I need a 5%+ Dividend Yielding UK Share

marathonic

Okay, I'm looking to invest in a single UK share which is reasonably safe and offers a good stable dividend.

Which do you think is best and why?

Note: I know I'll get the usual "don't invest in one share, use a tracker instead" and other similar responses. Before that, I'd like to explain my reasoning for this idea:

The scenario is that I've got an online stockbroking account with Interactive Brokers that I need to leave open for the foreseeable future as it allows me to exchange Australian dollars to UK pounds at extremely favourable rates on a monthly basis.

There is a Monthly Minimum Commission of $20 reducing to $10 when you hold $2,000 worth of shares.

The sole purpose of this purchase will be to get the reduced commission.

I want to invest £1,600 and I don't care about 20% swings in the share value. Theoretically, I'd like commissions to be covered by dividends so I'm looking for a stable yield of 5%+.

I don't want multiple shares because the value invested is so low that I don't want to have to work out whether the total value of multiple shares still exceeds $2,000 every month.

Effectively, I could consider the commission savings as an extra 5%+ added to the yield and potential capital appreciation when calculating total return on investment.

Thrugelmir

You've a choice of 9 in the FTSE.

Vodafone is possibly the best option. As is turning into little more than a cash generator.

marathonic

Thrugelmir wrote: »

You've a choice of 9 in the FTSE.

Vodafone is possibly the best option. As is turning into little more than a cash generator.

Thanks Thrugelmir.

Yeah, I'd eyed up Vodafone as well. To be honest, my investing to date has been all in US quoted stocks so I've no experience with the UK.

Everything was liquidated recently for a house purchase so I'm now looking to reduce my commission with Interactive Brokers before concentrating on ISA's.

VOD has jumped pretty sharply so far in 2013 and I'm always nervous buying something that has outperformed the market to such an extent. However, based on the measures I normally looked for when investing in US stocks, I don't think it's in overvalued territory just yet - not compared to the market as a whole anyway.

Thrugelmir

Market is heading for a correction. There's a disconnect between increasing company valuations and the real economy. Company profits aren't going to grow indefinately.

marathonic

Thrugelmir wrote: »

Market is heading for a correction.

I agree here too but I don't think it'll be too severe. Maybe a 10% pullback and some consolidation before continuing upwards.

A lot of companies have become more lean through the expense cutting exercises they've been going through over the past few years.

The market is a leading indicator anyway so, although Joe Public is still hurting, companies in general, aren't doing too bad.

I've been expecting that 10% pullback for quite some time now so, given that the market appears to have defied gravity for so long, it could possibly be a bigger pullback than expected.

There's also a pretty good chance that, with the current "all time high" headlines, the general public could become more interesting in the market again - giving rise to the potential of re-entering a bubble phase.

It's like they say, it doesn't matter whether it's houses, shares or ounces of gold, as soon as your taxi driver (shoe-shine boy) starts talking about an investment, it's time to get out. We're not at that point at the moment and may be quite some time away from it.

Shaolin_Monkey

AstraZeneca is yielding about 5.88%, has dividend cover of 1.7, and a history of increasing their dividend. I'm not sure I'd expect much in the way of growth but it's dividend should be dependable. Its currently ex-dividend, the next pay date for someone buying now would be in September.

Another possibility could be HICL Infrastructure Company (HICL) which is an investment trust that invests in infrastructure projects. It's share price doesn't move around much, and it's in the FTSE-250 so the spread should be reasonable. The current yield is 5.7%. Again it's currently ex-dividend. Another investment trust worth a look might be Henderson High Income PLC (HHI) which yields 5.36% and is a bit more volatile than HICL. It is fairly highly geared and invests in mixed equities and bonds.

simarks

I'd recommend Vodafone too, being the 3rd largest company on the FTSE, and continuous improvement in dividends record over 10+ years I believe they are a rather safe and reliable option.

grey_gym_sock

SSE tends to be pleasantly boring, and yields about 5.5%.

though for any single share, the swings could be more than 20%.

cepheus

So why can't you buy a high yielding Investment trust?

Caveat: Treating dividends and capital like chalk and cheese, rather than thinking in terms of total return and risk is very irrational and dangerous in my view.

merlingrey

Sainsbury's (or maybe Tesco) because you know what they will be doing 10 years+ from now.

Vodafone? not got a clue, big company but remember they had the second biggest loss in corporate history next to RBS and 13th biggest loss in the world below citigroup and they done that twice (2002+2006), and that was before the recession.

If you call that "safe" i'd hate to see what the hell you call dangerous.

The other issue is the size of a company can work against it because it's harder to turn a £100bn company into £200bn than turn a £10bn company into £20bn.

Perelandra

National Grid?

Share price is relatively stable (so unlikely that the £2k thing would be breached). Currently at a little under 5.5%.

There's some political risk there, though.


NB: I work for British Gas, so I'm this this industry (hence my interest!).