Investments that pay mainly dividends rather than growth

stphnstevey

Are there any Investments that main returns are from dividends, as opposed to capital growth?

A_T

Quite a few FTSE 100 companies are run for dividends: Vodafone, BT off the top of my head. There are others.

An investment trust like City Of London specialises in holding these kind of shares.

masonic

Some Venture Capital Trusts are structured like this. Most mainstream investments simply pay out the dividends they receive from the underlying shares. A few Investment Trusts will top that up out of capital during harder times.

Is this to avoid selling units and crystallising a capital gain above your CGT allowance?

AnotherJoe

stphnstevey wrote: »

Are there any Investments that main returns are from dividends, as opposed to capital growth?

Yes but in general you'll get better overall return from ones, especially collective, that don't.

stphnstevey

I was looking at investment through a company. I read that dividends are not taxable but capital gains are, hence considering investments whose income comes mainly from dividends

AnotherJoe

Now you are getting into regimes of tax law that will require some detail as to the best way to invest, but the rule of thumb is not to let the tax tail wag the dog. .

stphnstevey

AnotherJoe wrote: »

Now you are getting into regimes of tax law that will require some detail as to the best way to invest, but the rule of thumb is not to let the tax tail wag the dog. .

True, but tax is still a factor in the decision and worth researching

TCA

Both dividends and capital gains are taxable, subject to allowances.

stphnstevey

TCA wrote: »

Both dividends and capital gains are taxable, subject to allowances.

Presume you are talking about personally

You may not have seen this was in realtion to a company investing

https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm02060

AnotherJoe

That is clearly now into realms where you need an accountant to advise not randoms on the Internet

But just to make the point about tax tail, the only view you can have of growth and income is in the rear view mirror.
You don't know what an investment will produce in the future and you seem to have assumed that overall profit inc tax on income and growth from a fund that mostly pays income will be more than from one that mostly is aimed at growth, without any analysis of what the actual numbers would show in detail, and without knowing what the particular investments you'd compare between and choose would be.
What I can say is that the investments I chose for income have certainly overall produced much less gain than ones I chose because I think they had a good future.

TCA

stphnstevey wrote: »

Presume you are talking about personally. You may not have seen this was in relation to a company investing

https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm02060

Sorry, I misunderstood. You're talking purely about corporation tax. Just to state the obvious as I don't know the reason behind the question - the income therefore belongs to the company and any dividends paid to shareholders comes into the realm of personal taxation.