I have been eyeing the opportunity to buy into chipmaker Nvidia (NASDAQ: NVDA) for a while but was put off by the price. As Nvidia stock fell recently, I was warming up more to the price – and this week saw it move around wildly.

Around a fifth cheaper than at the start of the year (but up 1,537% over the past five years!), has Nvidia now hit the sort of point where I would be ready to add it to my ISA?

Defining value can be difficult

It might seem as if I ought not to have a dilemma.

After all, I was waiting for the stock to get markedly cheaper – and the price has now fallen significantly.

But the thing is, value and price are not necessarily the same thing. As billionaire investor Warren Buffett has said, price is what you pay and value is what you get.

Nvidia now trades on a price-to-earnings (P/E) ratio of 37.

But that is based on last year’s earnings. As an investor, one way I can aim to build wealth from owning shares is to look for companies likely to have sizeable earnings (relative to what I pay) in future.

The main reason Nvidia stock has been falling lately is the fear of the potential impact US tariffs may have on its business. US policy in this area remains unclear and is fast-changing. But I continue to see a real risk to Nvidia’s sales revenues and profits from the proposed US tariff regime and retaliatory moves by other nations.

That could hurt earnings, meaning the prospective P/E ratio may be higher than 37.

So, while it may seems as if the stock has become cheaper, in fact what has happened is that the price has fallen. Those two things are not necessarily the same.

Not ready to buy yet

Time will tell. For now, though, I see significant risks for Nvidia (as well as other chipmakers) from US tariff policy.

The company faces other risks too, with the US government increasingly shutting off some avenues for growth in China. The stock market turbulence has likely made some large companies postpone or cancel decisions on capital expenditure. That could mean lower AI budgets, leading to weaker demand than previously expected for Nvidia chips.

I still like Nvidia as a business. It is massively profitable, has a large installed user base and thanks to a variety of proprietary designs it is able to offer some chips to customers with no effective competition.

But a P/E ratio of 37 offers me insufficient margin of safety for my comfort as an investor. Meanwhile, growing risks to the business mean that the prospective P/E ratio could actually turn out to be higher than that, meaning the current valuation would be even less attractive to me.

I am happy to buy shares during market turbulence — and have been doing so with other companies over the past fortnight.

But when it comes to Nvidia, the number of moving parts mean that I prefer to wait for some of the dust to settle – and I’m still not persuaded by the valuation. So, for now, I will not yet be buying.

Choppy markets may present buying opportunities for high-quality stocks at discounted prices.

Some Fools might consider adding to their positions in companies they have strong conviction in; others might view volatility as an opportunity to start a position in a company they previously deemed too expensive.

Admiral Group

What it does: Admiral Group provides car, home, and travel insurance, plus loans and financial services in the UK and beyond.

By Mark Hartley. When markets get choppy, it can help to shift a portfolio toward stocks with a low beta – a measurement of comparable price volatility. Admiral Group (LSE: ADM) has one of the lowest 5-year beta scores on the FTSE 100. 

As a leading UK motor and home insurer, it benefits from a steady stream of premium income, making its earnings less susceptible to economic downturns compared to more cyclical sectors. It also operates in a tightly regulated industry, reducing its exposure to risk-taking activities.

Its forward price-to-earnings (P/E) ratio dropped to 14 recently, so it looks undervalued.

However, high interest rates have impacted profitability in the past, wiping 50% off the share price in 2021/2022. Recently, this trend has reversed but a return to high rates could hurt the price again.

Mitigating this risk is an attractive 4.9% yield, with a decent track record of dividend payments. 

Mark Hartley does not own shares in Admiral Group.

Games Workshop

What it does: Games Workshop manufactures products for tabletop gaming enthusiasts including miniatures, paints and books.

By Royston Wild. I’ve steadily drip fed money into Games Workshop (LSE:GAW) shares since I first invested in 2020.

I topped up my position again in late January, and I’ll buy more if market turbulence causes the tabletop gaming giant to slump February’s record highs.

