Investment Trust Dividends

The Blogs plan, update for new readers.

When I wrote the plan for the blog the initial yield target for the portfolio was 5%. As Investment Trust prices fell the yields rose so the current target for a blended yield is 7%.

7% is interesting because compounded it doubles your income in ten years which makes the concept easier to understand.

Investment Trusts as some have a long history of paying a gently increasing dividends as they have built up reserves within the Trust to smooth out any market crashes. They often trade at a discount to NAV as Trust prices reflects the balance from buyers and sellers, so not only can the dividends be re-invested, there is an opportunity to take profits by selling some Trusts to add to the Snowball

In fact with a dividend re-investment plan u can actually welcome falling share prices as u get more shares for your money and a higher yield.

The plan is to provide a ‘pension’ of between 14-16k, based on seed capital of 100k with no further funds to be added.

When u start to spend your dividends, u will need the portfolio shares to provide the dividends so they cannot be sold, so the value of the portfolio is of

no interest, although in time as more and more dividends are re-invested the total should also start to grow.

The plans total is not in doubt, but the timescale could slip although currently it is ahead of plan.

Also it may not be possible to add to the Snowball at a yield of 7% plus so again the timescale could slip, although there normally is a sector of Investment Trusts that is unloved.

Finally the rules for blog, there are only 2.

Buy Investment Trusts that pay a dividend to buy more Investment Trusts that pay a dividend.

If any Trust drastically alters its dividend policy the Trust must be sold

even at a loss.

1 Comment

  1. Tài khon binance min phí

    I don’t think the title of your article matches the content lol. Just kidding, mainly because I had some doubts after reading the article.

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