She is older than me and will retire in 1 year 9 months; my retirement will be a year or two after that once I've built up enough safety margin (25%-30%) and reserve (2 years income) plus a Cash Float (3 months).
When my SIPP kicks in (5 years away) our Safety Margin will grow to approximately 50% and grow further when our State Pensions start - assuming we're still both alive of course. This should be more than sufficient income for our needs for the rest of our lives.
Current Portfolio
I've been moving more towards Investment Trusts, so current portfolio is:
57% HYP (18 Shares)
30% Investment Trusts (9 IT's)
12% Personal Pension (S&P500 Tracker with Standard Life)
1% Cash
The following table shows the current status of the HYP and IT portfolio:
Value Div Fcst
Share Epic Sector %Total %Total Yield
BAE Systems BA Aerospace & Defence 4.00% 3.05% 4.10%
BHP Group BHP Mining 3.97% 7.54% 10.20%
BP BP Oil & Gas Producers 3.41% 4.12% 6.50%
British American Tobacco BATS Tobacco 3.90% 4.71% 6.50%
British Land Company BLND Retail REITs 4.21% 3.91% 5.00%
G4S GFS Support Services 1.75% 1.50% 4.60%
GlaxoSmithKline GSK Pharmaceuticals & Biotechnology 4.20% 3.44% 4.40%
HSBC Holdings HSBA Banks 4.18% 5.05% 6.50%
Imperial Brands IMB Tobacco 3.61% 7.46% 11.10%
Legal and General Group LGEN Life Insurance 5.08% 5.39% 5.70%
Lloyds Banking Group LLOY Banks 3.30% 3.31% 5.40%
National Grid NG Multiutilities 4.16% 3.94% 5.10%
Pennon Group PNN Gas, Water & Multiutilities 2.80% 2.24% 4.30%
Rio Tinto RIO Mining 4.12% 5.98% 7.80%
Royal Dutch Shell 'B' RDSB Oil & Gas Producers 3.50% 4.23% 6.50%
Standard Life Aberdeen plc SLA Financial Services 2.73% 3.30% 6.50%
Unilever ULVR Food Producers 3.69% 2.26% 3.30%
Vodafone Group VOD Mobile Telecommunications 2.82% 2.73% 5.20%
BlackRock North America Trust BRNA Equity Investment Instruments 1.75% 1.37% 4.20%
City of London Inv Trust CTY Equity Investment Instruments 8.11% 6.33% 4.20%
Henderson Far East Income Ltd. HFEL Equity Investment Instruments 5.26% 5.97% 6.10%
Merchants Trust MRCH Equity Investment Instruments 7.47% 6.53% 4.70%
Murray International Trust MYI Equity Investment Instruments 6.20% 4.73% 4.10%
Smithson Investment Trust SSON Equity Investment Instruments 1.74% 0.00% 0.00%
Finsbury Growth and Income Tru FGT Equity Investment Instruments 1.71% 0.57% 1.80%
Scottish Mortgage Inv Trust SMT Equity Investment Instruments 2.05% 0.19% 0.50%
North American Income Trust NAIT Equity Investment Instruments 0.27% 0.14% 2.80%
Portfolio Running Yield = 5.38%
Value Div
Sector %Total %Total
Aerospace & Defence 4.00% 3.05%
Mining 8.09% 13.52%
Oil & Gas Producers 6.91% 8.35%
Tobacco 7.51% 12.17%
Retail REITs 4.21% 3.91%
Support Services 1.75% 1.50%
Pharmaceuticals & Biotechnology 4.20% 3.44%
Banks 7.48% 8.36%
Life Insurance 5.08% 5.39%
Multiutilities 4.16% 3.94%
Gas, Water & Multiutilities 2.80% 2.24%
Financial Services 2.73% 3.30%
Food Producers 3.69% 2.26%
Mobile Telecommunications 2.82% 2.73%
Equity Investment Instruments 34.56% 25.83%
Total 100.00% 100.00%
Note: 1...'Value %Total' is the portfolio value of the share as a % of the total portfolio
2...'Div %Total' is the expected dividend of the share based on forecast yield
as a % of the total portfolio expected dividend
Playing with Pay Away
1 Year before I retire, we shall move all of our dividend income to pay-away and live of that whilst saving my salary, thus dry-running the income/float approach before having to do it for real.
Several of our ISA's have now reached a size that I do not wish to contribute to them anymore and I have enabled pay-away for those accounts earlier this year.
The dividends from those accounts is reinvested (with new cash) into other ISA and SIPP accounts, boosting the income they will provide.
Financial Independence
Our ISA and SIPP dividend income grew to provide an extra 51 days of retirement income compared to last year.
This has resulted in us reaching a very important goal for me, today (31st December) became Financial Independence Day, thanks to Imperial Brands!
Our 2019 dividend income was greater than the planned expenditure for our retirement (with a £150 safety margin....), sadly this includes my SIPP which I cannot yet access, hence the need to continue to build income and safety margin - however, I'm very pleased with achieving this as it's taken me some time.
2019 Results
Note that I compare my entire portfolio, including personal pension and other cash savings as I treat the whole thing as a single portfolio:
Total portfolio increase: 31.7%
Made up of:
Cash Savings (Reserve): 0.8%
Cash Added to invest: 5.3%
Tax Relief and Interest (reinvested): 0.9%
Dividends (reinvested): 5.5%
Special Dividends (reinvested): 0.5%
Capital Gain (HYP + IT's): 13.2%
Personal Pension Gain: 5.5%
Dividend's compared to 2019: +16.1%
Dividends (2019 actual compared to forecast at end of 2018): +4.5%
2020
- Reduce transactions to save costs and focus more on Investment Trusts (Growth and Income).
- No sales, unless forced.
- Goals to increase dividend income (actual and forecast) by at least 15% compared to 2019.
- Invest more in IT's and improve dividend diversification, at the moment Mining and Tobacco are too high
I can transfer my Personal Pension into my SIPP at the end of January, and will probably transfer 50% of that - keeping the rest in the S&P tracker which has done very well over the last couple of years. Most, if not all of this money will go into Investment Trusts.
A surprisingly good year and I'm hopeful that next year will go well too.
regards,
Darka