Games Workshop shares have proven an excellent long-term investment, up 2,750% in the last 10 years. I’m confident the next decade will be another highly successful one too.

The Warhammer maker still has plenty of room for growth in its bread-and-butter operations as global expansion continues and broader interest in fantasy wargaming booms. Core revenues rose an impressive 14.3% in the six months to November.

It’s looking to supplement this with supercharged royalty revenues through major media deals (such as the film and TV tie-up currently in the works with Amazon). Such agreements also have the potential to substantially boost demand for Games Workshop’s traditional products.

I think it’s a top stock to consider even as the threat of US trade tariffs looms.

Royston Wild owns shares in Games Workshop Group.

Games Workshop

What it does: Designs and manufactures plastic miniatures for tabletop wargames in the Warhammer and Lord of the Rings universes.

By Zaven Boyrazian. Few FTSE stocks can hold a candle to the tremendous track record of Games Workshop. While there have been ups and downs, the business is among the best-performing investments of the last 20 years in the UK. And it’s not hard to see why.

Pairing an addictive hobby with a dedicated community is an excellent recipe for pricing power. And its one that management has cooked up perfectly, with operating profit margins sitting just above 40% with a staggering 65% return on equity.

This strong performance has continued throughout 2025 as new miniatures are quickly getting sold out by popular demand. And while the threat of at-home 3D printing is becoming more prominent, the firm’s pricing power remains intact.

With that said, it should come as no surprise that Games Workshop shares trade at a premium valuation. But in a choppy market, even the best businesses can get sold off. And that could be a terrific opportunity to snap up more shares at a discount.

Zaven Boyrazian owns shares in Games Workshop.

GSK

What it does: GSK is a global biopharma company that specialises in developing medicines and vaccines.

By Paul Summers. Gravitating to strong and stellar – if somewhat dull – defensive stocks makes a lot of sense in uncertain times. That’s why I’m currently running the rule on pharma giant GSK (LSE: GSK).

Sure, the shares have underperformed the FTSE 100 index over the last twelve months thanks to legal challenges relating to its heartburn drug, Zantac. Cost pressures have also played a role.  

However, things are looking up. Back in February, the company lifted its 2031 sales target to over £40bn. Q4 sales also beat estimates. 

As I type, the shares can be picked for a little under nine times forecast FY25 earnings. That’s cheap relative to the market and healthcare stocks in particular. There’s also a 4.4% yield, comfortably covered by expected profit. 

GSK won’t shoot the lights out but it should provide some stability to a portfolio going forward.

Paul Summers has no position in GSK.

Rolls-Royce (LSE: RR) shares are the toast of the FTSE 100 and with good reason. They’ve surged a staggering 635% over the last three years, including a 70% rise in the past 12 months alone.

The FTSE 100-listed engineering group has delivered one of the great stock market comebacks of recent times. When CEO Tufan Erginbilgiç took the reins in January 2023, many were still questioning the group’s long-term future. 

Today, it’s a completely different story. He’s taken a sprawling, sluggish engineering giant and turned it into a leaner, meaner machine, and investors have reaped the rewards.

Can this FTSE 100 star fly even higher?

Resurgent demand for international travel has helped drive growth in the firm’s civil aerospace division. 

Stronger Western defence spending has given it another boost. Donald Trump’s brand of economic turmoil has helped by spurring NATO nations to step up investment.

Rolls-Royce isn’t immune to global jitters though. This past week has delivered a reality check.

Over just five trading days, the share price has fallen by around 7%. That means anyone who put £10,000 into Rolls-Royce shares a week ago is now looking at a paper loss of £700. Their investment would be worth roughly £9,300 today.

In the grand scheme of things, that isn’t a disaster. We’ve seen some violent swings across the market lately, and Rolls-Royce has held up better than most. But it’s a reminder that no stock rises in a straight line.

The share price drop might even present a second chance for investors who felt they’d missed their moment. 

