investments trust for income

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  • coyrls
    coyrls Posts: 2,432 Forumite
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    Audaxer wrote: »
    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.
    Any increase would not necessarily match inflation.
  • Audaxer
    Audaxer Posts: 3,508 Forumite
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    coyrls wrote: »
    Any increase would not necessarily match inflation.
    I agree it is not guaranteed to increase by more than inflation. However looking at the AIC site, the dividend history of CTY shows that the annual dividend amount is now more than five times higher than it was 30 years ago. I would therefore be fairly confident that healthy dividend increases will continue in future years.
  • coastline
    coastline Posts: 1,649 Forumite
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    coyrls wrote: »
    Any increase would not necessarily match inflation.

    CTY hasn't done too bad over the decades and is closely linked with UK markets. The FTSE itself has only faltered in the last 5 years or so when you look at the long term comparison with the MSCI World. Set to 10 years and more.

    https://www2.trustnet.com/Tools/Charting.aspx?typeCode=NM990100,NASX

    CTY is currently paying around 10 times the dividend it paid out at the introduction of the FTSE 100 in 1985.Was 1.7p now 17.7p

    http://dividendchampions.uk/Company?symbol=CTY&p=div

    The FTSE itself started at a base of 1000 and yield around 4%. So that's around £40 a year in dividend.

    https://www.ukvalueinvestor.com/wp-content/uploads/2015/05/FTSE-100-Dividend-yield-over-30-years-2015-05.png

    Today the figure is 4.4% and the FTSE stands around 7200.The dividend works out around £315. Looking at inflation the dividends have kept up even more. This link has £40 at £126 since 1985.

    https://www.thisismoney.co.uk/money/bills/article-1633409/Historic-inflation-calculator-value-money-changed-1900.html
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Audaxer wrote: »
    I would therefore be fairly confident that healthy dividend increases will continue in future years.

    If global growth slows then so will company earnings. Falling $ exchange rates have played a significant part in boosting dividends over the past 15 years.
  • atush
    atush Posts: 18,726 Forumite
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    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?


    No i hold others, and some capital preservation and some growth. A little bit of property and some bonds. But i hold more income ITs than any other category.

    i'm holding 5 figures of CTY at present.
  • Audaxer
    Audaxer Posts: 3,508 Forumite
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    Thrugelmir wrote: »
    If global growth slows then so will company earnings. Falling $ exchange rates have played a significant part in boosting dividends over the past 15 years.
    I was thinking ITs would be more likely to be able to keep increasing dividends as their structure means that they can hold dividend income back to cover bad times. I think dividend growth in equity income funds is more likely to suffer than in equity income ITs?
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    Audaxer wrote: »
    I was thinking ITs would be more likely to be able to keep increasing dividends as their structure means that they can hold dividend income back to cover bad times. I think dividend growth in equity income funds is more likely to suffer than in equity income ITs?

    If revenue is added to reserves. Then ultimately you are still only getting your own money back. Whether it's paid now or later. To be prudent reinvesting rather spending all income received would be a better approach. I've always used dividends as a diversifer. An opportunity to rebalance without having to sell holdings thereby incurring unnecessary charges or incurring the margin spread.
  • arnoldy
    arnoldy Posts: 505 Forumite
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    Look at what CTY hold. Basically easily tradeable FTSE 350 stocks. You are being charged 0.33% of your investment to hold those stocks that would cost you 0% to hold yourself as a basket of shares!


    That equates to 0.33/4.5 or 7.3% of your monthly dividends/income being 'skimmed'.
  • Bravepants
    Bravepants Posts: 1,503 Forumite
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    arnoldy wrote: »
    Look at what CTY hold. Basically easily tradeable FTSE 350 stocks. You are being charged 0.33% of your investment to hold those stocks that would cost you 0% to hold yourself as a basket of shares!


    That equates to 0.33/4.5 or 7.3% of your monthly dividends/income being 'skimmed'.


    Yet but CTY is a managed fund, that's what you are paying for. I, for example, wouldn't have a clue what to buy or sell, or when to do it.
    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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    edited 10 December 2019 at 9:05PM
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    Thrugelmir wrote: »
    If revenue is added to reserves. Then ultimately you are still only getting your own money back. Whether it's paid now or later.
    That's true, but I would think that good ITs would have built up a reserve of dividend cover over the last 10 years of bull market? So if for example you were just starting investing now and there was an equity crash next year, I would have thought it was more likely you would continue to get growing dividends from ITs than from similar equity income funds that had paid out all their income? If however you had been invested over the last 10 years, I would agree you would have got the roughly the same income overall as the smoothed-out income of from a similar equity income IT.
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