Story by Rupert Hargreaves

Why MoneyWeek likes investment trusts© Getty Images

The investment-trust structure was conceived in the mid-1800s to fill a gap in the market for a low-cost, mass-market investment vehicle. One of the first was Foreign & Colonial, founded by City of London financier Philip Rose. The entrepreneur had a revolutionary goal: to provide the “investor of moderate means the same advantages as the large capitalist”

In the 1800s, investing was largely the preserve of the wealthy, with limited options available to the smaller investor. Foreign & Colonial pooled investors’ money and invested it in a diversified portfolio, spreading risk across a basket of assets.

The closed-ended structure, which provided a stable pool of long-term capital, made these investment companies ideal vehicles for financing the expansion of the British Empire and the rapid industrialisation of the Americas. As global investment markets grew and diversified, the range of investment options available to investors with investment trusts expanded, and the range of trusts available also expanded.

Investment trusts have a fixed capital base

Investment trusts are structured as companies. They issue a set number of shares at the time of their flotation, and this forms a fixed capital base. Investors are then free to buy and sell the shares on an exchange. As the shares are freely traded and the asset base is fixed, trusts can trade at a premium or a discount to their underlying net asset value (NAV).

Open-ended vehicles, such as exchange-traded funds (ETFs), unit trusts and open-ended investment companies (Oeics) issue or eliminate excess shares at the end of each day to ensure the NAV and the share price match. This means there’s no room for a discount or premium to emerge.

This also means the capital base can shrink dramatically if the number of sellers consistently exceeds the number of buyers (and the price of shares in the fund falls). As the capital base shrinks, the vehicle has to continue selling assets to fund investment outflows. If those assets are challenging to sell, this can lead to a liquidity crunch. That’s why investment trusts tend to be the best vehicle for holding illiquid assets. They have no obligation to sell the assets, no matter how wide the discount to underlying NAV may become.

Some of the biggest trusts in illiquid sectors are the infrastructure trusts 3i Infrastructure (LSE: 3IN), Greencoat UK Wind (LSE: UKW) and the Renewables Infrastructure Group (LSE: TRIG). All of these trusts own portfolios of illiquid infrastructure assets, which generate steady inflation-linked cash flows.

Infrastructure isn’t the only asset class that lends itself well to the investment-trust structure. Trusts are ideally suited to owning portfolios of mixed assets, such as bonds, gold and stakes in hedge funds or private-equity investment funds. BH Macro (LSE: BHMU) has a position in the global macro hedge fund Brevan Howard, giving investors access to a fund that would otherwise be unavailable.

HarbourVest Global Private Equity (LSE: HVPE) is just one investment trust in the private-equity sector, offering investors exposure to this asset class via the trust structure. RIT Capital (LSE: RIT) and Caledonia (LSE: CLDN) are two examples of trusts making the most of the flexibility offered by the structure. Both are majority-owned by their founding families and own a broad portfolio of assets, from private-equity holdings to direct investments in other companies and portfolios of equities.

The structure of the investment trust also lends itself well to borrowing money. Investment trusts that specialise in acquiring illiquid assets – such as wind farms, property and infrastructure assets – can borrow against those assets to increase growth and build the asset base. These companies can also borrow to invest in equities. Borrowing money to invest in shares can be risky, but trusts can often mitigate some of the risk by issuing long-term fixed bonds.

For example, Scottish American (LSE: SAIN) issued £95 million of long-term debt between 2021 and 2022 with a blended interest rate of under 3%, maturing between 2036 and 2049. The trust, which owns a portfolio of equities, as well as property and infrastructure via other investment trusts, used the cash to reinvest into the portfolio.

The ability to borrow money is particularly helpful for the real-estate investment trust (Reit) segment of the market. Reits are a version of the typical investment trust, but with tax benefits when the majority of the portfolio is deployed into property. Companies like Supermarket Income (LSE: SUPR) and PHP (LSE: PHP) have leveraged this structure to build property portfolios designed around supermarkets and healthcare facilities, respectively.

MoneyWeek has always preferred investment trusts to open-ended funds for the above reasons – and the fact that they have historically outperformed other actively managed, open-ended funds. However, this has started to change in recent years. Investment trusts, particularly in equities, have struggled to keep up with the performance of other funds. As a result, investors have drifted away, and discounts to NAVs have risen sharply.