At the time of writing, Rolls-Royce is trading on a price-to-earnings ratio of about 34. That’s rich compared to the FTSE 100 average of around 16, but arguably fair for a company that’s shown it can grow at this pace.

Still, I wouldn’t be piling in too enthusiastically just yet.

Valuations like this bring pressure. When expectations are so high even a small bit of bad news could send the share price plunging.

Dividends, growth, and share buybacks

And while Rolls-Royce is diversified, its bread and butter remains aircraft engines. More specifically, the real money is in long-term maintenance contracts, which depend on how much flying takes place. A global recession could put a dent in that.

Then there’s the long-awaited decision on its small nuclear reactors, or mini-nukes. This could be a huge growth avenue, but until governments give the go-ahead, we just don’t know.

Analyst sentiment is broadly positive though. Of the 18 experts covering the stock, 10 rate it a Strong Buy, three rate it a Buy, and just one calls it a Sell. Some of those views likely pre-date this latest wobble, although are unlikely to have changed much.

In my view, anyone considering buying Rolls-Royce today should forget about dazzling recent performance. It’s historic. In the past. Over. 

The future’s likely to be a slower grind and as much about dividends as dazzling share price gains. The forecast 2025 yield is a modest 1.13%, although the ongoing £1bn share buyback is a nice bonus.

It’s still a great company. though. And still well worth considering, but with a long-term view.

Many high-quality S&P 500 stocks are well off their highs right now. So there are a lot of opportunities for long-term investors like myself.

Here, I’m going to highlight two S&P stocks I believe are worth considering at the moment. I think that in two years, these two stocks are likely to be trading at much higher levels than they are today.

Double-digit gains?

Let’s start with ‘Magnificent 7’ stock Microsoft (NASDAQ: MSFT). It’s currently trading for around $381, about 19% below its all-time high of $468.

While this company is one of the largest in the world, it still has plenty of growth potential. It’s one of the world’s most dominant players in cloud computing, and this industry is forecast to grow by more than 10% a year over the next decade.

Microsoft is also a leading player in artificial intelligence (AI), video gaming, and business productivity software. And these industries have a lot of growth potential too, especially in AI.

For the year ending 30 June (FY26), analysts expect earnings per share (EPS) to be around $14.90, up 14% year on year. Let’s say that the company can grow its earnings at 10% a year over the following two years.

That would take EPS to around $18 by FY28. Stick an earnings multiple of 27 on this (roughly the price-to-earnings ratio right now) and we have a price target of $486.

That equates to a gain of about 28% from here. If the stock was to get there in the next two years, it would translate to a return of about 13% a year (14% when dividends are included) – not bad for a large-cap stock.

Of course, my forecasts here could be way off the mark. If the global economy weakens significantly in the next two years, cloud spending could drop sharply and Microsoft’s earnings growth could stall.

I’m optimistic about the long-term growth story though. I just bought some more Microsoft shares for my own portfolio.

Enormous potential

Another S&P 500 stock I believe has potential to perform well over the next two years is Palo Alto Networks (NASDAQ: PANW). It’s the largest player in the cybersecurity industry.

The cybersecurity market looks set for huge growth in the years ahead, and this company is well positioned to benefit. Recently, it has been pivoting to a ‘platformisation’ model where it can offer comprehensive protection to its customers via several different platforms (instead of providing individual solutions).

This pivot has slowed growth in the short term. But in the long run, it should support it. Currently, analysts expect revenue and earnings growth of 15% and 14% respectively for the year ending 31 July. If the company can continue to grow at that pace (and it may not as cybersecurity is a competitive industry and the company is up against the likes of CrowdStrike and Fortinet), its share price could rise significantly.

It’s worth noting that the average analyst price target for Palo Alto Networks is currently $211. That’s about 26% above the current share price.

That’s the 12-month price target however. If global markets recover over the next two years, and the company sees strong revenue and earnings growth, the share price could be even higher in 2027.

