Although many investors and economists are calling for a higher interest rate, it seems as though UK monetary policy is set to remain ultra-loose for a good while yet.
Certainly, the UK economy is moving from strength to strength. It is the fastest growing economy in the developed world, and it appears as though the austerity programme is bearing fruit. However, with inflation falling to just 1.2% last month, deflation remains a real risk and, as a result, the Bank of England may disappoint income investors and savers over the medium term when it comes to increasing interest rates.
Despite this, there remains a large number of stocks that offer top-notch yields. Here are my three top picks for 2015, with all three companies having the potential to boost your bottom line in over the next year.
Although National Grid (LSE: NG) (NYSE: NGG.US) may be an obvious choice as an income play, this doesnt mean that it is any less appealing. After all, there arent many companies for whom beating inflation via dividend per share increases is a key goal of the business. And, while this may not be such a boon for investors when inflation is just 1.2%, it could prove to be so in future years if higher inflation does take hold.
In addition, with National Grid having a stable management team and operations outside of the UK, it is arguably a more diverse and consistent performer than many of its UK utilities peers. As a result, and with a dividend yield of 4.9%, it could be a top notch income play in 2015.
In addition to a yield of 5%, Imperial Tobacco (LSE: IMT) also offers superb dividend per share growth. For example, in 2015 dividends per share are expected to move upwards by 9.4%. Thats almost eight times more than the current rate of inflation and means that Imperial Tobacco could be yielding as much as 5.4% in 2015.
Of course, Imperial Tobacco remains a hugely consistent stock when it comes to profitability and, with the advent of e-cigarettes, it could be on the cusp of a purple patch. As a result, it could prove to be a super income (and growth) play in 2015.
Over the last four years, Galliford Try (LSE: GFRD) has averaged bottom line growth of 42% per annum. Thats a staggering rate of growth and, while the current year is set to be much lower than that at 14%, it is still over twice the wider markets expected growth rate. As a result, Galliford Try remains a highly lucrative growth play.
However, theres more to it than just growth potential. Thats because Galliford Try currently yields a hugely enticing 5.4% and, with such strong growth potential, it would not be surprising for dividends per share to move upwards at a rapid rate. With dividends being well covered at 1.7 times, Galliford Try could be a top income play in 2015.
Of course, there are a number of other companies that could boost your income in 2015. So, which ones should you buy, and why?
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Peter Stephens owns shares of Galliford Try, Imperial Tobacco Group, 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.