But there’s still a place for trusts within investors’ portfolios. Thanks to the structure of trusts, they are invaluable to build exposure to specific themes such as small caps, emerging markets, property and infrastructure. There are virtually no mass-market alternatives to the infrastructure offering, and trusts such as BH Macro, RIT and Capital Gearing (LSE: CGT) offer the sort of portfolio diversification that just can’t be found elsewhere.

The 2026 target a yield of 10%, which in year 4 of the plan is already higher than an annuity and you get to keep all your hard earned. Remember when its gone its gone.

If you had been lucky or had a diversified Snowball

My share programme has changed their format, so until I get used to the new format, let’s look back at yearly performance, where if your Snowball is both

And you have been unlucky, these are the TR returns for one year.

CT Global Mgd – CMPI – Portfolio Update

19th February 2026

CT GLOBAL MANAGED PORTFOLIO TRUST PLC

All data as at 31 January 2026

This data will be available on the Company’s website,

CT Global Managed Portfolio Trust PLC

Income Portfolio

Top Ten Equity Holdings	%
JPMorgan European Growth & Income	6.6
Murray International Trust	6.1
JPMorgan Global Growth & Income	6.1
NB Private Equity Partners	5.4
JPMorgan Global Emerging Markets Income Trust	4.7
Schroder Oriental Income Fund	4.4
STS Global Income & Growth Trust	4.3
The Law Debenture Corporation	4.2
3i Infrastructure	4.1
TwentyFour Income Fund	3.8
Total	49.7

Note: All percentages are based on Net Assets 

Net Gearing

6.6%

Research for your Snowball.

Posted on 4th October 2015 | By Phil Oakley

Updated: August 2024

If you are watching or listening to the news at the end of the day you will usually be told what happened to the stock market that day. More precisely, you will be told whether it went up or down in price.

Yet investing in shares is not just about changes in prices. When you own a share of a company you are often paid a dividend as well. Dividends can be very important. They can form a major part of any long-term savings plan and also a source of income to live on.

In this chapter, we are going to look at why dividends are important and how you can use them to build up your savings pot or as a source of income. Then we will look at some of the tools that ShareScope has to help you find some dividend paying shares that can help you meet your goals.

What are dividends?

Dividends are your share of a company’s after-tax profits paid to you during a year.

They make up part of the investment return from owning a share. However, unlike a share price that goes up but then goes down again, a dividend once it has been paid cannot be taken away from you.

What’s good about dividends is that they represent a real, tangible return on the shares that you own.

The same cannot be said for a rising share price. Share prices tend to move up and down a lot and there’s no guarantee that you will sell for a profit.

The return from earning a share

Return = Change in share price + dividends received

Investing in shares that pay chunky dividends and holding them for a long time can be a great way to build up your portfolio’s value.

That’s because the dividend from shares and the reinvestment of them is where the real money can be made from the stock market over the long haul.

Why is this?

Dividends and the magic of compound interest

I’ve never been able to find the source, but Albert Einstein was rumoured to have said that “the most powerful force in the world is compound interest”.

When it comes to investing – and dividend investing in particular – I’m inclined to agree with him.

Compound interest is essentially earning interest on the interest that you’ve already been paid. This is what tends to happen if you leave money in a savings account for a number of years.

Let’s say that you put £100 into a savings account that pays interest of 10% per year at the end of the year.

You have a choice of what to do with the interest that you receive. You can either spend all or some of it or you can reinvest it.

In the first year, you will receive £10 of interest on your £100 of savings. If you spend the interest every year, this is what happens to your interest income and savings over five years.

Year	1	2	3	4	5
Starting Amount	£100	£100	£100	£100	£100
Interest at 10%	£10	£10	£10	£10	£10
Spent	-£10	-£10	-£10	-£10	-£10
Ending Amount	£100	£100	£100	£100	£100

You receive £10 every year to spend and at the end of five years the value of your savings is still £100.

You’ve had £50 of interest income and preserved your savings pot. So your initial £100 has given you £150 of value.

But what would happen if you didn’t spend the interest and reinvested it back into the savings account at 10%? If you compound the interest you receive.

