Here's how much you have to invest to pay for Christmas with dividends

 
Emma Haslett
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"All hail dividends" (Source: Getty)

Ever wondered how much you need to invest to pay for Christmas out of your dividends? Nope, us neither - but now the Association of Investment Companies (AIC) has answered the question no one was asking.

According to the AIC, an investment pot of £5,000 yielding three per cent would produce £37.50 per quarter, or £150 a year, assuming a quarterly dividend. Not exactly a king's ransom, but enough to pay for a few book tokens...

Meanwhile, a pot of £10,000 yielding three per cent would generate a quarterly income of £75, or £300 a year. If that yield was closer to five per cent, the income would be £500 a year. That's a couple of iPads.

Value of portfolio % yield £ yield Quarterly dividend Bi-annual dividend
£5,000 3 £150 £37.50 £75
£5,000 5 £250 £62.50 £125
£10,000 3 £300 £75 £150
£10,000 5 £500 £125 £250


Annabel Brodie-Smith, communications director at the AIC, pointed out that the best long-term gains are made by reinvesting dividends.

"[But] many investors want the income from their shares to help with living expenses.

"Our research shows that you don’t have to have a huge portfolio to generate an income which could at the very least prove helpful at certain financially stressful times such as Christmas."

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