Owning shares in FTSE 100 companies can be a great way of earning passive income. But finding businesses that can return cash to shareholders is only part of an investor’s job. 

The other part of the equation is finding ways to buy them when they offer good enough returns. And a falling stock market can be a great opportunity to do this. 

Discounted dividends

Legal & General (LSE:LGEN) is a stock that is popular with income investors – and justifiably so. It often trades at prices that mean there’s a high dividend yield on offer. 

Right now, the dividend yield is around 9.25%, but during the recent volatility, investors were able to buy the stock with a 10% yield. And the difference can be significant over time.

Compounding a £10,000 investment at 9.25% over 30 years results in £142,116. But the result of achieving a 10% annual return is £174,494 – over £30,000 more. 

From a passive income perspective, that’s the difference between receiving £12,032 per year and £15,863. Over time, taking advantage of unusually good opportunities can really pay off.

Caution

Investors, however, need to be careful when share prices are falling. The stock market often overreacts to unexpected developments, but it rarely does things for no reason.

In the case of Legal & General, falling share prices could actually be bad news for the underlying business. There are a couple of important things to consider here.

First, the firm has solvency ratios to maintain. And the value of its investments falling might mean it has to hold on to more of its cash, reducing the amount available for dividends.

Second, demand for its investment products might fall as customers become more nervous with share prices going down. Whether or not it’s the right thing to do, it does tend to happen.

Opportunities

It might be the case that a 10% dividend yield is enough to offset these risks. But I find this hard to assess accurately given the uncertainty around share prices at the moment. 

While I’m certain investors who bought the stock at £2.15 won’t do worse than the ones who are buying it at £2.31, I’m not minded to jump in myself. I am, however, looking elsewhere.

Shares in Games Workshop (LSE:GAW) have also had a volatile few days, with uncertainty over trade tariffs causing the stock to fall 16% before recovering 11%. Nonetheless, I’m interested.

The company might have to increase its prices as a result of tariffs and this is a risk. But very strong gross margins mean it’s unlikely to have to raise prices by much to offset the costs.

Buying the dip

A volatile stock market can give investors the chance to buy stocks with unusually high dividend yields. And over time, the result of taking these opportunities can be huge. 

Being greedy when others are fearful can be a winning strategy, but investors need to tread carefully. Sometimes there can be real impacts on companies that need to be considered.

I’m staying away from Legal & General shares at the moment for this reason. But I’m actively looking for opportunities to add to my Games Workshop as the share price fluctuates.

Four years ago, shares in Renishaw (LSE:RSW) were trading at £64.75. Today, the FTSE 250 stock has a price of £22.20. 

That makes it look as though a lot has gone wrong with the business. But I think the reality is quite different and things aren’t nearly as bad as they look. 

Why is the stock down?

Renishaw is one of the leading manufacturers of precision measuring equipment. Its products are used in production facilities for things like medical devices, robotics, and semiconductors.

It’s the last of these that has been a big drag on the business recently. Semiconductors are a notoriously volatile industry and after a boom in 2021, investment in factories has slowed.

On top of this, the company isn’t easily able to give guidance as to when this will turn around. Its order book only provides it with visibility of around two months ahead on average.

That makes it much more difficult to forecast earnings. And this in turn means the share price can be much more volatile. 

Long-term growth

From a long-term perspective, though, there’s a lot to like about Renishaw. It has a strong position in a growing industry – and this can often be a powerful combination for investors.

Semiconductors, robotics, and medical devices look like industries set for long-term growth. And the FTSE 250 company’s products are difficult to compete with in these environments.

Renishaw’s own equipment is highly technical, which creates a barrier to entry for competitors. But its products also feature as parts of machines made by other companies.

In these cases, its components are often specified by the equipment manufacturer. And that makes them almost impossible to compete with. 

Valuation

I think the end markets Renishaw sells into will grow over time, even if it’s not clear exactly when and at what rate. But the current share price arguably doens’t reflect this.