Year	1	2	3	4	5
Starting Amount	£100	£110	£121	£133.10	£146.41
Interest at 10%	£10	£11	£12.10	£13.31	£14.64
Spent	£0	£0	£0	£0	£0
Ending Amount	£110	£121	£133.10	£146.41	£161.05

Well, after five years, the value of your £100 would have grown to £161.05 and your annual interest income would have grown to £14.64.

The longer you reinvest your income the bigger the potential annual income and the value of your savings pot. This is the power of compound interest at work.

The one big caveat here is that the interest rate has stayed the same for five years.

This might be the case with a fixed term savings account or a bond, but is rarely the case for other investments. I’ll say a bit more on the effect of changing interest rates a little later on.

You can use this strategy of compounding to very good effect with dividend paying shares.

Instead of spending the dividend you receive, you use it to buy more shares in the company which paid you, which in turn gives you more dividends in the years ahead.

Repeat this process for long enough – the longer the better – and it is possible to turn a small initial sum of money into a large one. This can be the case even if dividends per share or the share price do not change.

Let me show you how this can work.

Let’s say that you buy 1000 shares in a company called Bob’s Book Stores plc at 100p per share (so an investment of £1,000) when it is paying an annual dividend per share of 4p.

Over the next thirty years the company doesn’t grow its profits but maintains them.

Dividends stay at 4p per share and the share price stays at 100p.

If you had kept your 1000 shares you would have received an annual dividend income of £40 (1000 x 4p) or £1200 over thirty years.

With your 1000 shares still worth £1000, your investment value would be £2200 (£1,000 + £1,200).

But if you had reinvested the dividends and bought extra shares (To keep things simple, I’ve ignored the impact of broking commissions and buying whole shares here) each year you’d have ended up with a much better result.

At the end of thirty years you would own 3243 shares worth £3243 and have an annual dividend income of £125. This equates to a yield on initial cost of 12.5% (£125/£1000).

An investment of £1,000 in Bob’s Book Stores over 30 years:

	Left alone	With dividends reinvested
Value of shares	£1,000	£3,243
Income Received	£1,200	£0
Investment value	£2,200	£3,243
Annual income in year 30	£40	£125
Yield on cost	4.00%	12.50%

That said, if you pick the right investments you’ll find that dividends don’t stay the same for thirty years – they can often increase substantially.

This makes dividend reinvestment and the power of compound interest even more attractive – if you can find the right share at the right price. More on this in a short while.

It’s worth adding that companies which have an explicit policy of paying and growing dividends (known as a progressive dividend policy) usually aim to increase their payouts by at least the rate of inflation every year.

Dividend re-investment in the real world and total returns

Theory is all well and good, but what about what happens in the real world?

The chart below compares the value of the FTSE 100 (the lower or red line) with the value of the FTSE 100 Total Return index (the higher or blue line), which includes the effect of reinvested dividends since 1994.

You can now see that the total return index is worth a lot more than the FTSE 100 index.

This is important as it should make you look at investment results in a different way. Investing in shares is not just about the changes in share prices, it’s about the total returns which includes the dividends you receive.

However, the point I want to get across is that dividends matter and can make up a large chunk of the returns that you get from owning shares over the long run.

Dividend reinvestment with individual companies

Buy the right share at the right time and the right price and you can see spectacular results. Take British American Tobacco (LSE:BATS) for example.

Let’s say you bought 1,000 shares of this company on the first trading day of 2000 for 332.5p (an investment of £3325 excluding stamp duty and dealing costs) when it was paying an annual dividend of 22.2p (or a dividend yield of 6.7%). The shares were very cheap as many investors ignored them and put their money into glamorous internet shares.

Just over fifteen years later though in January 2015, BAT shares are priced at 3522p and are paying an annual dividend of 144.9p. Most people would be quite happy. The shares have soared as has the annual dividend per share.

Even if they had spent their annual dividend income, their investment would have increased in value more than ten-fold to £35,220. The dividend income as a percentage of the original price paid (144.9p/332.5p) – or the yield on cost – would be an impressive 43.6%.

But say you’d reinvested your dividend income every year and bought more shares with it. Your investment would have soared in value to £69,335 with an annual dividend income of £2753.64 – or a yield on cost of 82.9%.

