Some notes from a long-term income investor

[Itsallaguess]

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Just a few quick notes regarding my long-term income-portfolio...

My rolling 12-month dividend income continues to steadily and reliably rise, and my spreadsheet monthly-table and long-term chart of that rolling-income progress continues to give me a very good level of confidence that my largely income-focussed investment strategy is going to fully deliver on it's long-term intention of supplementing an early-retirement plan that's now quite rapidly beginning to take shape.

I'm still working at the moment, so a combination of re-invested dividends and fresh capital from wages is continuing to help provide a good boost to that ongoing dividend-delivery, accompanied by a reliable level of long-term dividend-growth itself, from within existing portfolio holdings.

All my dividend-generating investments are now within two ISA accounts, which will provide some account-level diversification when I eventually come to draw on that income, and my non-ISA shares account now only carries three holdings, all designed to keep me within the current relatively low unsheltered interest and dividend allowances -

• TN25 UK Gilts (0.25%) - a low-coupon gilt holding that's due to mature at the end of January 2025, and which will feed eventually into my 2025 ISA allowance investments

• Vanguard LifeStrategy 80/20 - a long-term capital-based holding to capture some hands-off growth with spare cash where ISA allowances have already been filled

• JP Morgan Indian Investment Trust (JII) - A zero-dividend Investment Trust facing the Indian market that's outperformed it's intention as another soak-away for spare unsheltered investment capital, as discussed last October here - https://tinyurl.com/22orum2d

I continue to track month-to-month dividend income, with a very reliable forward-month view being provided by the excellent DividendData website - https://www.dividenddata.co.uk/dividend-payment-dates.py?m=alldividends

Clashing that ongoing monthly list against my income-portfolio holdings provides a concise table of expected dividends on a forward-looking basis, and around 30 minutes is spent at the end of each month confirming those expected dividends against actual delivered dividends in my two ISA accounts, with the monthly amounts then also feeding into my rolling 12-month income table and chart.

In terms of company and dividend news, I've spent a little time setting up a free RNS News account with the London Stock Exchange, which then delivers highly reliable company-level news emails related to my specific portfolio holdings -

https://www.londonstockexchange.com/personal-investing/tools/email-alerts

One of the long-term issues with that approach to RNS News harvesting has often been the amount of unimportant regulatory announcements that listed companies have to make, often making granular announcements that are well outside the more important results or dividend-announcement areas that are likely to be of more interest to income-investors.

This often puts people off using this very reliable holding-specific RNS News emailing facility, but to counter that issue, I've set up a free email account with ZOHO (https://mail.zoho.eu/signup?type=org&plan=free), which can be used separately to my main email account, and when set up to receive the relevant portfolio-level RNS News announcements from the LSE link above, it can also then be configured using the ZOHO email web-interface to provide a very good level of server-based pre-filtering, thus allowing the automatic deletion of any RNS News emails that are of no general interest.

This means that huge numbers of RNS News emails are automatically deleted for me by those user-defined ZOHO filters, and the important result and dividend-based ones that are important to me then get forwarded on to my main email account.

Setting up the ZOHO email filters doesn't take any time at all, but there was an initial period of a number of weeks where the word and phrase filter-list was built up from the initial incoming RNS News emails, but things very quickly settled down, and I now reliably receive the small number of portfolio-specific RNS News-related emails that I'm interested in - it's a process that works very well indeed.

My long-term move away from UK-facing single-share income-holdings to more globally-diverse Investment Trusts has been a process that continues to deliver good results, and my one regret is perhaps not seeing the possible benefit of that shift a little sooner than I did.

I've gradually come to the conclusion over recent years that I get a great deal of satisfaction owning a much more self-sufficient and hands-off IT-based income-portfolio than I ever did having to micro-manage my UK-facing single-share portfolio, with all the regular accompanying 'excitement' that type of portfolio often provided.

As I now begin to properly plan for a life outside of paid employment, I'm happy to be in a position of good confidence that my long-term investment plans are likely to be able to deliver on their initial intentions, with very little hands-on management now being needed except a few top-ups a year from any spare funds that might be available.

In terms of my involvement with this site, I'm enjoying my break from participating more fully, and whilst I intend to maintain that, I will hope to nip in from time to time and provide updates on how things are going regarding my income-strategy.

