investments trust for income

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  • Bravepants
    Bravepants Posts: 1,503 Forumite
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    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?
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • coyrls
    coyrls Posts: 2,432 Forumite
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    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
    atush Posts: 18,726 Forumite
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    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
    Bravepants Posts: 1,503 Forumite
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    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).
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • Chickereeeee
    Chickereeeee Posts: 1,186 Forumite
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    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
    capital0ne Posts: 872 Forumite
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    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
    Thrugelmir Posts: 89,546 Forumite
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    eskbanker wrote: »
    Indeed, the question was rhetorical!

    15 -20 shares has been calculated to be optimal
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    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
    Bravepants Posts: 1,503 Forumite
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    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?
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
  • Audaxer
    Audaxer Posts: 3,508 Forumite
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    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.
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