![]() As a “core” there was a three-unit holding in each of Aviva, Legal & General and M&G, all on yields of at least 8 per cent. I selected 16 stocks with a weighting to large caps, all offering a dividend yield of 5 per cent or more. What a wonderful time to have cash to invest given current available dividend yields.Ī balanced portfolio - without overdiversifying - is something to aim for. It was against this background that I relished the recent opportunity to advise and build a conservative, income-focused portfolio for a family charity. Never did I think those days would come round again! Of course, depositors can get returns of 6 per cent or more on bank deposits following recent rises in interest rates, but for how long will these rates last? Years ago, I wrote an article on my “double 7” approach, which advocated looking for both a dividend yield and a price/earnings ratio of 7. Many solid, established and profitable small-caps are also now offering attracting yields. I like businesses in which I’m invested to at least maintain dividend rates in a difficult period, if at all possible, as reducing or passing dividends always leave a scar on a company’s record which can never be erased.Ĭurrently, highly depressed markets have thrown up very attractive dividend yields and I have significantly moved funds in my own and family portfolios into the likes of Aviva or Legal & General - virtually private sector “gilts”. Probably it is my accountancy training and self-discipline, but I have always differentiated between capital and income, and nibbling away at one’s seed corn is not for me. But in a bear market, as we had recently, depreciating capital combined with little or no income is hardly encouraging. ![]() This may be fine when shares are powering ahead, the argument being that you can always sell a portion of your holding if you need the money. ![]() Much less appealing has been the pursuit of “total return”, that is, focusing on an overall return, primarily driven by capital growth at the expense of income. I have always been a lover of dividends - reinvested and compounded - they have played a big part in the growth of my Isa over the years.
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