21 July 2025
Quilter has raised the forecasted annual income for its Monthly Income Portfolios for the fifth year running as the management team sees dividends from Japanese, European and UK companies set to continue, making up for the uncertainty in fixed income yields.
Managed by Helen Bradshaw and CJ Cowan, for the 2025/26 fiscal year, the Quilter Investors Monthly Income is forecast to pay between 3.50p to 3.90p per share, while the Quilter Investors Monthly Income and Growth portfolios is expected to pay between 3.60p to 4.00p per share.*
Based on these forecasts, this would equate to estimated yields of between 3.8% to 4.2% for the Monthly Income Portfolio, and 3.5% to 3.9% for the Monthly Income and Growth Portfolio.**
The upgrade in forecasts follows another successful year where the income delivered came in ahead of estimates. The Monthly Income Portfolio delivered an income of 4.14p per share, a 9% increase on last year, while the Monthly Income and Growth Portfolio delivered income 14% higher at 4.29p per share – both comfortably above the forecasted payments.
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Income estimates |
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Portfolio |
Estimated income per share 2025-26 |
Estimated income per share 2024-25 |
Actual income per share 2024-25 |
|
Quilter Investors Monthly Income Portfolio |
3.50p to 3.90p |
3.50p to 3.85p |
4.14p |
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Quilter Investors Monthly Income and Growth Portfolio |
3.60p to 4.00p |
3.40p to 3.80p |
4.29p |
Source: Quilter. All income figures quoted in pence per share, based on the U1 (GBP) Income share class of the Quilters Investors Monthly Income and the Quilters Investors Monthly Income and Growth portfolios.
Throughout 2024 and into 2025, the team saw strong dividend growth from their equity holdings. Regionally, Europe saw very strong growth, with all holdings in the portfolios experiencing double-digit dividend growth. Meanwhile, Japanese corporate reforms are starting to feed into increased shareholder payouts.
Fixed income was also a positive driver of income growth through the year. Payouts from bond funds can take time to catch up with market yields, so despite US government bond yields roughly ending up where they started a year ago, the portfolios still enjoyed income growth from the fixed income holdings. The portfolios were also able to benefit from special dividends, such as those from BioPharma Credit. The investment trust unexpectedly paid two special dividends for the second year running.
Looking ahead, the team remains optimistic that dividend growth in Japan will be sustained, backed up by Europe and the UK also continuing to contribute. However, there are also risks presenting themselves as global markets go through an uncertain phase. Interest rates are likely to be cut going forward, depressing bond yields at a time when the positive lag effect for fixed income distributions is coming to an end. Furthermore, a weaker dollar also has the potential to weigh on the value of distributions to shareholders.
The portfolios distribute a monthly income in a smoothed manor, ensuring clients receive consistent payments throughout the year. To generate the forecasts, Bradshaw and Cowan combine several inputs and use an in-house forecasting tool to estimate in granular detail the amount of income that may be expected from the portfolios throughout the financial year.
Helen Bradshaw, portfolio manager at Quilter Investors, said: “We are delighted to have raised our income forecasts for the fifth year running, following a really successful year. As a result of the tax landscape changing in the UK, we are seeing increased demand from investors looking for a smoothed monthly income to help make gifts out of surplus income. As such, we are very conscious of the investor journey across the year when constructing this forecast.
“With the interest rate environment looking uncertain but not rising anytime soon, and the removal of lag effects from the period of higher rates, fixed income will not be as fruitful as it has been in the past. This is where it is crucial to use all the tools within a portfolio. Investment trusts can be particularly beneficial thanks to their ability to hold income reserves, as well as provide greater guidance of expected distributions.”
CJ Cowan, portfolio manager at Quilter Investors, added: “As ever, the year ahead is uncertain. The tariff back and forth and bubbling geopolitical risks has increased the range of possible outcomes, so it is crucial to diversify across various income sources to ensure the portfolio can perform well in many different eventualities.
“This exercise not only gives clarity to our investors, but it also helps us manage the portfolios more effectivity. We can identify if there are any parts of the portfolio doing an undue amount of heavy lifting when it comes to income delivery or if a turning point is coming in the income we can expect from a holding. It helps put us in the best position to take advantage of opportunities as they present themselves while maintaining a keen eye on delivering a smoothed monthly income for our clients.”
*This forecast is an estimate and relates to the U1 (GBP) Income share class for both portfolios.
**Based on the unit prices at the beginning of the financial year.
