The good news is you still have time to build a healthy pot of money, by investing tax-free through your Stocks and Shares ISA allowance. And there’s plenty of opportunities out there right now.

As ever, there are risks, such as Middle East tensions and the global trade war, but world markets nonetheless rose more than 25% last year. Equities typically shrug off short-term problems like these, to post strong growth in the long run.

I think investment trusts are a good way to invest, as they tap into global growth and income opportunities. Here are two that could help you retire on a rising passive income.

Edinburgh Investment Trust

Edinburgh Investment Trust (LSE: EDIN) invests in the UK equity income sector, which means it aims to generate both capital growth and a rising dividend income, in this case from investing in the FTSE All-Share. Its long-term performance has been strong, delivering a total return of 156% over 10 years, according to the Association of Investment Companies.

There’s another attraction too. By investing in a spread of income-generating stocks, such as BP, Royal Dutch Shell, and Legal & General Group, Edinburgh generates a healthy yield of 4.55% a year. That’s far more than you’ll get on a Cash ISA, where even the best buy rates pay little more than 1%.

UK shares have underperformed global stock markets because of Brexit uncertainty, and I think they could now start catching up. This could make today a good time to buy this fund, ahead of the next surge in share values.

A big attraction of UK equity income investment trusts is they aim to increase their dividend payout every single year. Edinburgh has lifted its for the last 14 years. You can reinvest those dividends for growth and, when you retire, have a growing, passive income to live off.

Murray International

As well as investing in the UK, it could pay to spread your wings internationally. Murray International Trust (LSE: MYI) can help you do that, because it’s a global fund across Asia Pacific, North America, emerging markets and Europe, with less than a 10th of its portfolio invested in the UK.

Top holdings include renowned companies such as Taiwan Semiconductor, Swiss pharmaceutical firm Roche Holdings and US tobacco giant Philip Morris International, which means it could balance the UK-focused Edinburgh investment trust nicely in your portfolio. 

Murray has also delivered a strong performance, with a total return of 150% measured over 10 years and, better still, offers a generous income. It currently yields 4.21% and has a great long-term track record of increasing its dividend every year.

So if you’re 40 and don’t have any savings, these two trusts could help you play catch-up and build a passive income for a happier retirement.

The post No savings at 40? I’d buy these 2 investment trusts to retire on a rising passive income appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Investment trusts, which are companies that trade like regular shares but also own a whole portfolio of stocks themselves, can be a great way of doing this, as many trusts pay shareholders healthy dividends on a regular basis.

Today, I’m profiling two dividend-paying investment trusts that could be worth considering if you’re looking for a little extra income in retirement. Both have excellent dividend track records.

Edinburgh Investment Trust

Launched in 1889, the Edinburgh Investment Trust (LSE: EDIN) invests primarily in UK stocks. Its objectives are to grow its Net Asset Value per share faster than the growth of the FTSE All-Share Index, while also growing its dividends at a rate higher than UK inflation. In other words, it aims to provide investors with capital growth and rising dividends. Previously run by star portfolio manager Neil Woodford, the trust is currently managed by his successor at Invesco, Mark Barnett.

Looking at the trust’s portfolio, it’s clear that there’s a strong focus on large-cap stocks. For example, the top 10 holdings currently include a number of major FTSE 100 companies such as British American Tobacco, BP, Legal & General Group and BAE Systems. It’s also worth noting that the portfolio manager appears to employ a value approach to investing and picks stocks that trade at lower valuations and offer generous dividend yields.

Speaking of dividends, the trust is paying investors 26.6p per share this year (paid quarterly) which, at the current share price of 660p, translates to a yield of 4%. Fees are low at just 0.55% per year.

Given that this trust currently trades at a near-10% discount to its assets, I think it could be a great play for those looking for income in retirement.

Murray Income Trust

Another trust that has been around for a long time (launched in 1923) and also aims to provide both capital growth and rising income, is the Murray Income Trust (LSE: MUT). This year, its payout to shareholders is 33.25p per share, which equates to a yield of 4.4% at the current share price of 750p.