The stock trades at a price-to-earnings (P/E) ratio of around 17, but this is based on earnings that have fallen significantly. A recovery could cause this multiple to contract sharply.

With this type of business, I think the price-to-book (P/B) ratio is a good one to consider. The firm’s book value (the value of its assets minus its liabilities) is more stable and less cyclical.

On this basis, Renishaw shares are historically cheap right now. So, for investors who are prepared to live with the uncertainty, I think this is a good stock to consider buying.

Volatility

The danger with Renishaw is obvious – it sells into markets that are cyclical and that means demand is out of its control. And a potential recession could cause profits to decline further.

Investors interested in buying the stock need to judge for themselves whether or not this is a risk they’re comfortable with. For some, it might – entirely reasonably – not be. 

For those that can live with the volatility, though, I think this looks like an interesting stock. At historically low multiples, there’s arguably never been a better time to consider taking a look.

Despite all the turmoil in the financial markets, the last five years have been pretty rewarding for Stocks and Shares ISA investors.

The most recent data from the official statistics from HM Revenue & Customs show that the market value of investment ISAs has grown significantly since 2020. Some of this comes from new investors leveraging the tax advantages of an ISA. However, a large chunk also stems from impressive capital gains achieved since the pandemic.

So how much money have ISA investors actually made?

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Crunching the numbers

Most investors rely on a passive index fund investment strategy. The returns earned since April 2020 obviously depend on which index they choose to track. The FTSE 100 is by far the most popular here in the UK. And while it’s not known for its stellar growth potential, a chunky dividend paired with relatively low volatility still makes it a solid pick for growing wealth in the long run.

Over the last 15 years, the UK’s flagship index has yielded an annualised gain of around 6% a year. But in the last five years, investors who capitalised on the stock market crash at the height of Covid-19 have enjoyed an annualised return closer to 9%. And when compounded over time, a 3% difference can lead to a significant difference in wealth creation.

To demonstrate, £20,000 invested at a 6% annual return for five years would be worth £26,980. But when this return is bolstered to 9%, the value climbs notably higher to £31,315. And if left to run for longer, the gap grows ever wider.

For example, after 10 years, these figures would stand at £36,390 and £49,030 respectively. Or £66,205 and £120,185 after two decades. In other words, an extra 3% can deliver almost twice the wealth generation in the long run.

Pushing returns even higher!

Given the power of an extra 3%, what if investors strive for even higher gains? Even if it just amounts to a slightly bigger 12% annual return, after two decades, a Stocks and Shares ISA could reach £217,850 without putting any more capital into the stock market.

Needless to say, having close to a quarter of a million pounds by investing just £20,000 is an alluring prospect. And it’s a reality that stock picking can potentially provide. Take Diploma (LSE:DPLM) as an example.

Since the lows of the pandemic, the value goods distributor has continued to demonstrate its importance within its customers’ value-chain. That’s translated into a combination of acquisitive and organic growth for revenue and earnings.

Subsequently, the dividend per share has almost doubled from 30p to 59.3p, with share price following suit. And shareholders who bought and held over the last five years were rewarded with a staggering 18.2% annualised gain!

Obviously, no investment is without its risks. Diploma relies on global supply chains to meet its customers’ demands, with a large chunk of sales originating from the US market. However, with a global trade war brewing, the impact of potential tariffs in three months’ time could impede the firm’s ability to keep delivering double-digit gains.

Nevertheless, the long-term potential of this enterprise remains promising. So for investors looking at a stock-picking strategy for their ISA, Diploma could be worth a closer look.

Using the stock market to earn a second income is a powerful wealth-building tactic. And despite popular belief, investors don’t need to be rich to leverage this tool.

In fact, investing just £100 a month over the long run can make an enormous difference – that’s less than the median £180 monthly savings of British households. But how big of a second income could investors unlock with this modest monthly capital?

