Turbo-Charge Your Income Portfolio

A glance at the FTSE 100 index may suggest that investors have made no money for more than ten years. Most shares pay an income — known as the dividend — twice a year. Specialist equity income funds focus on shares of companies that pay strong and growing dividends. Reinvesting the income they pay to buy more units or shares in the fund can turbo-charge your portfolio.

The income, which gives the bulk of the profits to canny investors, is swallowed by the firm that issues the bond. Independent financial adviser Danny Cox, of Hargreaves Lansdown, says: ‘The power of reinvested dividends should not be underestimated. ‘Higher yielding UK income shares outperformed lower yielding UK growth shares over the past ten years, when the income is reinvested.’

Source: This Is Money

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