Swapping interest for dividends ?

C_Mababejive

Hi all,

With the return of interest rates to near historical norms, i find that i have significant cash amounts that im unable to shelter and have thought about swapping interest for dividends. I already make SIPP contributions to keep my overall position out of the higher tax band.

I'm thinking a well diversified investment trust, ETF or fund with of course that panacea of low charges and a decent yield. 

I already have my old favourite CTY which produces some capital gain also.

Any other ideas? 

I'm happy with this level of risk.

Thanks all

ColdIron

C_Mababejive said:

I'm thinking a well diversified investment trust, ETF or fund with of course that panacea of low charges and a decent yield.

It's certainly a plan. I have a GIA with only ITs that generate about £4,000 of dividends. The tax is less than half income tax although the 'allowance' from next year is barely worth the bother saving you less than £44. I was Bed & ISAing it but have stopped and have now started to tuck cash away instead

I already have my old favourite CTY which produces some capital gain also.
Any other ideas?

It depends what you want, income, growth etc. You could look at EDIN alongside CTY which has staged a bit of a recovery since Woodford and Barnett. You might cast your net wider than the UK. MYI and HINT (no UK) have been good to me although they are off their game at the moment with a wide discount. Perhaps an opportunity. BNKR has its place to help keep the bottom line out of the red

The AIC have a list of dividend heroes

https://www.theaic.co.uk/income-finder/dividend-heroes

And a useful screener

https://www.theaic.co.uk/aic/find-compare-investment-companies?sortid=Name&desc=false

Personally I avoid unwrapped ETFs to keep my tax situation cleaner though no stamp duty is always welcome

Funds work as well

You will have to keep accurate and complete records of purchases and sales