Income-generating stocks have been the big story in 2016 and thats unlikely tochange in 2017. The FTSE 100 nowyields a fruityand juicy 3.83%, against a thin and watery average of 0.39% on easy-access cash, according to MoneyFacts. The following generic sildenafil citrate three companies pay watermelon-sized yields of around7%, or28 times baserate.Should you take a bite?
Housebuilder BerkeleyGroup Holdings (LSE: BKG) yields a towering 7.08%, the largest on the FTSE 100. It hasalso been a dream growth stock, up 123% over five years, against 23% on the FTSE 100. The last year has been tough but the share pricehasrecovered in recent weeks, helped by cialis free coupon healthyinterims thatsawsix-monthly profits before tax rising 34% year-on-year to 393m, although reservations fell 20%.
The big concernis the London property market, withprime central prices slippingas stamp duty changes and Brexit uncertainty cools foreign buyers ardour. Expect more of thisnext year after Prime MinisterTheresa May triggers Article 50. Todays valuation of 10.57 times earnings (up from 7.1 times in just two weeks) suggests that some of this has been priced-in. Berkeleys earnings per share (EPS) are forecast to dip slightly in the year to 30 April 2018. The income looks reasonably solid cover is 1.4 butthe share price could be in fora volatileyear.
Oil major BP (LSE: BP) has one number in its favour right now: it currently yields 6.7%, the second highest on the FTSE 100. Worryingly,cover is now-0.9%, which means BPis using debt to fund its dividend.
All hopes now rest on the oil price, in the wake of the OPEC and non-OPEC production cuts, which should come into force in January. The subsequent price surge has stalled,with Brent crude now reversing to around$54, as critics question whether oil producers will deliver on the deal. Another hurdle is the accelerating US shale rig count, as drillers hedge in todays higher prices. BPs EPSare forecast to rise a whopping 120% next year, helped by the companyscost-cutting programme, and the dividend is probably safe in 2017. What happens after thatis down tothe oil price.
Outsourcing and professional sildenafil citrate services specialistCapita Group (LSE: CPI) is the worst performing stock on the FTSE 100 this year, its share price down 60%. This has driven itsyield to a dizzying 6.55%, the third highest on the index. The payout is comfortably covered 2.2 times, which may tempt income seekers, but this is clearly a company with problems.
Capitas shares hit a10-year low this month after itissued its second profit warning in three months and announced plans to offloadassets. Management blamedBrexit-related client indecision but denied it needed to raise capital or cut the dividend. Some investors will see this as a buying opportunity, especially since this years 8% drop in EPS is expected to flatten out in 2017. Todays valuation of 6.89 times earnings is also tempting for risk-takers.Especially when you consider that last years two biggest FTSE 100 losers, mining giants Anglo American and Glencore, arethis years winners, up 300%and 200% respectively.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Berkeley Group Holdings and 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.