Having expressed his surprise that investors were not anticipating a rise in interest rates in 2014, Mark Carney quickly backtracked when being grilled by MPs this week. Indeed, it appears as though they are set to stay low for a little while yet and, even when they do begin to head north, Mark Carney assures us that it will be a gradual rise.
That’s bad news for savers. However, here are five stocks that come with great yields and also have the added benefit of a low beta, which means they should (in theory) be less volatile and more defensive than the rest of the index. That means the value of your investment should fluctuate less than the wider market, thereby providing a degree of stability as well as a high yield.
GlaxoSmithKline
As well as having an enviable pipeline of drugs through which to grow profits over the long run, GlaxoSmithKline (LSE: GSK) also offers investors a yield of 5.2%. Clearly, this is above and beyond any savings rates on offer and, more importantly, GlaxoSmithKline is forecast to increase dividends per share by 2.9% next year, thereby keeping them ahead of the current rate of inflation. With a beta of 0.8, shares in GlaxoSmithKline should move by 0.8% for every 1% move in the FTSE 100, thereby potentially providing increased relative stability, too.
Centrica
Despite the domestic energy sector being referred to the competition commission this week, Centrica (LSE: CNA) continues to offer investors a lot of bang for their buck. Indeed, it currently yields a highly impressive 5.7%, which makes it among the highest yielding shares in the FTSE 100. Allied to this is a very low beta of 0.3, which makes Centrica a relatively attractive defensive play, as well as a forecast dividend per share growth rate of 3.4% next year. These facets make it a strong income play for investors.
National Grid
Although its capital expenditure programme is vast, with the company being required to replace outdated infrastructure across the UK, National Grid (LSE: NG) still offers a consistently reliable and attractive yield to investors. Indeed, it currently yields 5.2% and has a strong track record of dividend per share growth. In addition, it looks set to increase dividends by 3% next year, meaning its yield should become more favourable to investors, while at the same time a beta of 0.7 should help to lessen downside risk, too.
United Utilities
Although shares in United Utilities (LSE: UU), the North West water company, are up 30% year-to-date (versus a flat performance from the FTSE 100), they still offer a yield of 4.3%. While this is slightly lower than the three previously mentioned shares, it still easily beats savings rates and is almost three times the current rate of inflation. Furthermore, United Utilities has a beta of just 0.4, which means it provides some downside protection, and provides perhaps the most required utility of all: water, which means it is unlikely to cease existing.
SSE
Although there remains a degree of political risk resulting from Ed Miliband’s price freeze policy, SSE (LSE: SSE) still ticks all the right boxes for income-seeking investors. For instance, it yields a very impressive 5.7% and aims to increase dividends per share by at least as much as inflation over the medium term. In addition, SSE has a beta of just 0.4, meaning shares should fall by 0.4% for every 1% fall in the FTSE 100. This should mean reduced volatility in SSE’s share price, which is often a key consideration for investors who seek a decent income from their portfolio.
