Investment Trust Dividends
The dividend history of the portfolio companies.
ICG-Longbow is in run down and no longer pays a dividend.
RGL recently trimmed their dividend and are selling property, so may do so again but still above the market average.
Cash for re-investment £10,680.00
The Motley Fool
I’d build passive income streams the same way Warren Buffett does.
Story by Christopher Ruane
When it comes to passive income, there are quite a few things I like about simply buying shares in proven companies. I can benefit from the work of blue-chip businesses and can invest as little (or as much) as my financial circumstances at that moment allow. When investing for passive income, I have learnt some things from billionaire Warren Buffett.
Buying into brilliant companies
Buffett looks for passive income in obvious places.
Most of his shareholdings are in large, well-known and long-established companies.
A lot of far less successful investors spend ages trying to find little-known firms they think could yet take the world by storm. Buffett, by contrast, is happy to buy shares in businesses that have already proven their business model and staying power over the course of decades.
Take his holding in Coca-Cola (NYSE: KO) as an example. Buffett started buying into the company back in 1987 and completed his stake-building in 1994.
When he started buying those shares, Coca-Cola had been listed on the New York Stock Exchange for 68 years. It had already raised its dividend annually for over two decades (and has continued to do so ever since Buffett invested).
So the Sage of Omaha was not looking for ‘the next big thing’. He was buying into an existing big thing. Today his company, Berkshire Hathaway, earns over $700m annually in Coca-Cola dividends. That is over half of what it paid in total for the entire stake.
With a large customer base, proprietary brands and strong pricing power, Coca-Cola is a classic Buffett pick. It faces risks, such as increasing concern about sugary drinks leading many consumers to prefer healthier alternatives. But, for now at least, the sweetest thing about Buffett’s long-term Coca-Cola stake is its incredible financial rewards.
Investing for the long term
Is it an accident that those rewards have built over the course of decades? No.
Warren Buffett is the epitome of a long-term investor. He says that if someone would not be willing to own a share for 10 years, they should not even consider owning it for 10 minutes.
Buffett’s Coca-Cola dividends have grown steadily for decades even though he has not added to his shareholding for 30 years.
As the old saying goes, over the long term, “quality in, quality out”.
Compounding dividends
Although Warren Buffett has not bought more Coca-Cola shares since 1994, he has not used the massive dividend streams to pay dividends to his own Berkshire shareholders.
Instead, like all of Berkshire’s earnings, he has retained them to use in other ways, from buying different shares to taking over whole businesses.
Reinvesting dividends is known as compounding.
VPC % loss excludes 4.2p being returned as a repayment of capital.
A much better week.
We’re fund managers and these are the six big investment lessons we’ve learnt over the years
Story by Rosie Murray-west
As the children across Britain sharpen their pencils and go back to school, there are some financial lessons that their parents can learn too.
We asked Britain’s foremost investment managers to share the most important ones they’ve learnt – and how they’ve put them into practice.
What are the most important investment lessons? We ask the experts by This Is Money
Early mistakes have led to caution for Richard de Lisle, who manages the VT De Lisle America Fund. He began his investment journey at just 16, only to lose his hard-earned pocket money on a risky bet.
‘I read everything on my paper rounds and did well from Patrick Sergeant in the Daily Mail and Jim Slater in The Telegraph. Those were my favourites. Yes, the Mail had a hand in my career.
‘The FT 30 had fallen more than half in two years. Stock prices were so low that I was seduced by the glamorous Court Line [a former shipping company that became a holiday provider]. It was leading the new package holiday boom, opening up the Spanish Costas to people who’d never been abroad before.’
Despite his tender years, De Lisle even looked at the valuation, including the price-earnings ratio, which shows how much profit a company is making per share. As a rule of thumb, the lower the ratio, the cheaper the company.
‘Its P/E ratio was under four; the yield was 17 per cent. What could go wrong?’ De Lisle asks.
Quite a lot, it turns out.
‘Five months later, Court Line went bust because of too much debt and I lost all my hard-earned cash. My friend’s father, who owned the fish and chip shop, did much better. He put everything he had into five blue-chip companies and more than doubled his money in six weeks.
‘Warren Buffett says that debt just speeds things up and so it does. Today we run a value-based fund. While we like cheap, we don’t like debt. Lesson learned.’
For Laurence Hulse, who manages UK smaller companies’ specialist Onward Opportunities, an internship at Barclays Capital when he was 18 brought a lesson he has lived by all his life.
‘You’re almost always wrong before you are right. This was one of the first ‘lessons’ I was ever taught,’ Hulse says. During his time at Barclays under revered equity trader Howard Spooner, Hulse learned that because you do not usually time the market perfectly, your investment is likely to fall at first.
‘Other than in the unlikely event when you buy at the very lowest price or sell at the very highest price to the penny, you have got to be prepared to be wrong initially,’ Hulse says.
