Want a rock solid income EVERY month from your investments? These are my 12 must-have funds with an amazing track-record, says our wealth guru JEFF PRESTRIDGE

Investing for income has been somewhat sidelined in recent years as many have been drawn to the potential gains to be made from global tech stocks. Yet I believe it still makes great sense for so many people, young and old.

Yes, it’s a conservative investment approach in a world where a lot of investors are seeking quick returns.

But it can prove quietly effective, both as a tool to build long-term wealth and as a way of boosting income in retirement.

It’s an investment strategy I have adopted with my tax-free stocks and shares individual savings account (Isa) over many years.

As a result, my portfolio is awash with shares in investment trusts which aim to deliver a combination of long-term capital return and a growing income. 

The likes of Alliance Witan, Bankers, Brunner and JP Morgan Claverhouse, which between them have more than 200 years of annual dividend growth tucked under their belt. And, crucially, a commitment – not a guarantee – to keep on tickling up their income payments.

Of course, these steady-eddies are complemented by more growth-orientated investments – such as Seraphim Space and Templeton Emerging Markets – but they provide my portfolio’s ballast, my investment comfort blanket.

Typically, every quarter they provide me with a dividend which I see as my reward for being a loyal shareholder.

Currently that income stays in my Isa and is then used to buy more shares. But at some stage in the future, maybe when I fully retire, I will withdraw that dividend income to support household finances.

In terms of overall returns (income and share price growth), my income-friendly investments earn their place in my Isas.

Yes, I could invest in specific income-friendly stocks, such as British American Tobacco, HSBC, Legal & General, Lloyds and Shell, but I prefer stock market-listed investment trusts with portfolios comprising a broad spread of income-yielding shares. After all, successful long-term investing is all about diversification.

And yes, I could avoid conservative income-orientated investments altogether and opt for a gung-ho approach, forever jumping in and out of shares as the market moves. But whenever that idea weaves its way into my brain, I remind myself of the moral of Aesop’s famous fable of the tortoise and the hare: slow and steady wins the race.

While investment trusts may lack the zest – the pizzazz – of technology funds, they will rarely let you down over the long term.

‘Investment trusts provide investors with a treasure trove of income opportunities,’ says Annabel Brodie-Smith, communications director at the Association of Investment Companies (AIC).

She’s spot on.

How to get a regular income from trusts 

Recently I have been looking at how this ‘treasure trove’ of opportunities can be used to provide an attractive monthly income.

Regular readers will be aware that I’ve written about this subject before, but I thought I would look at it afresh, given the many requests I’ve had from readers and the rosy outlook for dividends both in the UK and overseas.

For example, investing platform AJ Bell believes the 100 largest listed companies in the UK will deliver dividends this year worth £88.8billion – their highest level since 2018.

Investment house Allianz Global Investors is similarly optimistic about dividend growth across Europe, both this year and next.

My starting point to create a portfolio delivering a monthly income is a splendid (and rather addictive) research tool set up by the AIC which is free to use – take a look yourself by visiting theaic.co.uk and clicking on the ‘research tools’ tab.

This service allows you to put together a portfolio and then see the income it would have delivered over the past year. For each month it shows the trusts that have provided the income and how much. Indeed, you can go back further and analyse the monthly income you would have received in any particular year.

It also provides key information on the trusts, such as past total returns (income and capital), dividend dates and the annual income they deliver, expressed in terms of a dividend yield.

And here’s the bit that you’ll REALLY like 

Some may argue that everything I’ve just said is based on the past – the income you would have got if you had held shares in the trust, as opposed to what you are likely to get in the future.

It’s a fair point. It’s the future that matters as an investor.

But the portfolio I have constructed should deliver you income growth. Indeed, I would be amazed if it didn’t.

How can I be so bold? It’s because the investment trusts I have included in the portfolio have all grown their dividend payments to shareholders, year in, year out, for at least 20 years – some are closer to 60 years.

It’s an achievement they are very keen to keep going, and they’ve demonstrated in the past that they can do it under the most testing of conditions.

They all managed to keep growing dividend payments during the financial crisis of 2007 and 2008, and the Covid pandemic of 2020 and 2021 when the world economy went into lockdown.