Building wealth £100 at a time

Over the period of 10 years, putting aside £100 each month builds to £12,000 in total savings. However, the stock market also offers compounding returns from both dividends and capital gains. On average, UK shares have delivered a long-term average annualised gain of around 10% when looking at the FTSE 250. For reference, this figure’s closer to 8% for the FTSE 100.

At a 10% annual return, investing £100 every month for a decade yields a portfolio worth £20,485 when starting from scratch. Following the 4% rule, that translates into a second income of £820.

Obviously, that’s not a life-changing sum. But patience can go a long way along an investing journey. What if an investor continues to invest for 20 years? Well, then the portfolio grows to £75,940, or £3,038 passive income.

What about 30 years? That translates into a £226,050 portfolio from just £36,000 of savings, generating an extra £9,042 passive income each year. And for those able to wait a full 40 years, an investor’s nest egg could reach £632,408, generating a retirement income of £25,296 that would continue to grow, year after year.

Earning 10%

Index funds are a terrific way to grow a portfolio on autopilot. However lately, the FTSE 250 hasn’t been keeping up with its historical average. In fact, over the last 15 years, returns have been lagging even the FTSE 100 at just shy of 6%. For reference, 40 years of compounding at 6% only yields a £200,000 portfolio – a third of what an extra 4% in annual gains can deliver over the long run.

This is where stock picking offers a solution. Building a custom portfolio comes with greater risk and involvement. But it opens the door to higher, potentially market-beating gains.

Take Future (LSE:FUTR) as an example. The media giant has had some rocky times of late with an initially underperforming expansion into the US market. Nevertheless, despite its recent woes, the value creation for shareholders has been exquisite, with an average total annualised gain of 17% over the last decade.

Given that its market capitalisation is only slightly over £700m, there’s still ample room for growth. And this is also backed up by management’s ambitions to capture more market share in America, which could see its audience sizes for its Fashion & Beauty, Homes, and Wealth verticles surge.

Of course, there are never any guarantees. And as shareholders have recently seen, a failure to deliver on ambitious targets is a big reason why the Future share price is still down over 80% from its 2021 highs. This goes to show that even with a strong business, investments can underperform if bought at the wrong price. As such, stock picking may fail to deliver the expected results.

Nevertheless, the business does appear to be getting on track to hit its 2026 organic growth targets. Although with a recent change in leadership, Future might be best left on an investor’s watchlist. At least for now.

Regardless, with prudent decision-making, robust diversification, and consistent monthly saving, even a small investor can potentially earn a substantial second income in the long run.

With the US stock market crashing by double digits earlier this month, opportunistic contrarian investors have begun asking what are the best stocks are to buy now?

Historically, some of the best investments are high-quality companies trading at a deep discount on their underlying value. But finding such opportunities isn’t always easy, especially when everyone’s looking in the same place. That’s why I almost always start my search among the businesses that have been beaten up the most.

Finding value in unloved stocks

Companies that get sold off aggressively can end up getting mispriced. With that in mind, here are five of the worst-performing US stocks over the last 12 months.

Company	Industry	Market Cap	12 Month Performance
Novo Nordisk (NYSE:NVO)	Pharmaceuticals	$217bn	-47.9%
Advanced Micro Devices	Semiconductors	$139bn	-42.1%
Merck & Co	Pharmaceuticals	$206bn	-35.4%
ASML	Semiconductors	$246bn	-29.5%
The Walt Disney Company	Media & Entertainment	$151bn	-21.9%

Chances are, each of these businesses is getting caught in the panic-selling crossfire of the US tariff-induced market sell-off that started earlier this month. And while the subsequent announcement that tariffs are being paused for 90 days created a rebound, each of these businesses is still trading close to their 52-week lows.

However, just because a firm is getting sold off doesn’t instantly make it a bargain. Each is tackling notable challenges right now. As such, investors need to examine operational risks and potential rewards before jumping in. To demonstrate, let’s zoom in on Novo Nordisk.

