predictable, progressive and fully cash-covered dividends for over a decade.” Whitney goes on to note how, at the current share price, the shares offer FY 2024 and FY 2025 dividend yields of 6.3% and 6.4% respectively.
CEO, Duncan Ball, meanwhile has his eyes fixed on the future “Stabilising, and potentially reducing interest rates, combined with an ever-increasing demand for infrastructure investments, presents a long-term growth opportunity for BBGI.” Shares barely budged on the day of the results – market clearly focusing on the long term.
Jefferies: “The portfolio valuation was little changed over the half, while cash flow generation was typically robust.”
Liberum: “The results were largely as expected with limited changes from the FY 23 results. We continue to prefer: (1) infrastructure funds with a higher terminal value and better scope for earnings growth at the investment level which can drive NAV growth.”
Winterflood: “With the shares trading at a current discount of 8% (relative to 11% 5-year average premium), we believe that BBGI is undervalued and hence we continue to recommend the fund for core Infrastructure exposure.”
Investec: “The portfolio continues to perform well operationally and financially, and the company remains well positioned with a conservative balance sheet. We remain comfortable with our Hold recommendation.”
Numis: “We view BBGI as a high-quality business but maintain a preference for the revenue diversification and higher inflation linkage on offer elsewhere in the Core infrastructure sub-sector.”
CTPE noted a pick-up in realisation activity during the first half – realisations and associated income came in at £52.3m, a +31.4% increase on the same period last year. What’s more, realisations were struck at a 35% premium to prior valuations. Other half-year vitals include a +0.8% NAV total return; and a 6.5% dividend yield based on the period-end share price. Letting the side down, however, a -4.5% share price total return on the back of a widening discount. Chairman, Richard Gray doesn’t sound overly concerned though, as “there now appears to be a mild but definite pick-up in activity.” This includes a “substantial increase in realisations over the course of this reporting period with some more significant ones to come in the near future.” As for why this is important “Realisations are usually at a significant premium to recent carrying value and so have the benefit of enhancing NAV as well as strengthening the balance sheet and creating more shareholder value.”
And doesn’t sound like reinvesting the proceeds from realisations will be all that hard either “There are many investable funds and co-investments being appraised by our managers. Experience shows that investments made during, or immediately after, economic slowdowns usually perform very well.” Market liked what it heard – shares tacked on 11.5p on results day to close at 454p.
Winterflood: “In our view, realisations of c.10% of NAV YTD at a +35% uplift offer transactional evidence to support the prevailing NAV, which is particularly relevant given a 36% share price discount, and represents a continuation of the trend across the sector.”
JPMorgan: “The shares are trading at a headline discount of 34.7%, but taking into account proforma net debt the implied discount on the unquoteds is narrower at 30.2%. This looks about fair relative to peers in our view and therefore we see no need to change our Neutral recommendation.”
Chelverton UK Dividend Trust’s (SDV) Year of Two Halves
SDV’s NAV total return of -7.5% for the full year doesn’t tell the whole story. For performance at the UK equity income trust picked up markedly in the second half of the year with NAV rising +20.3% in the six months to 30 April 2024, a nod to the improvement in sentiment seen towards the mid and small-cap stocks that SDV invests in. And according to the Investment Manager’s Report, the majority of the fund’s portfolio companies “continue to trade profitably, generate significant levels of cash and pay dividends.”
The relatively strong operational showing at the portfolio company level is not going unnoticed if an uptick in corporate activity is anything to go by – six of the fund’s holdings were the subject of corporate activity in the year to April 2024. The investment managers don’t sound 100% happy about this though “We must also hope that we do not lose too many of our holdings to takeovers at prices which do not reflect the full medium-term potential of the business. As long-term, fundamental investors, we would far rather continue to back the management teams of growing, cash generative businesses, than settle for a quick return based on current low levels of valuation.” Results were good for an initial 3p spike in the share price to 172p.
Winterflood: “Ordinary shares moved from 3.8% premium to 6.5% discount; 395k shares issued at a premium over FY. 2025 ZDPs moved from 4.6% to 6.3% discount.”
How much do I need to invest in UK shares to stop working and live off passive income?
Story by Royston Wild
The Motley Fool
To my mind, the best way to try and create a passive income is to invest in a broad range of UK shares.
What about savings accounts? Well, with interest rates falling again, I’m expecting these products to start delivering mediocre returns again.
Past performance is no guarantee of future returns. But with the Stocks and Shares ISA delivering an average annual return of 9.64% (according to Moneyfarm research) in the past decade, I think building a portfolio of British stocks will be the best way to go.