As a result of this lesson, he has learned not to make sudden swerves in his trading. ‘We very rarely trade into or out of a company in one transaction, as to do so would be to assume you have timed things perfectly.
John Husselbee, head of multi-asset at LionTrust, learned many of his investment lessons from his family.
‘My father taught me that whenever speculating at the racecourse or a casino, work out beforehand how much money you are prepared to lose betting, then put that amount in a separate pocket to treat as a sunk cost. Whatever is left in that pocket at the end of the day is your good fortune. However, if you have bad luck and your pocket is empty, never add to it – just walk away,’ he says.
From his grandfather, who bet on the horses as well as investing in shares, he learned the difference between investing and gambling.
‘Visiting my grandad on a Saturday morning, we would walk to the newsagent to buy a copy of the FT and the Racing Post. Back home, I would update the prices of Grandad’s shares in his ledger and calculate the profit/loss since purchase.
‘In the meantime, Grandad would study the form to select his bets for afternoon racing live on the telly. We would walk back to the newsagent; Grandad would give me pocket money for sweets and I would wait outside the bookies while he would place his bets.
‘The lesson learnt was the difference between investment and speculation – with the latter you need to be prepared to lose all your money!’
For a lesson he has never forgotten, Ian Lance, fund manager in the UK Value & Income team at Redwheel, casts his mind back to a despondent lunch in City of London oyster bar Sweetings, just as Britain was about to crash out of the European Exchange Rate Mechanism (ERM) in September 1992.
‘I calculated the payments on the mortgage my wife and I had taken out to buy our first home a few months earlier at the new interest rate of 12 per cent which the Government had just announced.
‘On finding that our payments were more than our combined salaries and the UK equity market was crashing, I headed down to Sweetings to drown my sorrows.
‘An hour or so later a colleague turned up and announced the stock market was soaring. The rest is history as Britain crashed out of the ERM, interest rates plummeted, and a new equity bull market began.’
What did he learn from this – apart from to take a long lunch now and then? ‘Markets look forward and will peer through the gloom to the sunlit uplands,’ he says. When all about you are despondent, it might be time for things to recover.
Jamie Ross, portfolio manager of Henderson Eurotrust, says that the facts available at our fingertips leave us more vulnerable than we know. The biggest lesson of his career, he says, has been that he always needs to focus on one important question when deciding whether to invest or not.
That question is: ‘What makes this a good company?’
‘It leads to all sorts of analysis, from understanding the competitive environment, to assessing pricing power to attempting to determine the sustainability of a company’s margins.’
Without this simple question, he says, it is easy to drown in information about a potential investment and to think you know everything about it.
‘Knowledge is not the same thing as understanding. Even experienced investors can sometimes miss the wood for the trees and suffer from familiarity bias – feeling more comfortable investing in something you ‘know’ lots about.
‘I think about this every time I start to work on a potential new investment.’
Edward Allen, investment director at Tyndall Private Clients, says that for all investment experts’ perceived wisdom they are ‘rarely cynical enough’, so you should never believe what you read from those who don’t have anything to lose from their predictions.
‘Economists and market forecasters have the luxury of being wrong. Investors do not,’ he points out.
‘Understand the biases of an author if you are going to follow their advice and remember that for every balanced, well-reasoned argument for doing something there will be many others for doing the opposite.
‘The investment world is perverse and often seemingly irrational.’
I’ve sold the portfolio shares in FSFL for a profit of £253.00 including the dividend earned but not received. The funds are earmarked for JLEN although trading at a slightly smaller yield, I feel more comfortable holding for the long haul.
A portfolio of shares to DYOR on. If u are growing your pot and time is on your side, u may be willing to take more of a risk and invest for growth and income. Better to have a dividend to re-invest when markets are weak.
If your pot of money has grown by compounding, u may be more interested in preserving your wealth by taking less risks with your money.
Above is a portfolio IT’s at the lower end of the risk spectrum, no share is entirely risk free but if u want a dividend to pay your bills or to re-invest, CTY have paid a gently increasing dividend for 52 years, so are unlikely to change their criteria, especially as they have reserves built up to pay their dividends when markets crash. LWDB could be a buy if/when the next market crash happens.
But as it’s your hard earned it’s always best to DYOR.
Dividends received at the end of April £3,861.00.
Do not scale by 3 to arrive at a figure for the year as the fcast is still 8k and the target 9k.
For any new readers, the portfolio rules there are only 2.
One. Buy Investment Trusts that pay a ‘secure’ dividend to buy more Investment Trusts that pay a secure dividend.
Two. Any Trust that drastically changes it dividend policy must be sold even at a loss.
The target for the portfolio is to pay a ‘pension’ of 14% within ten years, better if u have longer.
The target is not in doubt, although depending on the market the time scale may slip.
Dividend investing, the only strategy where u can welcome falling prices because as the price falls the yield rises.
I forgot to mention, u keep all your capital against buying an annuity at around 7% and gifting all your capital to a pension provider.
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