Possibly the best risk-adjusted yield in UK equities

After calling the bottom of a three-year downtrend, analyst Edmond Jackson’s share tip has returned 20% in seven months. Here’s what he’d do with them now.

16th October 2026

by Edmond Jackson from interactive investor

Yesterday, I attended a Capital Markets event for Greencoat UK Wind

UKW

for the £2.5 billion renewable infrastructure investment trust that is a leader in wind farms. 

The purpose was to elucidate how this UK-listed company will apply its strong cash flow in support of durable long-term returns, having generated £1.1 billion since flotation in 2013. A similar amount of self-generated capital is anticipated over the next five years alone.

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Care is needed with well-choreographed City presentations. In a twist on the late comedian Eric Morecambe’s quip in the Grieg piano concerto sketch, “They’re playing all the right notes and in precisely the right order.”

Even so, it bolstered my sense of how applying a “buy” stance at 96p in March (Stockwatch: why I like these two renewable infrastructure funds), when pricing offered an 11.2% yield with cover over 1.2x, was spot-on, and this share offers a good chance of continuing to evolve a bullish “bowl” chart having declined from around 190p in 2022:

Source: TradingView. Past performance is not a guide to future performance.

Last August, I wobbled – albeit maintaining “buy” – having realised the extent of subsidies not apparent from the accounts. However, that also was with the Reform Party riding high, which supposedly would cut net-zero spending. Interestingly, its waning in the polls has coincided with an uptrend in renewables shares but is not the whole story.

When I alighted on renewables last April, it was in a classic sense of mean-reversion due. Shares looked to have fallen too far amid disillusioned selling, and a market value 0.72x net asset value (NAV) also implied probability of upside. Yesterday’s event was an enabler to appreciate why a current 9.6% yield at 115p is less risky than it seems.

Organic investment and broad tailwinds

Political risk cannot be eliminated, and wind remains prone to weather variations, yet to me the dominating tailwind is electrification. Adoption of electric vehicles (EVs), also the steady migration away from gas and oil for heating, positions a wind operator well in the long run, and in the short term it benefits from high energy prices because of global conflicts.

Reinvestment is vital to sustain shareholder returns but management also sees this as logical for growth rather than, say, prioritising acquisitions.

Yesterday substantiated two key themes: “life-extension” to the assets and “repowering”, which involves upgrading older turbines with far more efficient and powerful models. Both strategic initiatives should benefit NAV while also de-risking yield.

A £100 million boost to cash flow by 2030 was entertained from life-extensions alone. At questions, I elicited a 15% accretion to NAV with regard to the Willow wind farm being showcased and, yes, this was said to be representative of the group portfolio.

Cash flow is to be approximately equally applied for new construction, life extension and repowering. The 30 June interim cash flow statement showed a 22% rise in net cash generated from operations to £244 million with zilch investment then, applied as £114 million on dividends, £47 million finance costs and £30 million on repaying loans.

The right strategy in an overall financial context?

While the presentation focused on actions, we should consider how Greencoat had £1,621 million net debt as of 30 June, its finance costs swiping 27% of operating profit. Net gearing was 56% and in terms of credit risk measures, “moderate risk” requires caution be taken.

Against this, the last six years’ financial record initially seems bumpy, although the oddity of £45.4 million negative revenue last year relates to a £446 million “movement in fair value of assets” under IFRS 13, taken above the line. Otherwise, investment income had been dead-stable at £395 million.

Management embarking on this organic investment programme can therefore seem potentially tight given that financing aspects (dividends, modest buybacks, interest paid and loan repayments) took 79% of first-half net cash flow. Bear in mind, any extended period of low winds might compromise this investment and/or dividends without further recourse to debt. End-June cash was £69 million.

Yesterday also brought news of the acquisition of a remaining 20% stake in a portfolio of UK wind farms for £10.5 million, funded from net cash generation. This being incremental, related to the existing portfolio, rather than any radical acquisitive move. Speaking with management elicited the standard “we look at all opportunities”, but in a debt and dividends context I cannot envisage acquisitions being a plank of corporate development.

Until we see financial proof from this programme it is hard to quantify what extent of growth it can add to shareholder returns, besides enhancing security. When I promptly cross-checked the claim as to 15% NAV accretion via Google AI, for what that is worth it suggested 5% would be an industry norm.  

Strong management is a definite advantage

Perhaps they can outperform anyway. Amid informal discussion with renewables analysts and institutional investors, I found consensus in how Greencoat is regarded as the strongest in the sector. The presentation had concluded with a board-type discussion, including the non-executive directors, with Steve Packwood, one of UK Wind’s key managers with Matt Ridley, describing it to me as “certainly keeping us on our toes”.

I got a sense of how, if this operation was an industrial plc – which effectively it is – rather than badged as an infrastructure fund, its share rating would be better.

The last director dealings were in May and June at around 101.5p when the chair of three years bought £50,800 worth and a non-executive director of seven years bought £30,500 worth, hence meaningful rather than token purchases.

