I’ve bought for the portfolio 9961 shares in JLEN for 9k.

I’ve bought for the yield of 8.3%. If I was buying solely as a trade I would have waited to see how the price develops. Next dividend June.

I’ve sold the shares in PHP for a profit, including dividend earned but not received of £394.00.

The portfolio had a previous losing trade with PHP and the total loss is reduced to £17.00

Thursday 9 May

Aurora Investment Trust PLC ex-dividend payment date
Balanced Commercial Property Trust Ltd ex-dividend payment date
Bellevue Healthcare Trust PLC ex-dividend payment date
Chenavari Toro Income Fund Ltd ex-dividend payment date
Custodian Property Income REIT PLC ex-dividend payment date
CVC Income & Growth Ltd EURO ex-dividend payment date
CVC Income & Growth Ltd GBP ex-dividend payment date
Fidelity Special Values PLC ex-dividend payment date
Gresham Technologies PLC ex-dividend payment date
Henderson International Income Trust PLC ex-dividend payment date
Invesco Perpetual UK Smaller Cos Invest Trust PLC ex-dividend payment date
JPMorgan Global Core Real Assets Ltd ex-dividend payment date
Marwyn Value Investors Ltd ex-dividend payment date
Petershill Partners PLC ex-dividend payment date
Picton Property Income Ltd ex-dividend payment date
PRS REIT PLC ex-dividend payment date
Taylor Maritime Investments Ltd ex-dividend payment date

I have started my own similar high income portfolio. I am using DRIP because I am investing in 4x ISA’s (wife, me, 2 x kids), so DRIP seems like the most efficient way to re-invest.

I understand your two rules for the SB Portfolio, I am wondering what your strategy is for selling / re-balancing / top slicing (or what ever the City Wire lot call it !). E.g. say you have £10k invested in a high yielding stock, the capital value goes up to say £13k, at what point would you be selling some capital down ?

Many thanks
RT

££££££££££££££££

I try to have very roughly the same amount in each position.

A profit is not a profit until it’s banked and it’s not a profit until the underlying Trust is sold because the market can take back all the profit plus extra.

I am guided by one fact, if a Trust yields say ten percent and the price doubles the yield falls to five percent, I would sell and re-invest if I could get a higher yield.

I f when u start to spend your dividends (drawdown), safety of dividends are more important so I might take out the original investment and re-invest into a higher yielder say eight percent and u would be receiving a yield of thirteen percent on your original investment.

Currently dealing costs are low so I would sell some shares if in profit, not including dividends and re-invest. The worst thing that could happen is the Trust’s price continues to go up and u make more money.

Re-investing earned dividends by DRIP, is a great low cost to grow your Snowball as your dividends are re-invested when markets are weak and u get a higher yield on your re-invested cash.

RGL may be trimming their dividend.

LBOW no longer pays a dividend and is a rump position which will be sold when there is news.

PHP 7% yield.

If I was spending my dividends PHP would be a core holding because of their dividend paying history.

Currently the blog is still re-investing to grow the Snowball and as PHP is in profit it may be sold soon and the funds re-invested into a higher yielder.

A reminder of the Snowball rules.

To buy Investment Trusts that pay a dividend, to buy more Investment Trusts that pay a dividend.

Any Trust that changes their dividend policy must be sold even at a loss.

The ten year plan to provide a ‘pension’ of 14-16k on 100k of seed capital and u retain all your capital.

If u could add new funds to your portfolio, the figure will be higher.

Risk/reward

As always it’s best to DYOR and have a portfolio that u are happy with which might mean a lower yield and a longer time scale

How I’d invest my first £9,000 today to target £36,400 a year in passive income

This writer reckons one cheap FTSE 100 dividend stock with good growth prospects could be a solid choice for a long-term passive income portfolio.

Published 5 May

Ben McPoland

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.Read More

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

Many people will have started 2024 with a New Year’s Resolution to start investing and get passive income flowing into their bank accounts.

However, sometimes life has other plans and things get in the way. But now is as good a time as any.

The new Stocks and Shares ISA year has just started. This means I can plough up to £20k into stocks and enjoy tax-free returns.