Like Edinburgh Investment Trust, this also has a large-cap dividend stock focus, which makes it an ideal holding for lower-risk investors seeking income in retirement. Top holdings currently include Unilever, British American Tobacco, Prudential and Royal Dutch Shell. The fund also has the flexibility to invest 20% of its capital internationally, and currently holds names such as Microsoft, Roche and Nordea within its top 20 holdings.

This trust currently trades on a large discount of 9.6% to its Net Asset Value, as its performance over a five-year time horizon has been a little disappointing, and investors have dumped it. However, given the large number of high-quality stocks within the portfolio, and the high dividend yield on offer, I think that discount offers considerable value. Ongoing charges are 0.69% per year.

The post Need extra income to supplement your State Pension? Consider these dividend investment trusts appeared first on The Twelfth Magpie.

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• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Edward Sheldon owns shares Unilever, Royal Dutch Shell, BAE Systems, Prudential, Legal & General Group and the Murray Income Trust. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Prudential. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, the prospects for share prices in the long run remain generally positive with the world economy continuing to deliver relatively high growth. As such, these two investment trusts could be worth buying at the present time.

Strong performance

Reporting on Friday was Allianz Technology Trust (LSE: ATT). The company enjoyed a strong year, outperforming its benchmark by a large margin. In the year to 30 November 2017 its net asset value per share increased by 41%. The Dow Jones World Technology benchmark increased by 31.5% during the same time period, which means the company’s outperformance was 9.5%.

In terms of its share price, there was a 50.2% gain in the same timescale. Of course, it was an exceptional year for the technology sector and for a number of the trust’s major holdings. The likes of Amazon, Apple, Facebook and Microsoft enjoyed strong gains as investors became increasingly positive on the prospects for the US and global economies. With those four stocks its major holdings, they were able to deliver a positive contribution to the trust during the year.

Looking ahead, there could be increased volatility in the wider technology sector. Higher inflation in the US could spark a more risk-off attitude among investors. This may mean that the company’s performance in the current year fails to match its 50%+ gain in its last financial year. However, with it trading on a 1% discount to its net asset value, it appears to offer excellent exposure to what may prove to be a growing technology sector.

High total returns

Also offering the potential for high returns in the long run is the Edinburgh Investment Trust (LSE: EDIN). It trades at a 10% discount to its net asset value, which suggests that it could offer good value for money. Furthermore, a number of its major holdings are relatively defensive. For example, British American Tobacco, Altria and AstraZeneca are among its top 10 holdings. They could provide stability and resilience during possible market turbulence over the medium term. They may also offer significant upside potential in the long run.

Additionally, the trust also has a relatively impressive income outlook with a dividend yield of 4.1% at present. This is likely to remain above inflation and could mean that investor demand for the company increases over time. This may help to reduce or even eradicate its current discount.

With the Edinburgh Investment Trust’s net asset value per share having beaten the performance of the UK Equity Income benchmark by over 10% in the last five years, it appears to have a solid track record which could be repeated in future.

The post Looking to invest £2,000? Here are two investment trusts to consider appeared first on The Twelfth Magpie.

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Peter Stephens owns shares in AstraZeneca, British American Tobacco and Altria. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. The Motley Fool UK owns shares of and has recommended Amazon, Apple, and Facebook. The Motley Fool UK has the following options: long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, short March 2018 $200 calls on Facebook, and long March 2018 $170 puts on Facebook. The Motley Fool UK has recommended AstraZeneca. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Starting a share portfolio can seem like a daunting experience. There are thousands of stocks listed here in the UK and thousands more listed across the world. Where do you begin?

The key, in my opinion, is to keep things simple. With that in mind, today I reveal two that I believe could be excellent beginner stocks.

BAE Systems

One company that I think looks perfect for a starter portfolio is BAE Systems (LSE: BA). It’s a defence, aerospace and security company that generates sales not only in the UK, but also in countries such as the US, Saudi Arabia and Australia.

There are several reasons why the stock has strong starter potential one being that it is easy to understand. It builds fighter jets and military ships, as well as electronics products such as radars. It also has a growing cyber security arm, helping to protect its customers against cyber threats. With geopolitical uncertainty on the rise, I believe demand for BAE’s products should remain robust in the medium term.

