High yielding giants that will boost your income

Since the UK was brought to its knees during the global financial crisis, and the Bank of England slashed the base interest rate to record lows, income has been the name of the game for most investors.

More than a decade on from the crisis and the interest offered even on the best savings accounts is paltry.

However, there is somewhere investors can get an income of more than 0.75%.

Data from the UK Dividend Monitor for the first three months of 2019 show a 15.7% increase in payments made by companies to their shareholders to a record £19.7bn – boosted by a special from BHP Billiton.

In fact, the global mining group paid a whopping £1.7bn special dividend to its shareholders as a result of its deal to dispose of its US shale oil interests.

Coupled with a decent special dividend, BHP Billiton was the second largest payer in the first quarter.

Intercontinental Hotels also added to the record sum with a special dividend totalling £369m, or 203.8p per ordinary share.


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Some sectors are better for providing an income than others. Almost two-fifths of the £19.7bn total for the first quarter came from oil and pharmaceutical companies, but for those on the quest for income the best hunting ground was among tobacco stocks.

British American Tobacco raised its dividend in the first three months of 2019 by 12%, offering investors a payment of 50.75p, while Imperial Brand’s dividend rose by 10% to 31.28p.

However, it is important that the promise of a decent yield – 8.16% for British American Tobacco and 7.51% for Imperial Brands at the time of writing – isn’t the sole focus of an investment. Profit has to play a part too – paying out the family silver to keep shareholders happy is not a long-term plan.

On this front, British American Tobacco has the goods to back up their increasing dividend. In the first quarter of 2019 the share price surged 20.6%.

Imperial Brands, however, is a different story. In spite of the company paying more out to its investors in the form of a dividend in Q1, its profits have not been that great. Over the same period, the company’s share price has remained relatively static, rising just 2.3%.

It’s easy to get carried away when income is a portfolio priority, but ensuring that the company has a solid profit-base and upbeat forecasts is key to ensuring your hard earned cash doesn’t go up in a puff of smoke.


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