Understandably, there’s a cost-of-living crisis and this has hammered many people’s savings. So 20 grand might be a stretch.

Let’s assume I have £9,000 to start investing then.

While that sum may not seem like it could grow into anything substantial, history shows it can.

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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Interest upon interest upon…

Over the last few decades, UK and US stocks taken together have delivered around an 8-10% return year, with dividends reinvested. That’s far higher than I’d get from any cash savings account.

Mind you, it hasn’t been a smooth journey. Investors take fright at almost anything, from the trivial (a small earnings miss by a large company) to the very serious (wars and pandemics).

I say ‘investors’, but actually most of the big trades done today are by algorithms programmed to respond immediately (buy or sell) to the slightest indicator.

The good news is that I don’t need to worry about any of that. I’m playing the long game. And due to the power of compounding, where interest builds upon interest, a single £9,000 investment made today could be worth £77,607 in 25 years (excluding platform fees).

Of course, this is assuming the same 9% historical average rate of return, which isn’t guaranteed. It could be less (or more), and dividends can be cut.

Which shares should I buy?

I would focus on quality and build a portfolio filled with firms that have solid business models, sustainable competitive advantages, fair valuations, and attractive long-term growth prospects.

One FTSE 100 stock I reckon ticks all these boxes is drinks bottler Coca-Cola HBC 

The company has the exclusive rights to manufacture and sell Coca-Cola products across three continents. Coca-Cola’s brands include Fanta, Sprite, and Costa Coffee.

So I’d say that’s a solid business model with competitive advantages right there. Moreover, these brands are still growing in developing and emerging markets as consumers earn more disposable income.

In 2023, the firm’s revenue grew 10.7% year on year to €10.2bn, its third straight year of double-digit growth. The dividend has been growing nicely too, and currently has a starting yield of 3%.

Finally, the stock’s trading at what I consider to be a fair value. The forward price-to-earnings (P/E) ratio is 14, which isn’t expensive. But there’s a reassuringly diverse mix of brands and countries to hopefully offset this.

Passive income

What if I could afford to contribute a little more towards my £9k? Well, if I could put £500 into different shares like Coca-Cola HBC each month, then I’d really fire up the wealth-building process.

All else equal, my portfolio would now be valued at £606,776 after 25 years. At this point, I could be receiving around £36,400 in passive income, from a dividend portfolio yielding just 6%.

Berkshire Hathaway’s first quarter profits plummeted along with the paper value of its investments, but the company said Saturday that most of the businesses it owns outright performed well.

The company reported reported a $12.7 billion profit, or $8.825 per Class A share, in the quarter. That’s roughly one-third of last year’s $35.5 billion, or $24,377 per A share.

The figures were heavily influenced by a large drop in the paper value of Berkshire’s investments. Buffett encourages investors to pay more attention to the conglomerate’s operating earnings that exclude the investment figures. Operating earnings jumped 39% to $11.222 billion from last year’s $8.065 billion as its insurance companies showed strong results.

££££££££££££££££££

As a comparison, the current portfolio dividend operating earnings for the last tax year were

£11,072.00

Income of 11% outperforming an annuity and u keep all your capital. If u can compound at 7%, u can double your income in ten years.

Temple Bar’s tips for value investors

Looking for investment tips from the professionals? Well seek no further. Redwheel, Temple Bar’s investment manager, provides a list of dos and don’ts for value investors in the top-performing trust’s latest Annual Report.

ByFrank Buhagiar•10 Apr, 2024

Wouldn’t it be handy to get an investing tip or two from the professionals, those in the know? But not just any professionals, professionals with a track record of outperforming? Step up Redwheel, the investment manager at value investor Temple Bar (TMPL). For in the trust’s latest Annual Report, which was released on 3 April 2024, the investment manager has kindly set out some of the key factors it considers when seeking to uncover the most compelling value opportunities. In other words, a list of dos and don’ts for value investors.

Investment managers dishing out investing tips? Now that’s a rare thing. One deserving of a mention in despatches here. But first, a look at Redwheel’s track record at TMPL to see why it might just be worth paying attention to what the investment managers have to say.

