There will probably be further bumps in the road for companies as the global economy stutters out of lockdown hibernation. Companies have looked to sure up their balance sheets and pay down debt. Alongside the uncertainty about future cash generation, this has caused many to review their dividend policies, cutting or scrapping pay-outs to investors this year.
- Sifting through the rubble for dividend paying shares is a challenging task and not a single FTSE All Share company passes all our tests this month. Companies showing up include Imperial Brands (IMB). Although the tobacco firm cut its pay-out last month, going forward although it won’t match the 14 per cent trailing yield shown on our screen, the yield should still be substantial.
- Other companies that pass at least two tests include WM Morrison Supermarkets (MRW), mining giant Rio Tinto (RIO) and defence and aerospace business BAE Systems (BA.). Recruiter Hays (HAS) also ranks well but it operates in a sector that will be under pressure in the recession.
- For income investors daunted by the task of picking shares with safe dividends, buying income focussed investment trusts is often a good way to spread risk across an expert manager’s portfolio and shares in a handful of closed-ended funds score well on our FTSE All Share and FTSE All Small Companies screens this month.