Cheers,

Itsallaguess

[kiloran]

I've gradually come to the conclusion over recent years that I get a great deal of satisfaction owning a much more self-sufficient and hands-off IT-based income-portfolio than I ever did having to micro-manage my UK-facing single-share portfolio, with all the regular accompanying 'excitement' that type of portfolio often provided.

Good to hear from you!

I enjoyed the HYP-based single-company approach and was happy with the performance, but ultimately moved away to ITs and ETFs to simplify the need (desire?) to micromanage all the dividends and reinvestments. It means that my affairs will be easier to manage (only 4 stocks now instead of 50-ish) when I pop my clogs, and I also decided that I didn't actually need the income when I retired so moved to more of a growth strategy which requires little maintenance.

--kiloran

[kempiejon]

Hi there; good of you to pop back you've been missed and a quality missive to break the silence, thanks for that.
The long history of month by month rolling 12 months of income and a bit of predictive work from Dividata and HYPTUSS are methods I use to justify my retirement income planning too.
I tried living off my dividend income for a few years as a taster back about 2018/19 before Covid spoilt everyone's game. I use Ian as my RNS feed but to be honest I'm no that bothered by announcements my holdings make. Really big ones would come via the brokers and even then I feel I could ignore them and not be materially affected. Seems I'm now much less interested in investing, no longer researching companies, in fact less concerned about yield as my portfolio feels sufficient. My hands off approach is just parking cash in a global ETF and like you under par low coupon gilts for cash without interest tax liability.

I'm glad you're enjoying your life and rest from the chatter about this place.

[moorfield]

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My long-term move away from UK-facing single-share income-holdings to more globally-diverse Investment Trusts has been a process that continues to deliver good results, and my one regret is perhaps not seeing the possible benefit of that shift a little sooner than I did.

I've gradually come to the conclusion over recent years that I get a great deal of satisfaction owning a much more self-sufficient and hands-off IT-based income-portfolio than I ever did having to micro-manage my UK-facing single-share portfolio, with all the regular accompanying 'excitement' that type of portfolio often provided.

Good to hear from you IAAG, and yes I agree. On reflection I became too distracted by HYP. It's a great/the right idea for an income investor, just the wrong implementation imo, I also run a very hands off PHY now.

[seagles]

‎
My long-term move away from UK-facing single-share income-holdings to more globally-diverse Investment Trusts has been a process that continues to deliver good results, and my one regret is perhaps not seeing the possible benefit of that shift a little sooner than I did.

I've gradually come to the conclusion over recent years that I get a great deal of satisfaction owning a much more self-sufficient and hands-off IT-based income-portfolio than I ever did having to micro-manage my UK-facing single-share portfolio, with all the regular accompanying 'excitement' that type of portfolio often provided.

As I now begin to properly plan for a life outside of paid employment, I'm happy to be in a position of good confidence that my long-term investment plans are likely to be able to deliver on their initial intentions, with very little hands-on management now being needed except a few top-ups a year from any spare funds that might be available.
Itsallaguess

Such a breath of fresh air your post makes. I too decided a while back to move to an IT based income "portfolio", whilst still keeping a HYP for interest, but to be honest have done very little with the HYP other than Bed & ISA, CGT planning and like you moving from my trading account to ISA so as to not give HMRC the satisfaction of taking tax. Which timely reminds me that I need to move/sell a couple, probably Bed & ISA IGG and sell the disappointing VOD. I actually retired 21 years ago (ok was 49, was able to draw a DB pension at 50, thanks very much for that, and did return to work but no longer needed the large amount of salary I was earning, so worked to keep busy and supplement my holidays). Fortunately for me all my IT's are in my SIPP, which I will probably never touch, and have in the last few years started investing in Growth and Renewables. The income for this "portfolio" is sufficient to allow a couple of fair size purchases a year and I still am able to add the £2880 new cash, which also allows a "buy" once the tax appears and I move it to my drawdown account. This is done without the need to do the detailed company searches that applied to my HYP.
I also "manage" my daughters ISA and my granddaughters JISA, both require little work but at least it keeps me involved.
Good to hear from you and good luck with your "planned" retirement path.