Greencoat UK Wind – financial summary
Year-end 30 Dec

	2020	2021	2022	2023	2024	2025
Turnover (£m)	155	423	1,025	234	61.7	-45.4
Operating margin (%)	81.3	93.0	96.2	82.8	38.3	0.0
Operating profit (£m)	126	394	987	194	23.6	-74.3
Net profit (£m)	104	363	954	126	-55.4	-193
Reported earnings/share (p)	6.5	18.3	41.2	5.4	-2.4	-8.7
Normalised earnings/share (p)	6.5	18.3	41.2	5.4	-2.4	-8.7
Operating cashflow/share (p)	7.7	12.2	23.6	15.5	17.1	16.5
Capital expenditure/share (p)	0.0	0.0	0.0	0.0	0.0	0.0
Free cashflow/share (p)	7.7	12.2	23.6	15.5	17.1	16.5
Dividend/share (p)	7.1	7.2	7.7	10.0	10.0	10.4
Return on capital (%)	3.8	9.7	20.5	3.8	0.5	-1.7
Cash (£m)	7.9	4.8	19.8	21.8	5.8	14.2
Net debt (£m)	1,092	945	1,081	1,768	1,754	1,706
Net assets/share (p)	122	134	167	164	151	133

Source: company accounts.

Latest consensus anticipates around £93 million net profit this year, rising to £259 million in 2027 for normalised earnings per share (EPS) of 11.6p, hence a 15-month forward price/earnings (PE) ratio of 9.9x. 

Dividend growth is tipped to continue slightly ahead of inflation (although time will tell) with a rise from around 3.5% in recent years to 4% based on an 11.1p dividend in respect of 2027. That would imply a near full payout of earnings, but from the above table you can see a consistently strong cash flow record, hence, barring calamity, the dividend is well-propped.

Is this really the best risk-adjusted yield in UK equities?

I concede that my tease as to the “best possible, double-digit yield” lacks quantitative rigour and testing. I am taking a political view: the right-of-centre vote in British politics is divided between Reform, which is rather losing credibility, and the Conservatives, which are currently somewhat resurgent. That leaves the prospect of Labour propped possibly by the Lib Dems or Green Party. A left-of-centre, climate conscious government is the best scenario for renewable shares.

Current energy policy is most helpful: accelerating electrification to bring down its price relative to gas implies a tipping point, enhancing organic growth. Admittedly, it is hard to predict power prices according to adoption of EVs and heat pumps, but electricity demand in aggregate looks set to rise.

My initial “buy” at 96p related to a sense of market capitulation values in the renewables sector. As I get to know UK Wind in more detail – the presentation being helpful – at 115p I am more comfortable reiterating this, despite a conventional sense that a near double-digit yield flags high risk.

Yesterday’s City event is being rolled over into a 27 October live presentation for individual investors – see today’s RNS announcement – with scope for your own questions. 

Edmond Jackson is a freelance contributor and not a direct employee of interactive investor.

As well as attractive dividend income, a director has bought shares in this FTSE 250 company. Analyst Edmond Jackson assesses potential for total shareholder returns.

27th October 2026

by Edmond Jackson from interactive investor

Is the first meaningful director share purchase in this high-yielding real estate investment trust (REIT) for 14 months worth paying attention to?

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On 23 October, the chief financial officer at Primary Health Properties

PHP

 and his wife received 114,360 shares for nil consideration but also bought 54,659 shares for £50,000 at 91p. While hard to ascertain if this buying might relate to such a grant – as terms of a performance share plan – it is still a material purchase in the low end of an 89p to 107p range this year:

TradingView. Past performance is not a guide to future performance.

Aside from agreed regular small purchases by the founder and non-executive chair, the last material purchase was £150,000 worth at 92.1p by the senior non-executive director in August 2025.

This REIT likes to proclaim itself as having an unbroken 30-year track record of annual dividend growth, aided by upward-only rent reviews for healthcare properties that seem a lot more durable than, say, offices or shopping centres. A circa 8% dividend yield helps explain its popularity with retirees.

Yet total return in recent years has been frustrating; you could say the market prices for such yield as compensation for holding risk.

Macro conditions can significantly affect these shares

Management flaws are not necessarily implied. In particular, the 2022 derating occurred when interest rates rose to combat post-pandemic inflation, which also raised government bond (gilt) yields. Since REITS like this rely on long duration, fixed-income-like cash flows, rising (virtually) risk-free yields compress REIT valuations – what investors are willing to pay for rental income even when relatively secure.

The notorious September 2022 UK Mini-Budget also triggered a sell-off in property-related shares, yet there is currently a mild parallel by way of high gilt yields and interest rates probably having to rise to curb inflation. In the very near term perhaps the best we can say, macro-wise, is that Wednesday’s Autumn Budget possibly induces an aspect of relief rally in affected shares, if the chancellor at least is seen to be steadying the UK fiscal ship.

