investments trust for income

Bravepants

There are some that say that investing for income is not the way to go, but rather buying an ACC multi-asset fund and selling units equivalent to a "Safe Withdrawal Rate (SWR)" of between 3 and 4%.

However, in the case of an income investment like CTY:

1. Yield provides equivalent 3 to 4% SWR with less volatility than equity price
2. You get the equivalent SWR without having to sell shares or units

Bearing in mind those two points, is it actually a no-brainer to hold at least some income providing funds in a retirement portfolio?

coyrls

A SWR is the initial 3 to 4% increased by inflation each year, so a constant yield of 3 to 4% is not equivalent to a SWR of 3 to 4%.

atush

Thrugelmir wrote: »

On 6 occasions the dividend has only been increased by drawing on capital reserves held.

Dividends are a lot more stable than underlying share prices. Reinvestment of the dividend income is what drives capital growth.

I am very happy with my holding in CTY

Bravepants

coyrls wrote: »

A SWR is the initial 3 to 4% increased by inflation each year, so a constant yield of 3 to 4% is not equivalent to a SWR of 3 to 4%.

But increases in dividends (if sometime spurious) can counteract inflation somewhat, right? Companies put their prices up, thus inflation, and therefore dividends increase, and some profits are reserved for company growth (capital increases).

Chickereeeee

Thrugelmir wrote: »

Stability. A Labour Government under Corbyn could unleash any number of what might be regarded as anti business initiatives.

"Could": versus the certainty of multiple years of negotiations with the EU and other possible global trading partners before we even know what we can sell to whom, for how much, and for what in return? That certainty?

capital0ne

LobsterMemory wrote: »

So that's the dilemma - will the trust continue to receive and pay out good dividends or will they wilt

The choice is yours

Yes they will keep paying the same divi. Everyone know ITs keep a reserve of cash to maintain it in hard times. Nothing to worry about folks

Thrugelmir

eskbanker wrote: »

Indeed, the question was rhetorical!

15 -20 shares has been calculated to be optimal

Thrugelmir

Chickereeeee wrote: »

"Could": versus the certainty of multiple years of negotiations with the EU and other possible global trading partners before we even know what we can sell to whom, for how much, and for what in return? That certainty?

WTO isn’t the end of the world
.

Better than state interference.

Bravepants

atush wrote: »

I am very happy with my holding in CTY

I was wondering what a comfortable size of holding would be?

A five figure sum or six figures?


Is CTY your only holding for dividend income or do you have something else, like Murray International for a bit of diversity?

Audaxer

coyrls wrote: »

A SWR is the initial 3 to 4% increased by inflation each year, so a constant yield of 3 to 4% is not equivalent to a SWR of 3 to 4%.

If you bought CTY now you would get a yield of about 4.5% on your purchase price. Over the last 53 years CTY has raised it's dividend every year. So I would be fairly confident that the dividend will continue to increase every year. If the dividends do continue to increase every year, and you are just taking the dividends as part of an income portfolio, you will continue to have an income from CTY of 4.5% on your original investment, increasing every year, irrespective of what the yield is in future years.