High yielding shares

Marine_life

By way of background - I am looking to get some of my cash into shares.

I already have a fair amount of cash across a number of diversified funds but I am now worried that i have too much money in pure cash and want to change that.

I am getting closeish to retirement I am looking to put some of that cash into individual shares but those specifically with a higher yield / return. I have been looking specifically at Insurance companies and utility companies and, particularly the insurance companies have a realtively high yield and I am wondering why that is?

Any other sectors I should be looking at (i.e. reasonable return, decent yields etc.)?

Freecall

In very general terms, high yielding shares such as the ones you mention (utilities etc) do so because they are in mature industries which can reliably generate revenues to sustain high dividend payments.

Of course you can never get anything for free, the downside is usually that because they are in mature industries there is little opportunity for growth.

Wilkins

In the case of insurance companies with a higher than average yield (not the case with all of them), it's because the market thinks, rightly or wrongly, that their earnings might fall and their dividend may be reduced.

Consider RSA. You pays your money . . .

gadgetmind

Do you want high yield now, perhaps at the expense of future growth of capital/income, or a more balanced approach?

And do you want to go the individual shares route or to perhaps consider using Investment Trusts?

planteria

i think in your position i would select some high yielders myself, but consider them carefully and have a diversity of industries amongst them: a friend of my Dad's holds a fund and then shares in 12 different companies.

HSBC, Morrisons, Glaxo, Vodafone, Resolution, Diageo, Unilever are the sort of companies i would have on my radar..... perhaps a miner (divs are decent nowadays) and some would argue Tobacco is a useful sector (but i avoid).

gadgetmind

The best place to meet fellow LTBH high income share holders is the HYP practical board on Motley Fool.

I work on at least 15 shares, but my wife currently holds 25. We try to limit ourselves to max 5% of capital per share, 10% per sector, and we avoid both the very high and very low yielders.

Of course, what to do when shares move outside these rules is the subject of lively debate! We recently flogged WS Atkins as we'd triple our money on capital alone and the yield was on the low side. We also flogged AZN as the bid frenzy offered a price we couldn't resist. Others would have held.

planteria

you did well to sell if you got £47ish...but perhaps you should re-invest in Astra now:)

sabretoothtigger

High yield is high risk in general? Centricia is 5% yield in theory but maybe the hammer and sickle flies over parliament next election and that share is nationalised


Insurance companies have large liabilities in theory, they are subject to investment risk. Some of the largest holders of BB shares were these companies.

planteria

BB? Barclays Bank?

gadgetmind

planteria wrote: »

you did well to sell if you got £47ish...but perhaps you should re-invest in Astra now:)

Just a few pence short of that, versus a buying price of £28, and a few years of dividends, so happy to part with the shares.

I may rebuy soon, but am currently chipping away at our unwrapped holdings to fund the newly enlarged S&S ISA allowances. There is always value somewhere, so I'm in no great rush.

bigadaj

gadgetmind wrote: »

Just a few pence short of that, versus a buying price of £28, and a few years of dividends, so happy to part with the shares.

I may rebuy soon, but am currently chipping away at our unwrapped holdings to fund the newly enlarged S&S ISA allowances. There is always value somewhere, so I'm in no great rush.

Surprised your selling holdings for the few grand extra in isa allowances, there's surely more than that down the back of the sofa at gadget mansions to fund that.