Since PHP is substantially reliant on government-backed NHS leases, you could say a radical left-wing government could take a tougher line – anti-private sector profits in a public service – similar to the way Prime Minister Andy Burnham is currently crusading against the water industry. It’s a bit like how the political Right threatens renewables, although I suspect in government they will have enough on their plate.

Radical response to lack of growth leads to debt dilemma

My chief concern is how PHP took the step of a major acquisition in July 2025 – to re-rate financial performance – which bumped up debt. It has also since led to the curiosity of joint ventures with financial institutions where PHS “seeds” (more accurately cedes) properties at a slight discount to net asset value (NAV) in return for cash lump sums that are then applied to reduce debt.

I confess that I am yet to figure out whether this is value-enhancing, neutral or worse, although it may explain why the shares at 92p trade at an 11.5% discount to adjusted net tangible assets per share (as of last June) on a reported basis.

I last mentioned PHP in July 2025 when they pipped private equity group Kohlberg Kravis Roberts in a takeover contest for listed rival Assura plc, creating the eighth-largest UK REIT with a portfolio of over £6 billion. At that time, 6.5% of PHP’s issued share capital was shorted, probably higher in total given disclosure related to positions over 0.5% versus 5.24% total shorting as of 19 October. That is significant in the context of a £2.4 billion company and, while I do not fear shorting (which can usefully depress market price for buying, with a baked-in rebound), we must always consider any rationale behind short positions.

Fifteen months ago, PHP proclaimed an inflection point in its property cycle due to “improving rental growth and stabilisation in yields”, and also a 10-year health plan for England just published, with the government re-iterating its commitment to strengthen the NHS. The Assura acquisition makes this difficult to test given that it bulks up PHP’s numbers. From the 30 July interim results, it is not possible to see like-for-like performance within a 123% advance in net rental income and 109% in adjusted earnings, albeit a more modest 9% rise in adjusted interim earnings per share (EPS), with reported EPS actually down 14%.

The interim statement described the combination with Assura as contributing to a strong set of results “supported by a robust operational performance”, with the outlook conclusion citing various political initiatives as supportive.

If an operational inflection point is present, might it be the case that high gilt yields offset this by way of tempering PHP’s share price? I think that has to be considered.

See from the table below how net debt jumped 2.5x from 2024 (grinding higher to £3.4 billion as of last June), which the market understandably would have factored in dividend risk, helping explain a volatile-sideways share price. Financial risk scores are adjusted to “cautious”.

Primary Health Properties – financial summary
Year end 31 Dec

	2019	2020	2021	2022	2023	2024	2025
Turnover (£ million)	121	139	146	154	170	182	259
Operating profit (£m)	7.1	173	183	73.3	87.3	104	213
Net profit (£m)	-71.3	112	140	56.3	27.3	41.4	119
Operating margin (%)	5.9	124	126	47.6	51.4	57.5	82.2
Reported earnings/share (p)	-6.5	8.7	9.8	2.2	1.9	2.8	6.6
Normalised earnings/share (p)	2.1	8.4	13.5	1.8	1.8	2.8	9.2
Operational cashflow/share (p)	8.6	8.7	9.8	8.2	9.2	9.3	10.0
Capital expenditure/share (p)	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Free cashflow/share (p)	8.6	8.7	9.8	8.2	9.2	9.3	10.0
Return on total capital (%)	0.3	6.6	6.6	2.6	3.2	4.1	3.6
Cash (£m)	143	104	33.4	29.1	3.2	3.5	20.0
Net debt (£m)	1,125	1,114	1,246	1,274	1,323	1,338	3,288
Net assets (£m)	1,229	1,414	1,500	1,482	1,424	1,376	2,554
Net assets per share (p)	101	108	113	111	107	103	98.4

Source: company accounts.

While there had already been two joint ventures across PHP’s portfolio, including with the Universities Superannuation Scheme (USS), the one declared last 19 October, with global institutional investor GIC, is most relevant to debt reduction. Twenty-seven private hospitals worth about £700 million will be “seeded” at a 5% discount to NAV in a 50:50 joint venture, with PHP receiving about £500 million to be applied for debt reduction. The CEO also proclaims the deal as enhancing the return on equity, which has varied from 2% to 6% but looks to be trending at over 8%.

Today, PHP has announced that its joint venture with USS will increase from £250 million to as high as £800 million, albeit PHP has just a 20% interest.

I have to say these joint ventures strike me as possible “dilution by other means” rather than a share issue, to cut debt, and it’s unclear whether the joint venture strategy was indicated for debt management when PHP bought Assura. It seems an after-case. The strategy is said to be supporting dividend security given that more earnings are freed from high-cost variable-rate debt, but that followed from bulking-up anyway, which in hindsight was not great given upward pressure now on rates.

