Each year for the past five years, we have put together a portfolio of income-producing trusts designed to provide a £10,000 income. We have always stressed that there is no guarantee that the portfolio will meet its objectives but so far it has always delivered over £10,000 income each year. Its capital value has been somewhat more volatile, rising in two years, and falling in two. This year so far the direction has been positive.
Over the past four months, both the equity and bond markets have been on a tear. Thomas Becket, chief investment officer at Psigma and manager of the Higher Income portfolio, says: “It’s pretty obvious that the past six months have been a very easy time to be an investor.”
Over the four months between the end of February and the end of June, the portfolio returned 3.4%. Over the 12 months since its inception, it has yielded 3.5%. It is currently yielding 4.4%.
Companies around the world handed out a collective $263.3 billion in the first three months of 2019, marking a new first quarter record, according to Janus Henderson’s Global Dividend Index.
Defying concerns over a slowing global economy, headline growth for global dividend payments stood at 7.8% compared to the same quarter last year.
A strong rebound in stockmarkets from the pounding shares received at the end of 2018 catapulted the Money Observer model portfolios firmly back into profitability during the first quarter of 2019.
Most of us like to holiday abroad at least once a year, in search of something different or more exciting. Increasingly, income-seekers are also inclined to venture overseas, where they can now choose between a variety of equity income trusts.
Constructing a diversified portfolio that is well-placed to weather storms and take advantage of future bright spots is no mean feat. That is where Money Observer’s 12 model portfolios aim to help investors reach their financial goals.
The ability of investment funds and trusts to provide investors with a regular and growing income is often underrated. Many investors still regard them as a way of accumulating capital, rather than as a means by which they can use capital to supplement their income. Yet for many of the 2019 Money Observer Rated Funds, income generation is one of the primary objectives; and historically they have proved they can deliver.
Four years ago, we asked how much an individual would need to invest in order to generate an annual income of £10,000 from corporate dividend payments. Rising yields have allowed us to reduce the amount each year and still meet the income objective, but 2018 proved a stiffer test and requires some explaining.
TR 1 year 11.4%, 3 years 75.8%, yield 0.5%