Second, the defence specialist appears to have a very reasonable valuation right now. The stock currently has a P/E ratio of 13.3. A general rule of thumb is that a ratio under 15 is considered to be cheap.

Third, the company also pays a nice dividend, and has a strong track record of increasing the payout. A dividend of 21.8p per share is expected for the year just passed, which is a yield of 3.8% at the current share price.

BAE Systems was one of the first stocks I bought when I started building my long-term share portfolio and I haven’t been disappointed with the results. For those starting out today, the stock still looks like a good choice, in my opinion.

Edinburgh Investment Trust

Another good option for beginners is to consider a buying an investment trust. These are companies that can be bought and sold like regular shares, yet actually own a whole portfolio of stocks themselves. The key advantage here is the powerful diversification benefits you can obtain. Even if you only have £500 to invest, you could potentially put it into over 100 companies. This would reduce the risk of your portfolio.

One investment trust that has considerable starter appeal is the Edinburgh Investment Trust (LSE: EDIN). Its goal is to provide capital growth in excess of the FTSE All-share index, as well as dividend growth that exceeds UK inflation. The trust mainly invests in UK stocks but can invest 20% of the portfolio outside the UK.

At the end of November, its top five holdings were British American Tobacco, BP, Legal & General, AstraZeneca and US-listed Altria. I’ll also point out that BAE Systems, listed above, was the seventh largest holding in the fund.

Over the long term, the performance of this trust has been excellent. For example, for the five years to the end of November, the net asset value (NAV) increased 87%, comfortably beating the FTSE All-share index’s return of 57%. The trust also rewards shareholders with regular dividends. Last year, investors received 25.35p per share, a yield of 3.6% right now.

Given its exposure to blue-chip companies, long-term track record and healthy dividend yield, I believe the Edinburgh Investment Trust would make an excellent buy for those starting a share portfolio in 2018.

The post 2 beginner stocks for 2018 appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in BAE Systems. The Motley Fool UK has recommended AstraZeneca and BP. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Tough period

Reporting on Monday was Troy Income & Growth Trust (LSE: TIGT). It has experienced a somewhat disappointing year, with its share price total return of 4% being well down on the FTSE All-Share’s rise of 11.9%. The main reason for this was the company’s style, with it being focused on defensive stocks which have generally been unpopular among investors during the last year.

However, this could create an opportunity for investors with a long-term timeframe. The trust currently trades at a small discount of 0.45% to its net asset value (NAV), while many of its major holdings appear to be relatively cheap. For example, Lloyds, British American Tobacco and GlaxoSmithKline are all among its top 10 holdings. All three stocks as well as other major holdings trade on historically low ratings at the present time, and this could signal that the trust has value appeal.

As well as this, Troy Income & Growth Trust has a dividend yield of 3.3%. This is above the rate of inflation and with many of its major holdings appearing to have a bright long-term future, its dividend growth rate could be above average. As today’s update from the company discusses, risks remain throughout the global economy. Therefore, its focus on defensive stocks could be rewarded in the long run.

More dividend growth potential

Also offering impressive income prospects is Edinburgh Investment Trust (LSE: EDIN). The company has also experienced a difficult year. Its return in the last year has been just 3.2% versus an increase of 13.8% for its UK Equity Income benchmark. However, with it now trading at a discount of 8.4% to its NAV, the company could offer good value for money for the long term.

It has a dividend yield of 3.7% at the present time. Its major holdings include a number of stocks which could offer high and yet reliable dividend growth in future years. For example, Imperial Brands has a solid track record of dividend growth which looks set to continue as it invests in new products. Likewise, AstraZeneca is expected to return to positive bottom line growth after a period of declines, and this could mean it is able to afford a higher shareholder payout.

As such, while Edinburgh Investment Trust has been a relatively disappointing place to invest in recent months, its long-term future appears to be bright. A mix of defensive characteristics, a relatively high yield and a wide margin of safety could mean it delivers strong income prospects over the coming years.

The post 2 dirt-cheap investment trusts for dividend-growth investors appeared first on The Twelfth Magpie.

More reading

• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Peter Stephens owns shares in Lloyds, GlaxoSmithKline, AstraZeneca, Imperial Brands and British American Tobacco. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca, Imperial Brands, and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.