An investment of 1,000 shares in BAT since January 2000

	Left alone	With dividends reinvested
Value of shares	£35,220	£69,335
Income Received	£1,112.60	N/A
Investment value Jan 2015	£36,332.60	£69,335
Annual income Jan 2015	£1,449	£2,753.64
Yield on cost	43.60%	82.90%

Of course, hindsight is a wonderful thing but this example does highlight three very important rules of a successful dividend re-investment strategy:

1. It helps to buy shares at a cheap price. Back in 2000, companies like BAT were out of favour as investors piled into glamorous internet and technology shares. With a dividend yield of 6.7%, the shares looked – and turned out to be – very cheap given that the business was not in trouble and had been increasing its dividend.
2. The importance of dividend growth. Your returns can be turbo-charged if the company is capable of delivering high rates of dividend growth. BAT’s annual dividend growth over the last 15 years averaged 13.3%.
3. The power of time. The longer you invest for, the greater the power of compounding on your investment returns.

The emotional benefits of dividend re-investment

This is a very powerful investing strategy, especially for shares with high dividend yields that are capable of growing their dividends year after year.

What’s particularly good about it is that you focus your attention on the performance of the company and its ability to keep paying a growing dividend rather than what’s happening to the share price. The bigger the amount of your investment return that comes from dividends and their reinvestment, the less you tend to worry about share prices.

In fact, with this investment strategy you can actually welcome falling share prices. As long as the underlying business is sound, a falling share price allows your dividend to buy more new shares which means more dividends to potentially boost your long term returns.

With this mindset, you worry less and concentrate on what’s important rather than the short-term whims of the stock market. To me this is proper investing and more people would be better off – financially and emotionally – if they put their money to work this way.

That said, evidence suggests that very few investors follow this strategy as the average time that people hold shares is becoming increasingly shorter which means that there is insufficient time for it to pay off.

Buy and hold is not the same as buy and forget

This strategy is based on holding on to a share for a long period of time. This is known as a buy and hold strategy. However, this must not be confused with a buy and forget strategy.

Whilst you do hear stories of people who had left shares invested and forgotten about them for 30 years, and then to find out they had become millionaires, it is probably wiser to keep an eye on your investment from time to time.

I’m not talking about obsessing about share prices every day. Instead you should read the company’s half year and full year results statements to see that all is well and that your dividend is still safe and growing.

The other thing to keep an eye on from time to time is the dividend yield on your shares. This is important because it represents the rate of interest you are getting on your reinvested dividends.

Back in 2000, the dividend yield on BAT shares was 6.7%. This was the income return you would get by reinvesting the dividend. In January 2015, the dividend yield – and reinvestment rate – had fallen to 4.1%. The rate of dividend growth has also slowed down a lot. When this happens, the incremental value from reinvesting diminishes.

What you need to be constantly asking yourself is whether you can reinvest at a higher rate elsewhere? You can search for shares with high dividend yields and dividend growth potential with ShareScope. I’ll be showing you how to do this shortly.

How to set up your own dividend reinvestment plan

Reinvesting your dividends is fairly straightforward. With funds (not exchange traded funds or ETFs) you can buy what are known as accumulation units that do this for you. Alternatively you can set up an automatic dividend reinvestment plan for individual shares with your broker (often restricted to shares that are in the FTSE 350 index) who will reinvest dividends for you for a small fee.

If you don’t want to reinvest back into the same share (for example if the price has gone up a lot and the dividend yield is too low), you can always just let your dividends increase your cash account over a year and then reinvest the money later on when you find a good dividend paying share at a reasonable price.

Looking for reliable dividend payers with ShareScope

1. A minimum dividend yield of 3% – I want a reasonable starting dividend return.
2. Minimum dividend cover of 1.5 times – the higher the cover, the better. However, I don’t want to exclude mature industries such as tobacco, telecoms and utilities where dividend cover can be lower but still mean that the dividend can be quite safe.
3. Dividend years of payments – At least 10 years. This means that companies that have missed a dividend payment – and often do when times get tough – can be excluded from the list of possible investments.
4. A minimum return on capital employed (ROCE) of 10% – This would indicate that the company concerned is a reasonable business and can earn respectable returns on the money it invests, which in turn suggests that it can keep on paying a dividend.
5. Forecast dividend growth greater than the rate of inflation – I’ve set a minimum growth rate of 4% so that the dividend increases in value after inflation.