A seemingly modest valuation

With consensus for normalised EPS around 7.5p based on roughly £200 million net profit, the forward price/earnings (PE) ratio of 12x appears proverbially modest. But I doubt it is significant to the valuation. The focus here is inflation-linked dividend growth and holding the share as part of a diversified income portfolio. The yield does, however, assume full distribution of projected earnings.

The shares rose to 108p by February then slid in March to 90p, trading volatile-sideways up to 97p. A current price of 92p is therefore at the lower end of the range albeit against attractive (near) risk-free gilt yields and prices.

Net debt should reduce to around £2.9 billion as a result of the GIC deal, where interim results showed it as £3.4 billion, with £78 million of finance costs taking 43% of operating profit. More “joint ventures” therefore look required, and I would prefer to see evidence both in terms of earnings and NAV, that they are not compromising. Like with any property assets right now, it is hard to assume upward revaluations are a certainty beyond a sense of replacement build cost inflation.

My conclusion therefore is that it is encouraging to see the CFO appear to reckon PHP shares rate a material “buy” at 92p. Healthcare provision plus the realities of a Labour government having to work with private sector provision constitute a reasonable tailwind. Mind a headwind of high gilt yields if they persist. 

I also find PHP has got itself into a corner with a major acquisition boosting debt at the wrong time, thus effectively requiring asset disposals to manage it. To upgrade firmly to “buy”, I would like more evidence of how this works out, hence I maintain a “hold” rating.

Edmond Jackson is a freelance contributor and not a direct employee of interactive investor.

Thursday 29 October

CQS Natural Resources Growth & Income PLC ex-dividend date
CQS New City High Yield Fund Ltd ex-dividend date
Ecofin Global Utilities & Infrastructure Trust PLC ex-dividend date
European Smaller Cos Trust Plc ex-dividend date
Fidelity Asian Values PLC ex-dividend date
Henderson Far East Income Ltd ex-dividend date
Invesco Global Equity Income Trust PLC ex-dividend date
JPMorgan Claverhouse IT PLC ex-dividend date
JPMorgan India Growth & Income PLC ex-dividend date
M&G Credit Income Investment Trust PLC ex-dividend date
Polar Capital Global Financials Trust PLC dividend payment date
Sequoia Economic Infrastructure Income Fund Ltd ex-dividend date
Supermarket Income REIT PLC ex-dividend date

XD dates are important because if you buy just before the xd date, you should earn 5 dividends in just over a year, therefore increasing the amount of cash for re-investment.

Primary Health Properties PLC
(“PHP”, the “Group” or the “Company”)

Increased target size of existing primary care JV with USS

Primary Health Properties PLC, a leading investor in critical healthcare infrastructure in the UK and Ireland, and Universities Superannuation Scheme (USS) are pleased to announce an increase in the target size of their existing joint venture (“JV”) to £400 million (from £250 million). Subject to additional approval, the investment has the potential to grow to £800 million over time. The JV has also exchanged contracts on the transfer of c.£67 million of assets into the vehicle, with a further identified pipeline of assets expected to follow.

The 20:80 JV will continue to support investment into essential NHS community healthcare buildings, aiming to address the current backlog of patients awaiting care. Reflecting the UK’s ageing population and a growing number of people living with chronic conditions, the provision of modern, flexible healthcare assets remains central to the NHS’s priority of delivering care closer to patients.

The JV focuses exclusively on assets let directly to NHS or GP tenants with rents linked to inflation or with fixed uplifts.

Mark Davies, CEO of PHP, commented:

“We are delighted to be extending our successful joint venture with USS, which will enable significant further investment into critical healthcare infrastructure in the UK.

“With a portfolio approaching £300 million, the JV will focus on funding new Neighbourhood Health Centres and other healthcare assets let to the NHS that help deliver the NHS 10-year plan. Future growth in the JV will come from further transfers of existing assets and new investment opportunities, including risk-controlled developments.

“We value the partnership that we have with USS, who are expressing their confidence in primary care by committing additional equity to the joint venture.”

Alex Turner, Head of Property at USS Investment Management, stated:

“We are happy to announce the expansion of our established joint venture with PHP”.

“As the UK’s demographics evolve, we continue to believe in the robustness of the healthcare sector, and we’re delighted to invest further into primary care.”

Transfer of assets

PHP has exchanged contracts on the disposal of nine primary care assets to the existing primary care joint venture with USS for a gross consideration of £67 million, in line with book value. PHP holds a 20% equity interest in the joint venture, and the net proceeds will be used to reduce net debt. Following the transfer, the joint venture will have assets in excess of £250 million, exceeding the original target.

The enlarged joint venture gives PHP access to an alternative source of capital alongside a highly credible long-term partner. USS has indicated its intention to grow the joint venture, sharing PHP’s belief in the long-term opportunity in primary care real estate, including the development of Neighbourhood Health Centres.

Credit rating reaffirmed and outlook improved

PHP is also pleased to note that Fitch Ratings has reaffirmed the credit rating of Assura Limited as BBB+ with a revised outlook of Stable (previously Negative), following the progress made on private hospital and primary care joint ventures.

