Recently, I’ve been looking for income shares to add to my portfolio. I’ve been looking for companies that should be able to prosper in any economic environment. I think these may be the best income investments as we advance.
Here are three companies I think meet these criteria.
The first company I’d buy is the financial services group CMC Markets (LSE: CMCX). CMC’s trading platforms allow investors to bet on financial markets around the world. Aimed at professional investors, these platforms can be a valuable tool for managing portfolios.
They can also be incredibly profitable in all environments. For example, when stock markets are falling, investors may want to bet against the market to offset investments elsewhere. And when the market’s rising, investors may want to join the party.
This kind of flexibility is precisely why I’d buy CMC Markets and its 5.7% dividend yield for my portfolio of income shares today.
The main risk facing the business is the potential for additional regulations. These could increase costs and reduce profitability. This may have an impact on earnings and the company’s dividend.
Trading for growth
The other company I’d buy in the financial sector is Man (LSE: EMG). This investment and CMC have a lot in common, in my opinion. The publicly-traded hedge fund and financial services provider are both designed to make money in rising and falling markets.
Man is quite good at this, and it’s earned handsome profits for its investors and its shareholders over the past few years. At the time of writing, the stock offers a dividend yield of 4.9%. In the past, management has also returned excess profits to investors with share buybacks.
The one drawback of this company is its investment strategy is based on a relatively complex computer system. This means it’s tricky to understand how the enterprise really makes money. This may put some investors because there’s no telling what could go wrong.
Still, despite this complexity, I’d buy the stock, based on its track record of returning cash to investors.
The final company I’d buy for my portfolio of income shares in June is Domino’s Pizza (LSE: DOM). This is a growth investment, which is throwing off an attractive level of income as well.
Over the past five years, earnings per share have more than doubled, and the company’s dividend payout has increased by around a third during this time.
For 2021, City analysts are forecasting earnings per share of 19.2p for the group and a dividend of 9.8p. That would give a dividend yield of 2.6% on the current share price.
Admittedly, this isn’t the highest yield on the market, but I think it could be worth sacrificing thar for earnings growth.
Of course, these are just projections at this stage. There’s no guarantee the company will meet growth targets for 2021. Its profits could come under pressure due to a range of factors, such as rising wage or ingredient costs. These would hold back growth and may lead management to reduce the dividend.
Despite these risks, I’d buy Domino’s for my portfolio of income shares right now.
We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign.
But with this opportunity it could get even better.
Still only 55 years old, he sees the chance for a new “Uber-style” technology.
And this is not a tiny tech startup full of empty promises.
This extraordinary company is already one of the largest in its industry.
Last year, revenues hit a whopping £1.132 billion.
The board recently announced a 10% dividend hike.
And it has been a superb Motley Fool income pick for 9 years running!
But even so, we believe there could still be huge upside ahead.
Clearly, this company’s founder and CEO agrees.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Dominos Pizza. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.