[daveh]

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All my dividend-generating investments are now within two ISA accounts, which will provide some account-level diversification when I eventually come to draw on that income, and my non-ISA shares account now only carries three holdings, all designed to keep me within the current relatively low unsheltered interest and dividend allowances -

• TN25 UK Gilts (0.25%) - a low-coupon gilt holding that's due to mature at the end of January 2025, and which will feed eventually into my 2025 ISA allowance investments

• Vanguard LifeStrategy 80/20 - a long-term capital-based holding to capture some hands-off growth with spare cash where ISA allowances have already been filled

• JP Morgan Indian Investment Trust (JII) - A zero-dividend Investment Trust facing the Indian market that's outperformed it's intention as another soak-away for spare unsheltered investment capital, as discussed last October here - https://tinyurl.com/22orum2d

Itsallaguess

Good to hear your back.
Similar to me. I have an income portfolio (mostly in ISAs now) a mix of individual shares, high yield ETFs, ITs a couple of prefs plus VWRL*.
Outside the ISA my cash holdings are mostly in low coupons gilts (TN25, T26, TN28 and TG31) and I'll be adding more soon (possible T26A and TG29) as my predicted interest this tax year will be > £1000 if I don't. Plus a a large holding in SMT for low dividends, but hopefully good capital gains.

*VWRL is low dividends, but is in my ISA to avoid the complications of ERI, what's the situation with Vanguard Lifestrategy, is it low yield and does the OEIC structure avoid tax complications? I might have to have a look at JII as India could be an interesting place to be invested in in the future.

[kempiejon]

what's the situation with Vanguard Lifestrategy, is it low yield and does the OEIC structure avoid tax complications? I might have to have a look at JII as India could be an interesting place to be invested in in the future.

I wondered that abut the OEIC and might even check out the details and a quick aside I thought India seemed a good place to invest and my weapon of choice is iShares India ETF IIND. Thus far looks like one of my luckier clever moves.

[Golam]

A timely and important post on the subject of long-term investment. My experiences and results are so similar to those of Itallaguess. I retired quite some years ago and have lived off dividends from a portfolio of 12 HY FTSE 100s and ITs. Little work involved and a predictable income. My portfolio value fluctuates but that does not really matter.

[daveh]

what's the situation with Vanguard Lifestrategy, is it low yield and does the OEIC structure avoid tax complications? I might have to have a look at JII as India could be an interesting place to be invested in in the future.

I wondered that abut the OEIC and might even check out the details and a quick aside I thought India seemed a good place to invest and my weapon of choice is iShares India ETF IIND. Thus far looks like one of my luckier clever moves.

Been and had a look on the Vanguard site. the 80% equity version has a yield of 1.95% and comes in both an accumulation and distributing version. Not sure how easy it is to keep the tax records for the accumulating version as the rolled up dividends still count towards the dividends allowance, but also increase the cost base of the holdings wrt CGT. Wonder if HSDL (or other brokers) include the rolled up distributions in the tax statement or the investor has to look them up themselves.

I'll have a look at IIND too thanks.

[Alaric]

Wonder if HSDL (or other brokers) include the rolled up distributions in the tax statement or the investor has to look them up themselves.

Brokers are required by law to tell you about the rolled up distributions on the annual dividend statement. What you have to do for yourself is keep a long term record if you want to use the accumulated dividends to increase the base cost for CGT calculations.

[funduffer]

Hi IAAG,

Thanks for this post and all you have contributed over the years - I have learned a lot from you.

I started a HYP and a high yielding portfolio some 10 years ago. The IT's have delivered more, been more stable and easier to manage. I have concluded that my HYP will be frozen (as far as possible) from now on, and if I have spare cash it will all go into IT's.

I too have diversified the IT's geographically, which I feel has made the portfolio more stable and reliable.

The HYP has had too much drama for me, so I am rationalising it to a smaller number of companies (16), then intend to leave it alone.

FD

[moorfield]

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Clashing that ongoing monthly list against my income-portfolio holdings provides a concise table of expected dividends on a forward-looking basis, and around 30 minutes is spent at the end of each month confirming those expected dividends against actual delivered dividends in my two ISA accounts, with the monthly amounts then also feeding into my rolling 12-month income table and chart.

This is an excellent habit to adopt. For those "builders" who want to take this a step further and extrapolate target (overall) income into the future, say 5, 10, 15 yrs hence, I highly recommend reading this thread, which should be a sticky one really:
viewtopic.php?p=467610#p467610