The Motley Fool

J Sainsbury Plc: A Super Stock For Income Investors

With interest rates remaining at historic lows, life continues to be challenging for people seeking a decent income from their capital. Indeed, the best savings rate I can find on an instant access, internet-based bank account is just 2% gross. With inflation being above this, savers are losing out in real terms and have been for a good few years.

Of course, many income-seeking investors have been put off from investing in the stock market to gain a more attractive yield as a result of high levels of volatility. Certainly, the value of capital invested in shares will fluctuate a lot more than that deposited in a bank account. However, I believe that the fear generated by such volatility can be reduced through buying shares in defensive companies, such as J Sainsbury (LSE: SBRY) (NASDAQOTH.JSAIY.US).

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

The main reason for this is the nature of its business. As you are doubtless aware, its main focus is the sale of food, although it has diversified in recent years into non-food items — notably, clothing. Such goods are highly defensive, since people will always need them no matter what the state of the economy. This means that, although the share price may fluctuate, the underlying business should be fairly steady.

In addition, dividends should continue to be paid, even if the stock market falls significantly. Sainsbury’s increased its total dividend per share throughout the credit crunch and currently pays out 52% of earnings as dividends. Clearly, there is scope for this to increase, although a yield of 4.4% is hardly shabby and places it at 14th in the list of highest-yielding FTSE 100 stocks.

Interestingly, Sainsbury’s trades on a discount to the FTSE 100 price-to-earnings (P/E) ratio of 13.1, currently having a P/E of 11.9. This, combined with forecast earnings per share growth of just under 5% over the next two years, means that Sainsbury’s should be able to continue to grow its dividend. Currently offering good value, growth prospects and stability, Sainsbury’s trumps the best savings accounts by some distance and is a super stock for income investors.

Of course, there are more opportunities around and I would recommend that if you are looking for other super income stocks in the FTSE 100, this exclusive wealth report reviews five particularly attractive possibilities.

All five blue chips offer a mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by The Motley Fool as “5 Shares You Can Retire On“.

Simply click here for the report — it’s completely free!

> Peter owns shares in J Sainsbury.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.