The challenge of pharmaceuticals

As more people become more health conscious, Novo Nordisk is finding tremendous success with its GLP-1 weight loss drugs. In particular, Ozempic now has a 44% estimated market share, with demand growing at an accelerating pace. The impact of this is made perfectly clear in its latest set of earnings, which reported revenue and profits surging by over 30%.

With plenty of other drugs in the pipeline, this could just be the tip of the iceberg. However, like all pharmaceutical enterprises, Novo Nordisk isn’t immune to the challenges of clinical trials. And last December, shareholders were reminded of this when the results of its brand-new weight-loss drug, CagriSema, fell short of expectations.

While the drug appears to be effective, average weight loss came in at 22.7% over 68 weeks, versus the 25% Novo Nordisk was aiming for. That led to a steep double-digit sell-off, demonstrating that bad results from a clinical trial can cause pharmaceutical stocks to plummet. Nevertheless, given the enormous market opportunity of weight-loss drugs, such volatility may be a price worth paying, in my mind. That’s why I think Novo Nordisk’s recent slip could be a potential buying opportunity and deserves further research.

Looking at the other businesses on this list, there are a variety of challenges investors need to take into consideration.

Advanced Micro Devices is facing fierce competition from the likes of Nvidia, while ASML is caught in the middle of a brewing trade war between the US and Europe. As for Disney, subscriber attrition from its Disney+ streaming platform is causing concern.

Of course, each business also has promising long-term potential. So when looking for the best stocks to buy, investors must dig deeper to determine whether the risks are worth the reward.

Investors searching for passive income could do a lot worse than consider the London Stock Exchange‘s large range of investment trusts. Here are two that I think are worth a close look today.

As you’ll see, their forward dividend yields sail past the UK blue-chip average.

Foresight Environmental Infrastructure

Investing in utilities can be an effective strategy when broader economic times are challenging.

Sure, earnings can be impacted by higher interest rates. But on the whole, the essential commodities they provide to homes and businesses — whether that be water, gas, or electricity — can provide excellent profits stability.

This is an essential quality that gives utility companies financial means and the confidence to consistently pay a decent dividend.

Investors have a huge range of utilities shares and related investment vehicles to choose from today. One investment trust I like is Foresight Environmental Infrastructure (LSE:FGEN), whose forward dividend yield is a gigantic 10.9%.

This company has its finger in many pies when it comes to harnessing the growing green economy. It owns wind and solar farms, hydro plants, waste management sites, and biomass projects, to name just a handful of asset categories it’s involved with.

In total, it owns 41 projects spanning Europe. It’s a range that provides added protection for investors, as localised issues like adverse weather conditions and regulatory changes can be effectively absorbed, safeguarding earnings and dividends.

Renewable energy trusts like this also have considerable long-term growth potential as the world steadily switches away from fossil fuels. Dividends here have risen every year since it listed on the London stock market in 2014. It’s a run I expect to continue.

Schroder European Real Estate Investment Trust

Schroder European Real Estate Investment Trust (LSE:SERE) is another investment trust I think’s worthy of attention from dividend chasers. Its classification as a real estate investment trust (REIT) means at least 90% of annual rental earnings are guaranteed to be paid out to shareholders.

Furthermore, at 7.9%, its forward dividend yield is more than double the FTSE 100 average.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

As the name suggests, this trust focuses on Europe and holds a diversified portfolio of properties. These include food and DIY retailers, warehouses, logistics hubs, and office space. And they are based in so-called “winning cities” (including Paris, Berlin, and Hamburg) that have substantial long-term growth potential.

Theoretically, the trust’s focus on cyclical sectors could leave earnings more vulnerable to turbulence during economic downturns. However, with around 50 tenants, it effectively minimises rent collection and occupancy issues at the group level.

I also like Schroder European Real Estate Investment Trust because of its strong balance sheet. With a loan to value of just 25%, it has substantial flexibility to continue paying a large dividend even if profits disappoint in the near term.