Game of Thrones is back for a sixth season but you don’t need to tune into Sky Atlantic or HBO to view mayhem and bloodshed, the FTSE 100 can deliver more than enough of that. Here are three royal investments, but will they give you a princely return?
Royal Dutch Shell
Surely the worst is over for the besieged oil sector, with a barrel of Brent crude now topping $48. It’s a far cry from late January, when it shaved $27 and Standard Chartered predicted it could go as low as $10. The oil price has fought back without the much-mooted output freeze, and a good thing too, given the rate at which the oil industry was slashing back investment, threatening an oil price shock further down the line.
Royal Dutch Shell (LSE: RDSB) is up 35% after hitting a low of 1,327p in January, in what now looks like a golden buying opportunity. Once again, investors who got greedy when others were fearful will have been richly rewarded. The dividend now looks safer than it was, and with the stock still yielding 6.97%, there’s still time to lock-into a splendid income stream. Trading at 8.8 times earnings, Shell isn’t overvalued either. Cash isn’t king anymore, top dividend stocks like this one have usurped its crown.
Royal Bank of Scotland Group
I wish I could be offer similar praise to Royal Bank of Scotland Group (LSE: RBS) but this Scottish banking king lost its crown some years ago. Last week’s Q1 results showed net losses widening to £938m, following a £1.2bn one-off dividend payment to government. Embarrassingly, RBS also warned that it may miss the 2017 deadline to divest its Williams & Glyn division, originally set for 2013.
RBS management has been handed a poisoned chalice and investors continue to drink deeply, with the share price down another 27% in the last six months alone. The bank’s restructuring still has some way to run as the business shifts its focus towards retail and commercial banking. One day, RBS may sheepishly resume its throne, but it still faces several more years in the wilderness.
Royal Mail
Following its privatisation, Royal Mail (LSE: RMG) has to slug it out with the commoners just like any other listed company. It has a fight on its hands, given the competitive nature of the parcels business, but still benefits from its royal inheritance, controlling roughly half of the parcels market. This allows it to benefit from economies of scale to out-gun its rivals by investing in technology and service. Royal Mail boasts a strong balance sheet and a healthy portfolio of London property to boot.
Future growth is likely to be steady rather than spectacular, with EPS forecast to rise 2% in the year to March 2017, and 3% the year after that. While it can’t match Shell’s all-conquering dividend, a yield of 4.31% is still attractive and prospects for progression seem good. Trading at 11.4 times earnings, you don’t have to pay a king’s ransom to buy this stock either. Game on.