Three years and counting
It’s been over three years now since Redwheel was awarded the mandate to manage the 98-year-old trust – launch date 24 June 1926. Three years, a decent amount of time for managers to get their collective feet under the table. The numbers suggest they have done just that.

According to TMPL Chairman Richard Wyatt’s latest full-year statement: “Since Redwheel took over the management of the Trust at the end of October 2020, the Net Asset Value total return to the end of 2023 has been 86.7% compared with 50.0% for the Benchmark”. As the Chairman says, this represents “a significant outperformance.” What’s more, in each of the discrete calendar years that Redwheel has been at the helm, TMPL has fared better than the wider UK equity income sector:

2023 2022 2021

TMPL share price +12.5% +3.6% +20.0%
TMPL NAV +12.3% +0.9% +24.6%
UK Equity Inc sector +2.9% -4.3% +17.8%

As for how TMPL’s latest full-year results covering the 12-month period ended 31 December 2023 compare to the benchmark, Wyatt adds: “I am pleased to report that the Trust’s Net Asset Value total return with debt at fair value was +12.3%, outperforming the total return on the FTSE All-Share Index of +7.9%. The share price total return was slightly better at +12.5%.”

Point made. Redwheel’s track record since they took over the management of the fund stacks up.

In terms of how Redwheel has generated the above returns, speaking to doceoTV, investment manager Nick Purves had this to say: “Our objective is to take advantage of what we see as the very significant undervaluation in UK equities and also in value stocks to the long-term benefit of the trust’s shareholders. We’re value investors so we look to invest in companies which, for one reason or another, are being undervalued. We’re looking to take advantage of that short-term undervaluation.”

Looking for undervalued companies to invest in is easier said than done. After all, there is no shortage of stocks that are cheap for a reason. Markets are littered with these so-called value traps and so avoiding them is key for the value investor. According to TMPL’s Annual Report: “Some value strategies simply apply mechanistic measures to identify undervalued stocks but this can lead to investing in businesses that are in structural decline; they may be cheap but their potential to recover is limited”.

By contrast, Redwheel’s “‘intrinsic value’ approach aims to identify undervalued, yet good, quality companies with strong cash flows and robust balance sheets. The portfolio management team put a strong emphasis on financial strength because it gives them the confidence that a company can survive through a prolonged period of lower profitability caused by company-specific issues, or an unexpected downturn in the economy.” As the numbers above demonstrate, it’s an approach that works. Helpfully, Redwheel goes on to provide a few pointers in TMPL’s latest Annual Report.

Redwheel’s tips for value investors
Consider probabilities and payoffs
No matter the research, there are always surprises, positive and negative. Think best and worst-case scenarios. If we think a share price could go to zero in one scenario, but has 400% upside in another, there is probably a case for investing.

Enhance, don’t drift
Discipline is key to value investing. Stick to your philosophy, you’re here for the long run. Always look to improve and adapt as things change.

Simple but not easy
Buying shares for less than their worth then selling when the value has been realised is easy to understand. But most don’t invest this way due to a lack of ‘sticking with it’. Value investing is tricky – we are hard-wired to conform – but can be rewarding.

Cycles, cycles, cycles
Profits and share prices are impacted by cycles such as credit, commodity and business. An investor’s overreaction can throw up opportunities. An advantage lies in knowing which cycles impact an investment and where we are in that cycle.

Be contrarian but not mindless contrarian
Investors love to buy what everyone else hates. But having respect for what the market is saying is key. Eagerly buying shares being sold in companies with too much debt, or declining profits, can prove costly and mindlessly contrarian.

Don’t buy rubbish
Recently the market has become fixated with quality and growth. Quality and growth are intrinsic to a business’ value. We’ve had success when high quality businesses have been questioned by the market, resulting in low value entry.

Bargains are rare, make the most of them
It’s unlikely that you’re going to buy a business trading at half its intrinsic value. However, a company or an industry will suffer a drawdown at some stage, which may present an opportunity to buy at a good value.

Adopt an absolute return mindset
Value investing is a risk averse strategy born out of a reaction to the Great Depression. By buying a dollar of value for 50 cents, you build in a ‘margin of safety’ in case the economy and/or the stock market suffer. Value investors see risk as the risk of permanent capital impairment, so, invest with this at top of mind.

