A secure income is a thing of beauty, especially in uncertain times like these. So cast your eyes over the following three FTSE 100 giants, whichall offera base-rate-thrashing yield of around 5% a year or more.
Big oil income
I hope you werebold enough to buyBP (LSE: BP) this time last year, when crude wasplunging below $30 a barrel and the oil giantsshare pricehad sunk to just 343p. Today, Brent standsat around$56 and BP at 515p, and yes, these two numbers are entirely connected. Where the oil price goes, so goes BPs share price. Its up 50% in the last 12 months.
Contrarians may claimthis has killed the investment case for BP. That may be true if youre looking for a recovery play, less so if youre seeking income. Yes, the yieldhas fallen from around 7% to 5.18% today, but it looks a lot safer. The company is edgingcloser to break-even point, thanks to rising crude prices and aggressivecost cutting, andthis will help secure the payout. The oil price could slip if producers backslide on recent production cuts, but the outlookis more promising than it has beenfor sometime.
On your Marks
High street stalwart Marks & Spencer (LSE: MKS) has had a very different year to BP, its share price falling25% in the last 12 months. Some might see this as a recovery opportunity, but be warned, plentyhave got sucked into that trap over the last seven or eight years.
The real value at Marks lies in its income prospects: itcurrently yields 5.74%, nicely covered 1.9 times. Clothing retailers look set for a tough year, judging by the troubles afflictingNext. Marks & Spencers general merchandise (clothing) divisionfell out of fashionyearsago but bizarrely this may give it some protection, as management is wisely tiltingthe business towards its flourishing food operation. Posh grublooks more Brexit-proof to me: Brits gotta have their ready meals. Its current valuation of just9.45 times earnings should also whet the appetite.
Royal returns
You arent paying over the odds for theincome stream from Royal Mail (LSE: RMG) either, with the company trading at 11.05 earnings. Itsshare price is down 6% in the past three months, which gives you a squeak of a buying opportunity. This couldbe a littlerisky aswe havent yet heard how the group did over the crucial festiveperiod, but income machines like this one arent just for Christmas.
I dont foresee much share price growth as Royal Mailmay struggle to make headway in the key UK parcels market, whileBrexit could threaten growth plans in continental Europe, where itrecently posted double-digit growth. However, itsoneof the most solid dividendpayerson the FTSE 100, currently yielding 4.83%, covered 1.9 times. Royal MailsUKdominance where it boasts more than 50% of the market healthy balance sheet and lucrativeLondon property portfolio should ensure the income deliveries get through.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended BP. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.