Nine stocks for a sample income portfolio
3rd December 2015 12:31
Following on from their beginners' guide to building a dividend stock portfolio, our sister publication Money Observer has put together an example portfolio for income investors.
They asked three top fund managers for their recommendations for shares to fulfil five different income aims.
The panel comprises Richard Colwell, who manages ; Gervais Williams, the manager of the fund; and Carl Stick of .
And they have put together a diverse list of companies, from established firms through growing FTSE 250 companies to smaller, Aim-listed firms.
Doesn't pay a dividend, but hopefully will soon
The logistics management firm could soon pay out a dividend. Once this happens, Threadneedle's Richard Colwell anticipates that dividend growth could lie ahead.
Share price: 193p
Price/earnings ratio (PE): 13
Market cap: £235.7 million
One-year share price performance: 29%
Recently resumed paying dividends
The gift-packaging manufacturer will pay its first dividend this year, one year ahead of plan. Miton's Gervais Williams expects it can grow its dividend from here.
Share price: 135.2p
PE: 14.8
Market cap: £79 million
Dividend yield: 0.74%
One-year share price performance: 85.7%
LSE:LLOY:Lloyds
This UK bank has resumed dividend payments. Many fund managers think it has a strong market position and improving balance sheet.
Share price: 77.6p
PE: 43
Market cap: £55 billion
Dividend yield: 1.9%
One-year share price performance: 1.7%
Dividend growth potential
LSE:BOK:Booker
Food wholesaler Booker has a track record of growing its dividend and could sit at the core of an income portfolio.
Share price: 186.9p
PE: 27
Market cap: £3.3 billion
Dividend yield: 2%
One-year share price performance: 43.2%
LSE:SMDS:DS Smith
Threadneedle's Colwell highlights this packaging company as another stock offering the potential for dividend growth.
Share price: 388p
PE: 23.6
Market cap: £3.7 billion
Dividend yield: 2.9%
One-year share price performance: 54.4%
LSE:LOK:Lok n'store
Highlighted by Williams as having potential for continued dividend growth. The self-storage provider has already grown its dividend by more than 25% over the past three years.
Share price: 305p
PE: 39.8
Market cap: £80.3 million
Dividend yield: 2.6%
One-year share price performance: 39.3%
The 'compounders'
LSE:RTN:Restaurant Group
Rathbone Income manager Carl Stick hopes the owner of Frankie & Benny's continues to reinvest in the business to drive future growth.
Share price: 712p
PE: 22.7
Market cap: £1.4 billion
Dividend yield: 2.3%
One-year share price performance: 7.2%
LSE:BT.A:BT
Threadneedle's Colwell highlights the telecom giant as an "engine room" compounder, which has achieved consistent returns and provides a solid payout.
Share price: 452.4p
PE: 17
Market cap: £37.3 billion
Dividend yield: 2.7%
One-year share price performance: 20.2%
A cyclical/turnaround situation
LSE:RDSB:Royal Dutch Shell
Rathbones' Stick anticipates the oil major's purchase of will help to improve cash flow, alongside the disposal of more non-core assets.
Share price: 1,774p
PE: 9
Market cap: £202 billion
Dividend yield: 6.8%
One-year share price performance: -19.7%
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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