I still cant get over the fact that solid FTSE 100 players likeBP (LSE: BP), Centrica (LSE: CNA), GlaxoSmithKline (LSE: GSK), Royal Dutch Shell (LSE: RDSB) and Vodafone (LSE: VOD) allnowyield 5% or more while cash gives saversa near-zero return!
Too many savers fail to realise how much income they could generate by taking a bit of extra risk with their money, plus the scope for capital growth as well.
So which of these five stocks are your best income options?
The plummeting oil price has hit BP, whose shares are down 12% in just three months. But thats good news for income seekers, because a lower share price means a higher yield. Today, you get a juicy 5.3%.
This is riskier than leaving your money in the bank, with Deepwater Horizon legal wrangles dragging on interminably, and BPs20% stake in Kremlin-controlled oil enterprise Rosneft succumbing to sanctions.
If you can accept these risks, todays valuation of just 5.6 times earnings maybe a good entry point for long-term investors.
British Gas owner Centrica offers an even more generous income of 5.8% a year. Again, a falling share price has helped, with the stock down 17% in the last year, over fears that Labour leader Ed Miliband will punish utility companies if he wins next Mays election.
But these fears are priced in, with Centrica trading at 11 times earnings, and its electric income will keep savers warm this winter.
Pharmaceutical giant GlaxoSmithKline is yet another FTSE 100 income hero to stumble, its share price down 15% in six months onthe Chinese bribery scandal and falling sales.
Todays price of 12.6 times earnings looks tempting, especially since it secures you an income of 5.5% a year. And there is scope for capital growth, with profits set to flow fromits R&D pipeline.
Royal Dutch Shell
Anglo-Dutch oil major Royal Dutch Shell has had a less turbulent year than BP, yet its share price is still down 9% in three months, largely on the oil price slide.
Shell is more expensive than BP, at 14 times earnings, and itsdividend is slightly lower at 5%. But it pumps out cash, posting a $6.1bn profit in the second quarter alone, and looks a lot less risky than its rival right now.
Telecommunications giant Vodafone is another UK blue-chip going cheap, down more than 9% in six months. This really is a great time to go shopping for stocks.
Vodafone is throwing off enough cash to splurge $19 billion on its Project Spring revamp, but still has enough left over to pay you a generous income of 5.52% a year.
The collapse of cash makes dividend-paying stocks like these look irresistible. So why put up with 1% or 2% on cash when FTSE 100 Dividend Stocks Can Yield 5% Or Even 6%?
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.