Be patient, be long term
A struggling, out-of- favour business is unlikely to turn around the day after you invest. It’s more likely that things continue to get worse, so we try to be patient, allowing for profitability to improve and for the market to recognise it. Our typical holding period is at least five years.

There is no single correct method
Value investing relies on estimating the intrinsic worth of a business. Our experience tells us to be flexible, by adjusting earnings for cyclicality, and to recognise the positive (hidden value), and the negative (e.g. pension fund deficit), on a balance sheet.

So, there you have it, Redwheel’s list of dos and don’ts for value investors.

A few highlights
Among Redwheels’ tips to mention. These include:

“Buying shares for less than their worth”

“We’ve had success when high quality businesses have been questioned by the market, resulting in low value entry.”

“a company or an industry will suffer a drawdown at some stage, which may present an opportunity to buy at a good value.”

The above three have been singled out because the shares of one company are currently trading for less than their worth and so potentially offer a low value entry point that may present an opportunity to buy at a good value. The stock in question? None other than TMPL. That’s because, as at close of play on 05 April 2024, the shares were trading at a -9.79% discount to net assets, not far off the 52-week high of -10.37%. The shares are trading for less than their worth – the holy grail for value investors. And remember that TMPL’s portfolio is invested in stocks the investment managers view as being undervalued. The shares therefore offer a double discount of sorts. That begs the question, does Redwheel see value in TMPL shares?

If the amount of share buybacks undertaken by the fund in the last year or so are anything to go by, then the answer is a resounding yes. As Chairman Wyatt reports in his full-year statement: “The Board has continued with its active share buyback policy, purchasing 27,209,505 shares to be held in treasury for a total consideration of £63.5m during the year.” Furthermore, since year end (31 December 2023) “to 2 April 2024, a further 3,771,869 shares have been bought back for treasury, at a cost of £8.9m.” The value investor seeing value in its own fund then.

Perhaps, Redwheel could add another tip to their list: Sometimes you don’t have to look far to find value.

Discount Watch

Yet another drop in the number of investment companies trading at 52-week high discounts – just 10 make it onto the latest Discount Watch List.

By Frank Buhagiar•

We estimate 10 investment companies saw their discounts hit 52-week highs over the course of the week ended Friday 26 April 2024 – five less than the previous week’s 15.

The number of 52-week high discounters has now fallen for four weeks in a row. A major contributor to the latest reduction is the renewable energy infrastructure space. Week ended Friday 19 April, five names from the sector made it onto the list. Seven days on, just two feature – Downing Renewables and Infrastructure (DORE) and Ecofin US Renewables Infrastructure (RNEW).

The reason for renewables renewed lease of life? A generous helping of positive updates have certainly helped – Gresham House Energy Storage (GRID) reported a meaningful improvement in revenues in a 24 April update; Greencoat Renewables (GRP) gave a well-received update of its own on 25 April which included details of a planned share buyback programme; while Octopus Renewables Infrastructure (ORIT) announced a 10-yr Power Purchase Agreement for one of its wind farms.

So, with updates appearing to do the trick, will next week see the two remaining renewables on the list, DORE and RNEW, put out press releases of their own?

The top-five discounters
FUND DISCOUNT SECTOR

Ceiba Investments CBA -71.08% Property
JPEL Private equity JPEL -41.33% Private Equity
Ecofin Renewables Infrastructure RNEW -41.01% Renewables
New Star NSI -39.20% Flexible
VPC Specialty Lending Invest VSL -38.24% Debt

The full list
FUND DISCOUNT SECTOR
VPC Specialty Lending Investments VSL -38.24% Debt
Develop North DVNO -1.55% Debt
Impax Environmental IEM -12.18% Environmental
New Star NSI -39.20% Flexible
JPEL Private equity JPEL -41.33% Private Equity
Dunedin Enterprise DNE -21.69% Private Equity
Ceiba Investments CBA -71.08% Property
Downing Renewables & Infrastructure DORE -37.71% Renewables
Ecofin Renewables Infrastructure RNEW -41.01% Renewables
Fidelity Special Values FSV -10.05% UK All Cos.