The strength of the PHP platform is endorsed by the quality of its JV partnerships.

Three utilities and infrastructure stocks for your portfolio, as picked by Jean-Hugues de Lamaze, portfolio manager of the Ecofin Global Utilities and Infrastructure Trust.

By Jean-Hugues de Lamaze

Published 2 hours ago In Features

The utilities and infrastructure sector has seen new structural growth drivers in the last few years. And the Ecofin Global Utilities & Infrastructure Trust (LSE: EGL), launched just ten years ago, gives exposure to the sector’s long-term trends, solid protection from inflation and high degrees of predictability of future cash flows.

The bulk of our infrastructure was built in the era following World War II and now significant capital expenditure is required to renovate it after decades of under-investment. The US’s Inflation Reduction Act of 2022 and Germany’s €500 billion infrastructure programme aim to address the issue.

Furthermore, demand for electricity is accelerating after 25 years of decline and is expected to rise by about 50% in the next decade. Energy-intensive AI data centres are securing their power supplies through multi-decade procurement contracts, which are proving highly profitable for utilities. Such fundamental drivers are yet fully to be appreciated by equity markets and there are attractive entry points for undervalued companies with solid earnings outlooks. Three shares stand out to me as particularly compelling.

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Three utilities and infrastructure stocks to consider

One of the most unfairly hit infrastructure stocks is Canadian developer Brookfield Renewable Partners (NYSE: BEP), down more than 20% since its highs at the end of May. The group operates a portfolio of high-quality renewable assets in North America and across the world and its strategy is to gather assets essential to energy security to meet growing demand worldwide. This includes nuclear assets in the US through Westinghouse, acquired in 2023. The group has developed a major franchise in batteries, with an 80GW development pipeline, reinforced by the 2024 acquisition of Neoen, and is well positioned to supply data centres. The firm also has one of the strongest balance sheets in the sector and we expect it to deliver earnings growth of about 15% a year over the next three years, with 90% generated from long-term contracts and with 70% of revenues inflation-linked. The stock offers a 5.5% dividend yield.

Greece’s power transmission operator ADMIE (Athens: ADMIE) provides exposure to one of the fastest-growing markets in Europe. Its subsidiary, IPTO, Greece’s sole transmission system operator, plans to double its regulated asset base by 2029. A $530 million equity issuance earlier this year provided the finance for this ambitious capital-expenditure programme. The regulatory framework provides a pre-tax return on equity of 9.8%, at the top end of the range of its European peers. The stock, down by more than 10% since late June, trades on a price/earnings ratio (P/E) of 14 times, with a 2.7% dividend yield. This looks attractive and growth in earnings per share (EPS) over the medium-term is expected to be 25%-30% a year.

Through its combination of flexible renewable-power generation and transmission assets, SSE (LSE: SSE), the UK-listed energy group, is well positioned to benefit from the energy transition. By 2030, 80% of group revenues are bound to be either regulated or fully contracted. SSE expects 25% annual growth in its regulated asset base over the 2025-2030 period via a fully funded £33 billion capital-expenditure programme. The stock trades on a p/e of less than 12 times and annual growth in EPS solidly in the double digits. Annual dividend growth is expected to be 5%-10% over the medium term. SSE looks like one of the cheapest stocks in the pan-European utilities sector.

Top 10 funds and trusts in ISAs

	Name	Place change
1	Royal London Short Term Money Mkt Y Acc (B8XYYQ8)	Unchanged
2	Vanguard FTSE Global All Cp Idx £ Acc (BD3RZ58)	Unchanged
3	HSBC FTSE All-World Index C Acc (BMJJJF9)	Up 2
4	Scottish Mortgage Ord SMT0.75%	Down 1
5	Henderson Far East Income Ord HFEL0.99%	New
6	Vanguard LifeStrategy 80% Equity A Acc (B4PQW15	Up 2
7	Greencoat UK Wind UKW1.22%	Unchanged
8	Artemis Global Income I Acc (B5ZX1M7)	Down 1
9	Polar Capital Technology Ord PCT0.08%	New
10	Fidelity Index World P Acc (BJS8SJ3)	Down 1

Both Polar Capital Technology Ord PCT

and Henderson Far East Income Ord HFEL have returned to our bestseller list, after a volatile few weeks for both.

Tech stocks in both the US and Asia have had a tough ride thanks to worries about the sustainability of AI spending. But investors continue to back the sector via PCT, which has outperformed peers this year in part thanks to its greater exposure to Asia.

The L&G Global Tech Index Trust, which has more of a US bias, slips out of the table and moves to 13th place. We also see the steady UK income trust City of London drift out of the table this time.

The list otherwise shows plenty of consistency. Royal London Short Term Money Mkt Y Acc (B8XYYQ8) maintains the top spot, while three broad tracker funds also sit in the list.

