Although our obsession with hoarding money on savings accounts is understandable, there is currently only one major income story in the city. The glorious corporate dividend.
As shown in our exclusive survey, it is expected that the dividends distributed to investors by the top 100 listed companies in the country will increase this year – by almost 9% for a collective and a record £ 89 billion. Grow inflation three times. A combined dividend pot that was almost double the pot for the financial crisis of 2008.
Light beam: the dividends paid to investors by the top 100 listed companies in the country are expected to rise this year
Moreover, if analysts are correct with their forensic investigation of company accounts (never a guarantee), the annual dividend amount will rise again to almost £ 93 billion next year, rise another five percent and of course a record.
Some will argue that many of these companies should use part of this money in other ways to strengthen impoverished occupational pension schemes – many of them around – or to reinvest in their businesses to boost the economy.
But in an era of low interest rates, persistent inflation and economic uncertainty, it must be reassuring for many people who seek to build long-term assets, so that a growing income can be obtained by holding a portfolio of dividend-friendly stocks.
Of course, shares have no guarantees. Prices can fall as well as rise, while dividends can quickly dry up if a company hits the buffers (think Carillion, according to Provident Financial).
But there are enough investment vehicles available – especially investment funds – that have proven to be an appealing mix of consistent dividend growth and long-term capital returns in the past. They have done this by diversifying – investing in a basket of shares – and in the case of investment funds that make use of income reserves built up over many years to ensure that dividend payments to shareholders increase steadily.
Because online-based investment platforms are widely available (and surprisingly user-friendly), investors can now easily build their own revenue-focused share or fund-based portfolio, using an Isa or an individual personal tax benefit for tax efficiency. They can collect income on a regular basis when they need it – only after the age of 55 in the case of a pension – or even better reinvest, and postpone disbursements until they are needed. For example in later life.
I say: thank goodness for business dividends. A sunbeam in an otherwise gray financial air.
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Although it concerns investments, it is reassuring to see that a city organization is emerging for investors.
Step forward to the Alliance of investment firms. It has just delivered a screwdriver document describing the misleading nature of essential information documents that investors should now have access to when buying a mutual fund or investment fund.
The document, a product of busy European and UK financial supervisors, is designed to alert investors to possible returns or losses they may expect from their investment – depending on whether the markets are rising or falling. Nevertheless, the figures generated by the forecast model, devised by the regulators – and which investment houses must use – seem to have been pulled out of the sky.
Take the document that Baillie Gifford must make available to those interested in purchasing shares in Japan Trust. Although the label five of the seven is labeled for risk – quite risky – this trust even appears to be in & # 39; unfavorable & # 39; conditions to deliver – an annual 6.5 percent over five years. Under favorable conditions, the equivalent figure is almost 36 percent. Jackpot time. Picking figures from the air.
It is not surprising that the association says that the documents are not correct and that, if they are continued, investors can cause serious financial damage. Burn before you read & # 39 ;, is his advice. Afraid. Children no longer.