Going back into Equities

Now that the UK bank rate has dropped to 2%, is it time to get back into ordinary shares simply for their yield and in the hope that surely capital values cannot fall much further? Of course we do not want to repeat the mistake of seeking high-yielding stocks such as in the past with Yell and Taylor Wimpey, amongst others, only to be on the wrong end of a dividend cut or complete pull

What we want are companies that look as safe as houses were not. What we want is utilities. Here is my safe four showing the current yield. Each has a dividend cover of at least 1.2 times so that they ought to be as good as, say, a one year savings bond whilst holding out the prospect of capital growth. I should emphasise that this research should not be taken as investment advice just a bit of “present day musing”. Over the next months I will track the capital value to see if this adds to the yield

Share Yield % Divi Cover Price

National Grid 5.6 1.3 611.5

Scottish & Southern 5.8 1.2 1061

Centrica 6.5 1.3 212.5

Severn Trent 6.3 1.5 1052

jgs-2008

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