Investors are making good use of quite different active funds.

Henderson Far East Income and Greencoat UK Wind UKW 

continue to stand out thanks to their bumper share price dividend yields, while Scottish Mortgage Ord SMT0.75% targets tech, AI and other future trends.

The value-minded Artemis Global Income I Acc (B5ZX1M7), which is sitting on some strong returns this year, also stays in the most-bought list.

US midterms 2026: what election could mean for your portfolio

Americans are preparing to vote in elections that could set the tone for the next two years, not just in Washington but on Wall Street and in the Square Mile. Analyst John Ficenec explains why.

21st October 2026

by John Ficenec from interactive investor

Share on

The US midterm elections in early November could change the political landscape that has helped lift share prices to record highs. At the same time, global markets have been on shaky ground recently with soaring borrowing costs and fears over AI investment unnerving investors. As the prospect of a divided house in the world’s largest economy hurtles into view, it’s important for investors to consider what it could mean for their savings.

Markets abhor uncertainty

Just as nature abhors a vacuum, markets hate uncertainty. The latest polling and prediction market figures make grim reading for the Donald Trump presidency and Republican supporters. According to The Economist’s tracker of YouGov polling, Trump’s approval rating is at -27, a new low and significantly worse than both Joe Biden and the first Trump presidency at the midterm point. Prediction markets are skewed towards Democrats taking control of both the House of Representatives and the Senate. Polymarket, where people bet on real world events, is currently showing a 91% chance of the Democrats taking the House, and a 65% chance of them controlling the Senate.

The potential for a significant shift in the political landscape of the United States has unsettled markets. The S&P 500 has largely drifted sideways since early August, while the tech-focused Nasdaq index has struggled to make any headway since early May. The run into midterm elections on 3 November has also coincided with a period when markets have historically suffered from lower returns during September.

Silver linings

The good news is that research shows that once the election uncertainty clears, markets have historically wasted no time getting back on the front foot. This year looks like no exception, with Jim Reid, global head of macro strategy at Deutsche Bank, adding that it’s possible marketa are “already feeling the gravitational pull of the midterms”.

Average S&P 500 performance after midterm elections since the Second World War (with range)

Source: Bloomberg Finance LP, Deutsche Bank. Past performance is not a guide to future performance. 

The historic performance of markets is even more encouraging when you begin to look at the last few months of the year. Once again, looking back at 100 years of stock market performance, we find that October, November and December have provided decent returns. While we would never make an investment decision based on a previous year’s performance, it can put recent market weakness into perspective, rather than as a portent of doom or any sign of things to come.

S&P 500 monthly performance (1928-2025). Seasonals consistently matter

Source: Bloomberg Finance LP, Deutsche Bank. Past performance is not a guide to future performance.

Divided politics are no problem for returns

If the Republicans were to lose control of both the House and the Senate in the coming elections, it wouldn’t necessarily be bad news for stock markets. In fact, there is strong historical precedent for stock markets continuing just fine.

One of the golden eras for the US stock market was the 12 years from 1981 to 1993 when the S&P 500 more than quadrupled in value. The Ronald Reagan years from 1981 to 1989 were divided, with a Republican president and Democrats in control of the House of Representatives. During the administration of George Bush senior from 1989 to 1993, again it was a Republican president and Democratic Congress.

The American political system is designed to function extremely effectively with differences of opinion. James Madison, the father of the US Constitution, built the structure of the presidency as the executive to run the country but with the checks and balances of a House of Representatives and a Senate.

In the midterms, all 435 members of the lower House of Representatives are up for election and are currently split 214 Democrat and 219 Republican, with one independent and one vacancy. While a third, or 35, of the 100 total seats in the upper house of the Senate are up for grabs and are split 45 Democrat, 53 Republican and two Independent. While current polling is pointing towards the Democrats taking the House, it is much harder to call the result in the Senate.

Executive orders

One of the main factors regardless of the result of the midterms is that President Trump will still be in charge, and that points towards a bumpy ride for the next two years. Trump has expanded the thinking of the unitary executive theory, namely that the president has the authority to do as he pleases, to new levels.

Foreign economic policy has been shaken up through tariffs, and international relations have been unsettled by supporting wars in the Middle East. Analysts from JP Morgan think this will continue after the midterms, believing “the trajectory of policy volatility is likely to be the status quo”.

In terms of the backdrop for the US economy, much of the main factors look set to continue as well. Elevated inflation and higher oil prices are putting pressure on consumers and businesses, although this is being offset by a key piece of Trump legislation, The Big Beautiful Bill, which will deliver an estimated $3.8 trillion (£2.8 trillion) in tax cuts to US business during the coming decade. Against those two competing factors, it’s easy to see how the stock market will continue to do what it does best and grind higher.

What do the midterms hold for AI investment?

