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Collins Stewart picks income earners

Collins Stewart Wealth Management says there are 15 stocks that best meet the demands of equity income portfolios.

By Jonathan Boyd, Editor in Chief
Tuesday May 25, 2010

A new screening of companies paying dividends has resulted in Collins Stewart Wealth Management issuing a list of 15 stocks it says investors should consider adding to any income portfolio.

The screening covers FTSE 350 constituents, looking for companies that offer a better yield than the market and more financial security through solid coverage ratios and defensive characteristics.

"When we ran the screen last summer, we identified just nine stocks in which we could hold conviction in a secure prospective dividend but four were then eliminated due to company/sector specific reasons. The five stocks that qualified for the dividend basket were: AstraZeneca, GlaxoSmithKline, Brown (N), Diageo and Halma," Collins Stewart says. 

"Now that the early hope-driven stage of the market recovery is over and growth is now evident in both financial and national accounts, we feel comfortable relaxing the criteria in our stock screen."

"After relaxing our dividend screening criterion we find ourselves with an additional fifteen stocks to consider for inclusion in our dividend basket. One option would be to include them all, but many investors would prefer a more focussed basket, or portfolio tilt towards this theme. On that basis we test each stock against the existing basket of dividend stocks in order to assess both its likely contribution to the returns of the expanded dividend basket, and the degree to which it will help better diversify our dividend strategy. There are ten stocks that pass this optimal inclusion criterion which are: BP, British American Tobacco, Atkins, Britvic, Playtech, Reed Elsevier , Pearson, William Hill, Melrose and IMI."
 

 
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