Decent income plus potentially robust growth: what more do you want!?
When share prices are depressed, dividend yields go up. So why not lock some of those attractive payouts into your portfolio by buying equities right now? Today I'm going to highlight the best and potentially safest incomes offered by the shares I've been watching.
These shares have underlying businesses that are growing, so when markets stabilise, their prices could return to former levels before continuing to grow alongside their profits. That's a potential double boost for your portfolio -- high income and robust capital growth!
Rising dividend yields
Here's the line-up showing the forward yields and how far each share price has fallen from recent highs. To put these declines into perspective, the FTSE 350 index has fallen about 16% since early July.
Each company has a link attached that takes you to an earlier article for more background:
Stock markets are anticipatory and right now, they are trying to predict another recession. That's why these share prices are falling -- the market thinks these companies' profits will drop. If that does happen, some of the dividend yields could be at risk of being reduced.
However, as well as being forward-looking, stock markets often over-react and share-price falls can be overdone. The way to spot such opportunities is to keep a close eye on the news flowing from each individual company and to make judgements accordingly.
And in my view, the overall news emerging from those ten shares has not been too bad.
Recent company news
On 26 July, oil giant BP released its half-year report and there were no nasty surprises -- the group is back in profit and the Gulf clean-up is practically finished. Meanwhile the share price is being buffeted by the volatile price of oil and the still-unknown level of US fines following the Gulf disaster. But the case for BP remains as strong as ever, at least in my view.
There was a trading statement from fund manager Man Group in July and it reported a decent fund performance in the quarter to the end of June. The directors were anticipating volatile markets going forward, but believed that they had the strategies to cope. Well, we've certainly had volatile markets!
Online and catalogue retailer N Brown Group reported a 5% increase in revenue and minor 0.2% margin slippage back in July, whereas sticky-bun seller Greggs increased sales by 4% and looks on course to lift its annual dividend for the 27th year in a row.
Pork products producer Cranswick reported like-for-like sales up 5% for the second quarter, sadly warned that full-year results would be below expectations, but remained confident about its long-term prospects. Meanwhile, supermarket Morrisons told us that it had experienced a good start to the year back in May, with total sales up 7%.
Also in May, construction group Kier reported strong trading with its order book well up. In June meanwhile, storage space specialist Safestore reported a good start to the year with revenues up 7%, and in July, plastic packaging manufacturer RPC Group was "... confident that the Group is well positioned to deliver on its growth strategy."
These businesses do not sound as if they are on their knees to me. In some cases, margins have slipped, which suggests discounting to stimulate sales, but overall, trading seems resilient at most of them.
It's true that company outlooks can change rapidly if economies do corkscrew into a recession, but a lot of that fear is already in the price at these levels, and to me, none of the dividends look threatened.
And as my Foolish colleague David Holding recently said, if you don't buy shares when they are cheap, when do you?
For more on coping with the current investing climate, don't miss the Fool's latest special free report -- What To Do When The Market Plunges.
More from Kevin Godbold:
> Kevin owns shares in BP, Man and Morrisons.