question in the title but wanted to know this as think it would be nice to get a monthly dividend without the FX impact.
The old energy companies pay great dividends and should be cheap enough to iron out any future losses currently.
BP
SHELL
The banks are also cheap currently and the dividend will be reinstated in the next quarter
LLOYDS
BARCLAYS
HSBC
NATWEST
Then there’s the future dividend payers like
CINEWORLD
UNILEVER
LEGAL & GENERAL
CARNIVAL
then there’s reits like
PERSIMMON
BARRATT
Many others like
GLAXO SMITH KLINE
ASTRA ZENICA
VODAFONE
OCADO
TESCO
NATIONAL GRID
The UK is a great choice at the moment, huge potential upside and great dividends with no fx issues
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Mine are GSK, BP, BAT, BAE, HSBC holdings and Nat. Grid. All safe boring divi stocks i bought cheap in lockdown 1.
BP were just over 2 quid and are 3 quid today.
CCL are cheap if you dont mind the risk and holding for 2 years.
general question on dividends, between a choice of purchasing property for rental income and dividend stocks surely you’d choose the latter (assume £1m to spend). I’m trying to understand the risk to reward of each and dividends comes out on top in my head. Do you all agree?
there are risks in both and it depends on what you want form your money and what you are better suited to handle. dividends can be cancelled, but you could also have a property that loses its tenants and so you stop getting the rental income.
in the immediate future I would choose the dividends because it is simpler, even if the amount is not much, however longterm I would consider the properties for rental market and also because I can co-sign with a family member as joint owners, so if I passed away, they could inherit full ownership without facing the taxes of normal inheritance.
owning the property can feel more real as a source of funds, and if its unoccupied you have the option of using it as a place to stay if you are in the area or for family members/friends passing through.
yes those are valid points I’ve come up with too. I like the idea of owning real estate for rental income (and eventually I think I will) but I just can’t get out of my mind the tax advantage of investing in divi stocks through your isa. Say you have built £1m in your ISA (not at all impossible) investing this all in divi stocks would be tax free, forever…
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if you can earn upto 1mill in your ISA then absolutely go for the taxfree dividends. but if we are talking £1million of funds (say from inheritance, or lottery et cetera) then its a toss up between a taxed invest account for dividends and real estate for rental income. personal comfort will ultimately be the decider most times.
as with retail you could net bigger returns if you bought cheap, fixed up and rented for a premium, but then you wouldn’t want to be on call to manage them all the time for tenants so you would need an agent to work on your behalf.
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yes I agree with you, if it wasn’t for the ISA I’d probably stick to property. I’ve convinced myself it’s a no brainer having tax free dividends over rental income that will require slightly more effort in terms of management. Thanks for your comments
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in the UK having just 1 property rented out can work well as an individual, but when you rent out 2+ (a small number) it works better to make a company (my brother knows about this in detail but I forget the name, limited liability perhaps?) to handle the properties and then when dealing with a lot of properties, yet another type of company for the preferential tax treatments.
The current UK tax laws for buy to let are making it more and more difficult to avoid paying taxes on your cost elements ie decoration and mortgage interest.
If you rent out a couple of properties then you would need to set up a limited company solely in the buy to let field in order to only pay corporation tax on profits so the loan interest and costs would not be taxed at all.
This will allow you to take your profits as dividends which are also lower tax.
Things to bear in mind though.
You will have added costs of running a limited company.
You will have to buy the properties in the limited company name, or if you already own them you will need to sell them to your limited company and pay any stamp duty due.
Mortgages and loans for fresh limited companies are difficult to find so higher interest may be calculated.
If your company fails the property will go with it.
Your purchase transactions could be liable for vat, this could have implications over your rental income.
My advice is if you could have a couple of properties with a lower loan to equity rate then keep it in your personal name and use your own taxable allowances.
If you have high loan to equity rates then form a limited company and just sign PG’s until the company can afford to finance itself. You could also use this period to gain loan accounts inside the company via deposits, improvement loans etc
This would give you taxable benefits further down the line if you decide the sell and withdraw your initial funds.
Finally if you sell a property you are personally liable for CGT on all profit amounts.
If you sell in a limited company you are liable for corporation tax on profits
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Best high yield 4%+ right now in UK I think is GSK.
Best growth and yield in UK is ULVR.
Best rebound (not paying dividend/cut dividend companies) play in UK is HSBC.
Just my thoughts.
On subject of property, one things is buy to lets do let you get 4x leverage on your money (as they are 75% LTV as standard) with relative low risk compared to leverage in other investments. For example lets say a £300,000 property rented for £12000 a year thats 4% yield (then have to deduct cost etc), but to buy to let a £300k property is £75k deposit. so leverage means yield is like 16%. This is heavily simplified of course.
That same 75k in GSK say would get you about 4k+ tax free if in ISA a year. Main issue is getting that initial buy to let deposit often.
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@Hbomb Quite a good way of looking at it, I’ve never thought of a mortgage as leverage before.
The only issue is the fact mortgage interest and obviously capital repayment can no longer be claimed back so the whole rent will be taxed.
225k will cost around £5400 per year so your yield drops considerably. You would only net around £4000 a year after tax (with the current tax credit) making a yield of around 5.6% based on just the initial £75000 deposit/investment
BP is paying a strong 5.4% dividend and I see this stock as a growth stock currently due to the change in demand to green energy
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Yes completely agree. I would say though that housing would also get capital appreciation, and for example I would be reckon over 10-15 years a house sensibly bought as buy t let would appreciate more than lots of the high yield dividend stocks. But yes I dont think dividend stock or buy to let needs to be either or, ideally if rich enough (not me) have both for diversification.
Yes I think BP is great, I own that too, I would say it can growth a lot from where it is as its very low histroriclly, but equally compared to the above ones I mentioned GSK, ULVR and HSBC it has high volatility with current climate, but I think very litte downside with BP if holding for 2+ years as you get the dividend while you hold and I dont think we will see the 200p lows of march again.
I wish the UK did have a Monthly Dividend play like Realty Income also but our Market is sadly not large enough to do that. 
Best bet is to put 4 Quarterly Dividend Stocks in your Portfolio that are in different months to get that constant flow of Dividends.
Well,a good start is BP and GSK perhaps.
GSK Jan/Apr/July/Oct
BP Mar/Jun/Sept/Dec
Just need a good choice for the Feb/May/Aug/Nov, ideally not Pharma or Energy perhaps for diversification.
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BritVic are a Feb stock at least.
QinetiQ are November too
Thinking of adding Marshalls to my Div play too and if UU gets lower, I might add those as well
Unilever might be a good choice at 3.5% current yield
Or maybe legal & general with a 7.2% yield
Just to chip in on the property front, me and my Mrs have a flat we rent out and if you’re looking for monthly income it’s not very advantageous.
Unless of course you have a massive deposit to put down.
Despite the above it’s a great investment long term as you’ll get the growth if you hold over a long period of time.
On the dividends though Legal and General is a great buy
I do commercial and residential property and the commercial is better for earnings but residential for growth.
If you have a larger deposit I would suggest a repayment mortgage and forget the profit.
Smaller deposit stick to interest only until the property value increases then switch to repayment