But how much would I need to invest so I can stop work and live off the passive income?
Hitting a £50k income
The first thing I need to consider is how much my everyday expenses will be. I also must think about what luxuries I want to enjoy. After all, none of us want to work for decades without having some lavish living to look forward to.
It says the average single person needs £43,100 a year to live a comfortable retirement. People in this bracket will get to enjoy regular holidays in the UK and overseas, a new car every few years, and a four-figure kitty to spend on clothes.
For this exercise, I’ll round my annual income target up to £50,000 to give me a margin of safety. So how much will I need to invest each year to reach this?
If I can manage to hit that 9.64% average return that ISA investors enjoy, I’ll need to spend £8,376 a year on UK shares for 25 years, reinvesting any dividends I receive along the way.
At this point, I’ll have built a nestegg north of £833,420.
Source: thecalculatorsite.com
I could then invest this in 6%-yielding dividend shares to target just over £50,000 in passive income each year. Remember, however, that dividends are never guaranteed.
Demand for FTSE 250 shares has risen sharply in 2024 thanks to the improving UK economic outlook. This pickup probably isn’t a surprise. Around 60% of the index’s earnings come from Britain.
The UK’s second-most-prestigious index has consequently risen around 7% in value in the year to date, pushing valuations higher. But don’t be mistaken, there are still many great bargains for investors to go hunting for.
Buying cheap shares has two significant advantages. Undervalued stocks can deliver stunning capital appreciation over time as the market wises up to their cheapness and share prices soar.
Value shares also provide investors with a margin of safety. If a company suddenly experiences adverse conditions, the scale of share price losses can be far more limited.
Value shares also provide investors with a margin of safety. If a company suddenly experiences adverse conditions, the scale of share price losses can be far more limited.
Solar star
Solar star The threat of higher-than-normal interest rates means property and infrastructure companies like NextEnergy Solar Fund (LSE:NESF) remain ultra cheap.
This particular investment fund — which owns more than 100 renewable energy assets mainly in the UK — trades at a 20.2% discount to the estimated value of its assets.
While they’re not without risk, renewable energy stocks like this have terrific long-term potential. As the climate emergency worsens, demand for their power should rapidly increase. This makes NextEnergy worth serious consideration, and especially at current prices.
Cordiant Digital Infrastructure’s Chairman buys shares AGAIN; Gulf Investment Fund launches a tender offer; Diverse Income maintains its unbroken record of dividend growth; while Partners Group Private Equity shares sit on a 6.7% yield full-year payout was raised.
By Frank Buhagiar•28 Aug
Cordiant Digital Infrastructure Chair Tops Up Holding
Cordiant Digital Infrastructure (CORD) Chairman and co-founder, Steven Marshall, snapped up a combined 440,919 CORD ordinary shares at an average price of 74.56 pence each. As per the company’s press release, following the purchases, which were made in July and August 2024, Marshall now holds 9,516,119 ordinary shares in the company. Regular readers will know, the purchases are not the only ones made by Marshall over the past year or so. With the share price still trading at a steep discount to net assets (-37%) chances are they won’t be the last.
Gulf Investment Fund Launches Tender Offer
Gulf Investment Fund (GIF) announced a tender offer for up to 100% of each shareholder’s holding in the fund. The tender offer is being proposed in line with the authority granted by shareholders at the December 2023 Annual General Meeting. The Tender Price will be announced at a later date.
Winterflood notes that “As it would not be in the interests of shareholders to be invested in a sub-scale illiquid fund, the fund shall not be obliged to proceed with any tender offer where the Board believes it would reduce the fund to such a size that it would no longer be fit for purpose. This minimum size condition shall be a post tender offer share capital of not less than 38m shares.” Thing is, according to the February Half-year Report, the US$2.5352 NAV per share reported for 31 December 2023 was based on 40,103,204 ordinary shares in issue. The tender then unlikely to be a particularly large one.
Dividend Watch
Diverse Income (DIVI) increased its full-year dividend by +4.9%. As announced in the latest Annual Report, a recommended final dividend of 1.2p per share will raise the payout for the year to 4.25p from 4.05p. The dividend increase maintains the trust’s “unbroken good and growing dividend record.”
Partners Group Private Equity (PEY) shares are currently sitting on a prospective dividend yield of 6.7%. That’s according to the latest Half-year Report and follows the payment of the first interim dividend of EUR 0.355 per share to shareholders in June. All in line with the fund’s objective to distribute 5% of previous year-end NAV for each financial year via semi-annual payments in June and December.