The temptation when you find shares that look interesting based on their numbers is to rush in and buy them.

This can often be a mistake.

Take your time and do your homework.

• Study the company’s financial history
• Read the latest news
• Check that the directors own a decent chunk of shares
• Look at the recent share price performance.

This should be seen as the bare minimum amount of research that you should do.

Following a disciplined approach means that you can learn a great deal about a company.

I also like to read the front half of the company’s annual report which gives a flavour of the company and its short- and longer-term objectives.

You won’t know everything – no outside investor ever does – but you should have enough information to know what you are buying and why.

The real skill in investing often rests with having the patience to wait and pay the right price.

Dividends to live on

People regularly rely on the dividend income from shares as a source of income to live on – especially in retirement and they are not buying an annuity.

If you are looking for dividend income to supplement your pension, then you can look for shares that might help you to do that in ShareScope.

1. A minimum dividend yield of 4% – The yield needs to be sufficiently high to provide a reasonable amount of income.
2. Dividend cover of at least 1.2 times – so reasonably covered by profit but allowing a large portion of profits to be paid out.
3. Continuous dividend payments for at least ten years. I want some comfort that the company has been able to pay some dividend when times have been tough. This gives me some confidence that it might be able to weather economic storms in the future.
4. Minimum forecast dividend growth of zero. I am looking for the dividend to be at least maintained at its current level.

Using dividends to find outstanding companies

Outstanding companies don’t necessarily have to pay a dividend or have paid one for a long period of time.

However, companies that have a long track record of increasing their dividend per share every year are often those with the characteristics of great companies.

An ability to keep increasing a dividend payout in recessions, pandemics and in the face of competition is one that generally serves investors well – again with the proviso that they buy the shares at a fair price.

When it comes to the UK stock market, only 10 companies have been able to increase their dividend per share for 20 years or more.

In the S&P 500 over in the US, that number increases to 14.

Posted on 4th October 2015 | By Phil Oakley

Updated: August 2024

This article is for educational purposes only. It is not a recommendation to buy or sell shares or other investments. Do your own research before buying or selling any investment or seek professional financial advice.

Q4 2025 Dividend Declaration

As previously indicated, the Company will pay a dividend of 2.50 pence per share (“pps”) for the period 1 October 2025 to 31 December 2025, (2024 Q4: 2.20 pence per share) amounting to 10pps for 2025. The entire dividend will be paid as a REIT property income distribution (“PID”).

Shareholders have the option to invest their dividend in a Dividend Reinvestment Plan (“DRIP”), and more details can be found on the Company’s website https://www.regionalreit.com/investors/investors-dividend/dividend-reinvestment-plan.

The key dates relating to this dividend are:

Ex-dividend date	26 February 2026
Record date	27 February 2026
Last day for DRIP election	20 March 2026
Payment date	10 April 2026

The level of future payment of dividends will be determined by the Board having regard to, among other factors, the financial position and performance of the Group at the relevant time, UK REIT requirements, the interest of shareholders and the long-term future of the Company.

REGIONAL REIT Limited

(“Regional REIT”, the “Group” or the “Company”)

Q4 2025 Dividend, Year End 2025 Valuation and Trading Update

Delivering in 2025, prudent approach in 2026

Regional REIT Limited (LSE: RGL), today announces its portfolio valuation as at 31 December 2025, Q4 2025 dividend, and an update for both EPC ratings and rent collections.

In 2025, the Company completed £51.6m of disposals – ahead of target and at a 1.3% premium to book value – and reduced LTV to 40.4% by year‑end (39.9% including post‑period disposals). The gross annualised rent roll of £50.4m tracked broadly as expected, while the dividend for the year was fully covered at 10 pence per share. December also saw the successful refinancing of £72.4m of debt which was due to expire in August 2026 and a new management contract being put in place bringing significant fee savings and also introducing much greater shareholder alignment for the Manager.

The portfolio valuation decreased by 2.9% in H2 2025, bringing the full‑year decline to 5.0%, largely reflecting previous changes in income following the tenant breaks previously announced.