One area that has come into focus has been the rapid growth of investment by AI hyperscalers (large cloud service providers like Amazon Web Services (AWS), Microsoft Azure and Google Cloud) and how this could be impacted by a change in the US political system. While both the Democratic and Republican parties are broadly supportive of the US becoming a world leader in AI technology, the pace of getting there could be different

The problem has been the massive growth of data-centre construction needed to power the AI hyperscalers. This has placed a strain on local power and water networks. If the Republicans hold on to both the House and the Senate, it seems likely the pace of construction would not slow. Whereas Democratic candidates looking to win local elections have been campaigning on greater control over data construction and more legislation to safeguard the nascent AI technology. For a sector where valuations have already been pushed to extremes, a slowdown in growth rates could be a headwind for further gains.

Potential impacts for healthcare and consumer staples

One feature of Trump’s Big Beautiful Bill was to greatly reduce government spending on healthcare and support for households. If the Republicans retain control, it looks like reduced government spending would be a drag on these sectors.

However, if the Democrats control Congress, they could use their voting power to delay and slow spending cuts. This in turn could see healthcare and consumer staple names recover in the US into the year-end.

Macro will remain in the driving seat

While the midterm elections will provide a fascinating piece of political theatre, the far more important issue for investors will be to keep an eye on macro forces driving the markets. Policymakers are under serious pressure to keep a cap on inflation with interest rates already rising in the US. The direction of inflation and central bank rates has resulted in wild swings in the gold price and other commodities.

The markets ignored soaring borrowing costs on government bonds for most of the summer, but have suddenly woken up to the fact that there may be a limit on fiscal expansion. The funding of vast investment into building data centres has also begun to stress the credit ratings of some of the companies involved.

The movement lower in technology names last week could just have been a pause for breath. But if it was the start of something more serious, you can expect the trends that emerged to continue in the coming months. Namely investors turning to the safety of fixed income like US treasuries and UK gilts that both rallied. Also, the FTSE 100 has a strong showing in dividend-paying defensive names that attract investors during a downturn, such as tobacco, defence, consumer staples, and infrastructure groups.

The key feature of the midterms seems to be that, as an investor, making any decisions based on the outcome looks like folly. Far better to keep a balanced portfolio, which should mean you still benefit from markets recovering into the end of the year.

John Ficenec is a freelance contributor and not a direct employee of interactive investor.

Headline Risk Rising? These Monthly Dividends up to 14% Are Still Getting Paid

Brett Owens, Chief Investment Strategist
Updated: October 23, 2026

Getting antsy about the midterms? Wondering whether oil will ever come back down? Afraid the AI bubble is going to pop, blowing a dotcom-sized hole into your retirement portfolio?

I’m not. Because I’ve found the best cure for headline risk is a fat income check—preferably one that arrives every month.

The headline risks I mentioned are really starting to eat away at investors big and small. The VIX volatility index just spiked to multimonth highs. Hedge funds have been unloading their tech holdings at the fastest rate in a decade. Even though the major indices are just a percent or two off their highs, breadth has been terrible and small caps are actually in a correction.

Not to mention, one of our favorite indicators of stock market sentiment has swung to “shaking in their boots.”

Investors Are Panicked. That’s Usually Our Cue to Buy!

Source: CNN Fear & Greed Index

It’s easy to think “defense” in this market—uncertainty tends to put a premium on protection. However, enough stocks have sustained enough damage that we contrarians can cast a wide net for more aggressive opportunities.

And my favorite waters to trawl are in monthly dividend stocks, whose yields are often enough to provide us with a big offset against market downturns.

Have you found yourself trying to convert a portfolio of quarterly dividend payers into a smooth monthly income stream? It is doable, but there’s a pattern to the quarterly payers that we need to smooth out. They tend to dish their dividends in one of three phases.

The early birds are our January, April, July and October payers. They pay in the first month of the quarter. Then we’ve got our “middle children,” delivering in February, May, August and November. Then we have our latecomers. They pay right before the end of the quarter: March, June, September and December.

Now if we stack too many of these January payers together, for example, we might run low on cash by the time it comes to March. I know, I know. There’s a way that we can account for it by taking a certain amount of money from our brokerage account into our checking account. We could leave a buffer there. But why deal with all of this when we can just find companies that pay monthly?

Boards are finally starting to catch on to this. We have not one, not two, but three companies below that have converted from previous quarterly dividends to monthly payers. They are beginning to see things our way. All we want is that monthly check.

But we can’t buy just any monthly payer, because we want to make sure that that check’s going to be cut on time, on target, for all 12 months. I hate to say it, but there are many monthly payers with a sketchy history of dividend cuts over the last decade. Let’s look at a five-pack today, including those three newly converted monthly payers.

UDR (UDR, 5.1% dividend yield) is a multifamily real estate investment trust (REIT) that has been doing business for more than half a century and boasts an ownership position in more than 60,000 apartment homes. It’s geographically diverse, too, with net operating income split 40/35/25 across the Northeast/Mid-Atlantic, West Coast and Sunbelt, respectively.

