3 Mega-Yield Plays: BAE Systems plc, National Grid plc And Vodafone Group plc


Recent comments from Mark Carney have hinted that the Bank of England is in no rush to raise interest rates. Indeed, only two members of the committee that sets rates voted for a rise last time around.

Even if rates do rise within the next year, they are set to increase at only a pedestrian rate. So, savers are unlikely to get much respite over the medium term. With this in mind, here are three stocks that could provide a remedy and generate a solid income over a long period of time.


With most of the developed world implementing substantial cuts to defence budgets, it’s of little surprise for defence companies such as BAE (LSE: BA) to be experiencing a challenging period. For example, in the current year BAE is expected to report earnings that are 11% lower than they were last year.

However, the company is set to bounce back next year with earnings growth of 4%. Furthermore, the long term looks bright for BAE, since demand for defence products should increase in line with the improved macroeconomic outlook for the global economy. With shares in the company currently yielding 4.4% and dividends being covered 1.8 times by profit, BAE appears to be a strong income play.

National Grid

Although inflation is currently below the 2% target set by the Bank of England, it could prove to be a much bigger headache over the long term. That’s because the level of quantitative easing and increases in the money supply could, in the long run, cause inflation to move much higher than it presently is. So, real terms increases in dividends may become the ‘must-have’ asset for income investors.

On this front, National Grid (LSE: NG) excels. That’s because it aims to increase dividends per share by at least the rate of inflation and, with shares in the company currently yielding 4.9%, it could prove to be a top income play moving forward.


With the European economy growing at a snail’s pace, life for Vodafone (LSE: VOD) is tough at the moment. That’s because, after selling off its stake in North-American focused Verizon Wireless, its business is concentrated in the Eurozone.

However, the longer term looks bright for Vodafone. Its strategy of buying undervalued, high-quality assets in Europe could pay off and it appears to have the financial firepower to make further major acquisitions so as to stimulate its bottom line. With shares in the company yielding 5.5%, they could prove to be an impressive income play over the medium term.

Of course, BAE, National Grid and Vodafone aren’t the only companies that could stimulate your income. In fact, a new report from The Motley Fool called Where We Think The Smart Money Is Headed could help you to uncover many, many more!

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Peter Stephens owns shares of BAE Systems and National Grid. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.