Looking ahead to 2026, the Company’s strategy is to retain cash where possible to facilitate essential, accretive capital expenditure to accelerate the repositioning of the portfolio to benefit from occupiers’ demand for quality space. In addition, the successful sales programme from 2025 will be continued. This will reduce debt and LTV but also temporarily lower earnings. Given this, the impact of the lease breaks from 2025 and the fact that debt costs will increase from the refinance at August 2026, going forward the Company plans to distribute a minimum 90% of the profit from the property rental business and is targeting* a dividend of 8 pence per share dividend for 2026. The Board remains confident that this approach of improving the quality of the portfolio is firmly in shareholders’ long‑term interests and aligns with the Company’s strategy and medium‑term outlook

The target dividend has been cut from 10p to 8p.

That equates to a yield of 7.5%, so it continues to be a hold for the SNOWBALL

This 9% REIT yield looks tempting, but what’s the catch?

Ken Hall looks at a discounted UK REIT yielding around 9% and breaks down the key risk he believes investors shouldn’t ignore.

Posted by Ken Hall

Published 18 FebruaryNRR

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.

When a real estate investment trust (REIT) offers more than double the the market average yield, it usually comes with strings attached. A near-9% dividend yield looks generous and reassuring. It even looks like easy money.

But yields often rise for the wrong reasons. So before focusing on income, investors should aim to find out what’s driving it.

The real story behind the 9% yield

Over the past year, the NewRiver REIT (LSE: NRR) share price has struggled to build sustained momentum. While there have been short bursts of recovery, the stock has climbed just 2.7% in the last 12 months as concerns linger around UK retail property and borrowing costs

The business appears to have stabilised. Occupancy has improved and management has been recycling weaker assets. For the year ending 31 March 2025, adjusted earnings per share were 6.3p.

Yet retail property remains a tricky area. Even though the REIT focuses on convenience-led locations, which tend to be more resilient than fashion-heavy shopping centres, tenants still face cost pressures. If retailers struggle, rental growth can stall.

Valuation

The company trades on a price-to-earnings (P/E) ratio of 11.3 as I write late on 17 February, which looks modest compared to the wider market. More strikingly, the shares change hands at a price-to-book (P/B) ratio just 0.6. In simple terms, the market values the company at a discount to the stated value of its property portfolio.

For income investors, the headline attraction is the near 9% dividend yield. That comfortably exceeds the FTSE 100 average, which sits closer to 3.5%.

That’s great from an income perspective, but it isn’t the whole story.

REITs come with tax advantages and are required to distribute at least 90% of their taxable income as dividends for shareholders. But high yields often signal perceived risk. Property companies typically carry debt, and higher interest rates increase financing costs. If borrowing remains expensive for longer, profit growth could stay under pressure.

There’s also the question of dividend cover. While earnings currently support the payout, there’s limited room for error if conditions worsen.

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.

So what’s the catch?

The catch is not necessarily that the dividend is unsafe. Rather, it’s that the business operates in a sector still rebuilding confidence.

If interest rates fall and consumer spending remains steady, retail-focused REITs could see valuations improve. A move closer to book value alone could lift the share price meaningfully. In that scenario, today’s yield may prove attractive in hindsight.

But if the economy weakens or retailers retrench, property values could come under renewed strain. In that case, the high yield may simply reflect the stock’s high risk profile.

For now, this REIT offers a compelling income stream backed by improving fundamentals, which could support further share price gains.

However, the clear trade-off between a generous dividend yield in exchange for exposure to a tough sector is one that needs closer evaluation from investors.

For now, the numbers justify investor consideration, but not complacency. That’s the real catch behind this 9% yield.

Pair trading for your Snowball is where you pair a high risk trade with a lower risk trade.

The SNOWBALL invests to have a blended yield of 7%, as this doubles your income in ten years if the dividends are re-invested at 7%.

The SNOWBALL currently invests in Investment Trusts as currently many trade at a discount to NAV. If these discount close the SNOWBALL would look to re-invest in ETF’s.

If you wanted to build up a fund to re-invest to buy a coveted share the next time the market crashes you could buy a money market account, although if the expected interest rates happen, the income will fall, or lock in a yield of around 3.5% with a short term gilt and pair trade it with a higher yield Investment Trust such as NESF.

Or if you wanted an equity share CTY.