This has been a roller-coaster of an industry, especially since COVID, but UDR has managed to deliver at least some level of dividend-growth through it … up until the only kind of dividend “cut” I like to see:

When a Quarterly Payout Turns Into a Monthly Payout

That’s right: This summer, UDR converted its vanilla quarterly distribution schedule into a monthly rate, which—thanks to the power of faster compounding—is also a minor raise in its own right.

As for the business itself? UDR has done well in navigating what has been a difficult environment for multifamily operators. In fact, that environment is the biggest near-term ceiling for this stock.

The yield, which is now back above 5%, is near historical highs. At 13 times 2027 estimates for funds from operations (FFO, an important REIT profitability metric), the discount could be a little deeper. And while higher interest rates don’t exactly help UDR’s ability to borrow, they do make apartment living look more affordable than a costly mortgage.

But the multifamily space has still been sluggish compared to its historical norms, so new money might not collect much more than UDR’s frequent dividend in the short run.

I’m also keeping my eye on another recent monthly convert—Four Corners Property Trust (FCPT, 7.0% dividend yield), a restaurant-focused retail REIT with 9.0 million square feet across 1,336 properties in 48 states. The full details are in my latest REIT missive, but it’s a solid portfolio that would look better if its so-so valuation contracted a bit more.

Yet another recent convert is a leader in its space. I’m talking about Capital Southwest Corp. (CSWC, 11.4% dividend yield), a member of another high-yield industry: business development companies (BDCs).

CSWC provides capital to smaller businesses that Wall Street banks either don’t want to do business with, or would charge them through the nose to do so. It targets firms that generate EBITDA (earnings before interest, taxes, depreciation and amortization) of between $3 million and $25 million.

BDCs mostly work in credit, and Capital Southwest is no different, with the vast majority of its deals made with floating-rate first-lien debt. Its diversified portfolio of 141 companies represents about a dozen industries, most notably healthcare, media/marketing and consumer services. And this portfolio is able to generate a current 10.4% “base” yield that it tops off with supplementals.

Those Supplementals Add Roughly 1% More to CSWC’s Yield

BDCs commonly offer high-single- and even double-digit yields. The problem is that it’s a brutal industry where many stocks’ yield is the only source of positive return we’ll get. Not so with CSWC, which is one of the better operators: it only uses moderate leverage and its dividend is well-covered.

The catch is that CSWC commands a high premium. It’s getting cheaper—a 40% premium has been reduced to 35% in only a week’s time—but it’s still among the pricier BDCs.

We can also get high and diversified monthly yields from the closed-end fund (CEF) space.

Nuveen Floating Rate Income Fund (JFR, 12.9% distribution rate), for instance, pays us nearly 13%, which it generates from floating-rate senior loans and (to a lesser extent) junky corporate debt.

Managers Scott Caraher and Coale Mechlin have assembled a portfolio of roughly 490 issues, split roughly 80/20 between the U.S. and the rest of the world. About 90% of its assets are rated non-investment-grade, and more than half of that is rated B or lower. Caraher and Mechlin aren’t afraid to take big swings with debt leverage, either. Total leverage is nearly 40% right now.

“Floating-rate” refers to their variable interest rates, which are tied to a benchmark but adjusted as that benchmark changes. This reduces what they distribute in falling-rate environments, but raises their income payments when rates are climbing, like they are now.

But I’m keeping a closer eye on JFR’s discount to net asset value (NAV). It currently trades at about 10% less than what its assets are, which is already deeper than its 8% five-year average. Nuveen’s fund tends to behave well under this level.

However, JFR Really Gets Going When That Discount Widens Past 15%

PIMCO High Income Fund (PHK, 14.2% distribution rate) pays even more on an even broader basket of debt.

Managers Alfred Murata, Mohit Mittal and Giang Bui can effectively go anywhere, and they do. They currently have double-digit allocations to high-yield credit, non-agency mortgage securities, non-USD developed-market bonds, and emerging-market bonds. They also own a little investment-grade credit, U.S. government debt and other short-duration debt.

This CEF shifts between using moderate and high levels of leverage; it’s currently near 30%, but I’ve seen as little as 15%. Still, it’s enough that PIMCO’s fund has sharp peaks and valleys.

Its pricing to NAV doesn’t jump around like it used to. But it still trades at a long-term 5% average premium to NAV, it’s still pretty sensitive to trading at a discount …

… And Right Now, PHK Trades at a 4% Discount

My 2027 Income Plan: 3 Monthly Dividends Paying Out 11% or More!

The Federal Reserve probably isn’t coming to rescue these bond funds anytime soon. So while they look good as eventual high-yield swing plays, I’m looking elsewhere for long-term wealth-building solutions.

Right now, as I look ahead to 2027, I’m laser-focused on a trio of incredible income plays that most people don’t even know about.

I call them my “Monthly Dividend Superstars.”

They’re three 11%-plus investments that fully subscribe to the idea that “boring is beautiful.”