Almost one fifth of FTSE 100 companies are currently offering yields higher than those available on...
Almost one fifth of FTSE 100 companies are currently offering yields higher than those available on gilts.
The 2003 gilt currently has a redemption yield of 3.77% and the 2004 gilt one of 4.02%, but many equities are delivering much higher dividends.
Although the level of cover and security varies significantly, Collins Stewart, the stockbroking firm, sees opportunities to be exploited from equities that are currently offering high yields. Dan Parmar, a fund manager at Collins Stewart, said the balance of portfolios should be reviewed given the recent value shift in favour of equities over gilts.
'Gilts look expensive when you can buy shares offering higher yields with the potential for dividend growth and capital gain. Although the security of dividends is an important consideration, there are many that are well covered and expected to grow,' he said.
Collins Stewart is positive on the outlook for equities as it feels the underlying economy is in good shape with low inflation and low rates.
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