High yield FTSE 100 stock recommendations?

atush

Rollinghome wrote: »

With every man and his dog on the internet wanting to buy high yielding income stocks, you might want to consider whether following the crowd is always the best way to invest.

Normally, unless you're sure an even bigger crowd will be following you to push up prices further then it isn't. Of course, this time it might be different, or not, and may depend on the time horizon you have in mind.

There is something to be said about the above, not following a crowd. But everyone wants better than savings accts give these days.

VOD (that you hold) is now seen as a great dividend payer, but I bought it as a growth stock back in 2001 and I don't think it paid a dividend then lol.

Latest one I bought was GSK.

atush

grey_gym_sock wrote: »

this was also true 10+ years ago, and the shares have given an outstanding return since then, especially BAT. lower turnover has more than been compensated for by higher margins. such high returns can't go on for ever, but it's far from obvious that the good times (for shareholders) are over. (full disclosure: i hold some of BAT.)

i do agree that it's worth looking at international dividend payers, too.

I read somewhere that tobacco co's were into emerging markets like africa/indonesia now as the west stopped smoking (or the smokers die off).

I don't hold any individually, but some of my investment trusts do.

mania112

atush wrote: »

I read somewhere that tobacco co's were into emerging markets like africa/indonesia now as the west stopped smoking (or the smokers die off).

I don't hold any individually, but some of my investment trusts do.

Also, Western fund managers have turned away from investing in the tobacco companies for fear of turning away anti-smoking investors.

grey_gym_sock

mania112 wrote: »

Also, Western fund managers have turned away from investing in the tobacco companies for fear of turning away anti-smoking investors.

have they? i think most funds explicitly labeled as "ethical" exclude tobacco, but apart from them?

Thrugelmir

grey_gym_sock wrote: »

this was also true 10+ years ago, and the shares have given an outstanding return since then, especially BAT. lower turnover has more than been compensated for by higher margins. such high returns can't go on for ever, but it's far from obvious that the good times (for shareholders) are over. (full disclosure: i hold some of BAT.)

Russia recently raised tobacco tax 800% and Australia now has the vanilla packaging approach. The world's become a smaller place in the past 10 years.

Porcupine

I've just spotted Vanguard have a FTSE Equity Income tracker - TMF article. Would be interested in opinions...

Linton

Porcupine wrote: »

I've just spotted Vanguard have a FTSE Equity Income tracker - TMF article. Would be interested in opinions...

It looks like it invests far more sensibly than the disastrous IUKD ETF.

The whole point of trackers is supposed to be that they mirror the market and it is claimed that this gives them a performance advantage. However if you look at Porcupines reference the "index" is one specially commissioned by Vanguard and seems to be constructed highly artificially with restrictions that stop the wrong sort of shares taking too high a percentage. This is no doubt a good idea, but whether it represents any actual market is open to question. So I would classify it as a passive fund rather than a tracker.

As to how it will perform, it will be interesting to see.

mania112

grey_gym_sock wrote: »

have they? i think most funds explicitly labeled as "ethical" exclude tobacco, but apart from them?

I'm trying to remember where I got that info from (besides common sense), but here's a quote from Chris Murphy, Fund Manager for Aviva Investors' UK Equity Income (Oct 2012):

The UK stock market rose after the US Federal Reserve said it would buy
unlimited quantities of bonds as it tries to foster stronger economic growth
and European Central Bank president Mario Draghi unveiled details of a
bond-buying plan aimed at easing the euro zone's debt crisis. Even
disappointing economic data from the US and China failed to dent investors’
enthusiasm for equities. The FTSE All- Share index rose 1.1 per cent on the
month. Mining shares jumped on news that China is planning £99bn worth of
infrastructure projects in a bid to boost its economy while shares in precious
metal producers followed the gold price higher. However, Bumi shares lost
more than half their value after the London-listed Indonesian coal miner
disclosed “potential financial and other irregularities”. Bank stocks did well
and Barclays, Lloyds Banking Group and Royal Bank of Scotland all delivered
double-digit gains. As the equity market rose, defensive stocks lost their allure
and British American Tobacco and Imperial Tobacco shares declined. Retail
shares were under renewed pressure as luxury-goods retailer Burberry issued a
shock profit warning which triggered a share price collapse. Next shares also
declined after the clothing retailer cautioned that recent sales have been
“disappointing”.

Tobacco seems to be on the decline (at last, some would say), primarily due to health and safety restrctions, like the one in Aus:

http://www.ft.com/cms/s/0/39ed8f4a-e680-11e1-ac5f-00144feab49a.html#axzz2A3oUkdTh

I think (as I can't remember a quality reference other than my opinion!) the Fund Managers are starting to shy away from these firms, primarily because the shares aren't looking too good now, but also because of the ethical concerns of holding them.

A non-ethical fund will still try to be ....err... ethical.

grey_gym_sock

mania112 wrote: »

A non-ethical fund will still try to be ....err... ethical.

if you phrase the question in the right way, i imagine a fund manager might agree with this. i don't believe it's true, though.

there are definitely some fundamental negative factors for the industry, including tighter regulation, and higher excise duties, in many countries.

from my point of view, the main question is: given all these factors, can the companies continue to deliver a rising stream of dividends?

Thrugelmir

grey_gym_sock wrote: »

from my point of view, the main question is: given all these factors, can the companies continue to deliver a rising stream of dividends?

Possibly not.