This ability to grow their income through thick and thin is in part a result of rules allowing them to squirrel away for another day some of the income they receive from their investments. This reserve can then be drawn upon to support income payments to shareholders when the corporate environment is challenging and some businesses struggle to pay a dividend. Investment trusts can also top up the dividends they pay by dipping into capital reserves.

In effect, investors continue to receive a growing income but forego a little bit of capital return in the process.

All this means I am confident the income from the portfolio I have constructed will be higher over the next 12 months than it was over the previous year – and it will be higher every year for the foreseeable future.

Hopefully, this growth in income will also be supported by share price gains.

Devising a successful income portfolio

The 12 trusts I selected have some common characteristics.

First, as already mentioned, they all have at least 20 years of dividend growth to their name and a commitment to keep it growing. Secondly, all pay quarterly income, albeit at slightly different times of the year. This ensures that the portfolio should pay an income every month, although the payments will be uneven.

Yet they have important differences, which ensures the portfolio is invested broadly across markets and different investment houses, plus has a slice of exposure to real-world assets.

So four of the trusts are UK invested. This emphasis is primarily a result of the income-friendliness of many home-grown stocks. Exposure to international dividends is via three trusts investing worldwide, two funds focusing on Asian markets (a growing source of income these days) and two trusts seeking out income in the US and emerging markets.

The dozen income-friendly trusts is completed by International Public Partnerships. This is a fund that delivers income from investing in infrastructure – everything from the transmission lines required for energy generated by offshore wind farms to be transported onshore, through to the companies that lease rolling stock to railway companies.

This diversification across the dozen trusts also means that a broad spread of investment groups run them.

And the result is a portfolio which provides access to the skills of ten well-regarded investment companies.

Only Janus Henderson runs more than one fund: it is the manager of Law Debenture, North American Income and Henderson Far East Income.

So how do the numbers work?

Last week I set up the portfolio using the AIC’s ‘my portfolio’ tool and invested £1,000 in each of the 12 trusts – a total of £12,000.

Calculating the number of shares I would have in each trust, the tool (via the ‘income finder’) showed me the income I would have received from them in the past.

For example, over the past year I would have received £468 – an average of £39 a month. In every month I would have received at least one dividend payment – with six in both December and May.

In calendar years 2025 and 2024, the respective income totals received would have been £461 and £442.

Over the last full tax year (which ended in April), the income would have been £479, with at least one dividend payment every month.

Given the determination of these dozen trusts to keep on growing their dividends, there is every possibility that in both the next 12 months and for the full calendar year of 2026, the income totals will surpass £468 and £461.

Indeed, they should grow year in, year out. That’s an exciting prospect for income seekers.

Even if we were to assume that the income over the next 12 months stayed at £468 (an unlikely event) we are still talking an income just short of 3.9 per cent per year. If it came in at £500 it would generate an annual income equivalent to 4.2 per cent. Rather attractive, given interest rates remain at 3.75 per cent.

I see this growing income as the investment cream on top of any future share gains that may be made from the portfolio.

Brodie-Smith says the ‘income finder’ component of the ‘my portfolio’ tool was designed specifically to help those investors who want to receive a steady income throughout the year.

She adds: ‘Like you, Jeff, many investors like to create a virtual portfolio of trusts to find out how much income they are likely to receive over a year and the months they would receive it in. Income is a top priority for many investors, and investment trusts are a proven way to provide it.’

Please bear in mind… 

Over the months ahead I will keep an eye on the progress of our income-friendly portfolio and report on how it is performing.

Of course, you can use the AIC online tools to devise a virtual income portfolio of your own – you might come up with something even better than the one I have put together (do let me know).

Indeed, there is absolutely nothing to stop you setting up a portfolio that will deliver you a regular stream of future income and long-term share price gains.

But do bear in mind that there will be costs: stamp duty charges and fees imposed by the investing platform you use that will nibble away at your returns.

Ideally you want to protect the portfolio from tax. That means setting it up within the shelter of a stocks and shares Isa or a self-invested personal pension (SIPP).

Outside these tax-friendly vehicles, you need to be aware that capital gains tax and dividend tax could become issues – especially if a Labour government under the leadership of Andy Burnham decides to ratchet up these rates, as many experts expect it to do.

Email me: jeff.prestridge@mailonsunday.co.uk