Tuesday, October 15

High Yield Shares?

Post Royal Mail shares - what to do now? Have a cigarette?

Now you've got your Royal Mail shares money (or not) - so far the highest price post-flotation has been 489p i.e. a 48% increase - and you've made a decent 40 - 50% profit - what next? Have an electronic fag? What should you do with all that hard-earned cash?

Well, just as I was wondering the very same thing myself, those nice chaps over at the MotleyFool.com sent me an e-mail with some excellent suggestions for shares with 6% yields. I am inclined to listen when said Motley Fools speak as they are careful chappies, despite their foolish name.

So here are the shares that they have come up with for your delectation - plus some comments and pictures from me (I really am a fool).

1: Admiral (ADM)



(NB: The chart is below the 200-day moving average (black line) and chartists say that is not a good buy signal)

Over the last 12 months, Admiral (car insurance) has made payments totalling 94.4p / share. So with the shares at £12 that is a trailing 7%-plus income – yum.

However, they pay out almost all their as dividends, so that payout could be cut if profits stumble. (Do car insurance profits ever stumble? Let alone tumble).

Nevertheless, the business has done well during the recession, with both profits and dividend climbing 70% between 2008 and 2012! Car insurers - don't you just love 'em.

2: Amlin (AML)



(NB : Also below its 200 day moving average)

Another high-yield insurer, Amlin is a Lloyds operator that offers insurance to cover hurricanes etc....

Trailing payout is 24.3p per share, i.e. a 6% income at 405p.

Reported profits have been up and down over the years, and they actually reported a loss for 2011! So some unpredictability here.

All the same, the dividend was covered 2x for 2012 and increased 60% between 2007 and 2012.

3: SSE (SSE)



(NB : Also below its 200 day moving average)

Power companies - don't you just love 'em too! SSE’s plan to raise gas and electricity prices by 8% should help near-term dividends. (Thank you granny).

The group is committed to raising its annual dividend by the RPI measure of inflation, and so is on course to pay 87p per share for this year. Yum.

SSE's dividend history is very reliable – it has increased its payout every year since it was created in 1999. And between 2008 and 2012, the dividend was increased 32%. So stop moaning about your gas and electricity bills and fill your fur-lined boots with SSE shares this Christmas.

4: ICAP (IAP)


An inter-dealer broker that has recently declared a 22p / share annual payout and thus yields 6% with the shares at 364p.

But they have had their problems, - underlying earnings fell 18% last year as the company’s traditional brokering activities continue to lose ground to the electronic competition.

Nonetheless, the payout was covered 1.5 times by profits and has been raised a respectable 41% since 2008 ...

So there you have it - four shares for your consideration - this is not advice of course as you have a brain of your own and the Motley Fool is just a bunch of blokes and blokettes trying to make a living by scouring the stock market just like the rest of us. Take care and good luck.