High yielding shares
A well worn route is to identify shares that pay out a large dividend when measured as a percentage of their share price. Known as high yield stocks, they offer the promise of income as well as capital growth.
Often the yield of a share is high because the share price is depressed. So you might want to ask yourself why that might be.
Often it can be nothing more sinister than a sector being out of favour. But in other cases it could point to underlying problems with
a company, meaning the shares deserve their lowly market rating.
The Americans have refined the strategy with their Dogs of the Dow approach. Across here it is the less poetic Dogs of the Footsie. The Dogs in question are the highest yielding bluechip share in the FTSE 1000.
The theory is these stocks offer a reasonably safe investment, a dividend that often beats hands down the current savings rate, while at the same time holding out the prospect of a recovery in the price.
Top dogs: 'You must be barking...British Airways only yields 3.6pc.'