At the beginning of this month, the much touted New ISA, or Nisa, came into existence.
The Nisa is a revolution for savers. The new product has a limit of £15,000, a substantial increase from the £11,880 allowed in the previous Stocks & Shares ISA. What’s more, you will be able to move freely between shares and cash at any time using the full £15,000 to invest in the stock market, cash or a mix of both.
I’ve already covered three attractive-looking growth stocks for those investors who are looking to add some spice to their Nisa.
For those investors seeking stability and income, here’s a basket of three high-yielding shares to form the core of any income portfolio.
Most hated
Tesco (LSE: TSCO) is one of the most hated stocks in the FTSE 100 but I believe that many investors have turned their back on the supermarket giant too fast. With sales collapsing, Tesco looks to be floundering.
Nevertheless, Tesco remains one of the UK’s biggest companies and with millions of customers flowing through its doors every day, the firm has a huge captive audience. What’s more, this customer base has allowed Tesco to build up a wealth of information, an invaluable source of data about its customers and their spending habits.
And this is not to mention the company’s huge land bank and international operations. All in all these qualities give the company a solid base from which to execute a turnaround.
Unfortunately, this turnaround will take time; however, with a current dividend yield of 5.1% investors will be paid to wait.
A value pick with income
HSBC (LSE: HSBA) (NYSE: HSBC.US) makes a great pick for any income portfolio. The bank has the support of City superstar Neil Woodford and it’s easy to see why. HSBC’s shares currently support an attractive dividend yield of 4.7%, covered nearly twice by earnings per share.
Current City forecasts expect the bank’s dividend yield to hit 5.2% next year followed by 5.6% the year after.
What’s more, HSBC’s shares currently appear undervalued as the bank trades at a forward P/E of 11.2 similar to the ratio the bank traded at during the midst of the financial crisis. Actually, this valuation is around 50% lower than its peers; the wider banking sector trades at an average P/E of around 25.
Special payout
BHP Billiton (LSE: BLT) (NYSE: BHP.US) is somewhat of a contrarian income pick. As a miner, BHP’s income can be erratic as profits move with the price of commodities.
However, BHP’s management has been conservative with their dividend policy, and the current payout is covered twice by earnings per share. This implies that income would have to slump by more than 50% before the payout came under threat.
That being said, BHP’s current yield of 3.5% is not exactly show stopping.
Still, BHP is currently in the process of trying to sell the ‘Billiton’ side of the business, which could be worth up to $10bn — it is expected that the proceeds will be returned to investors.
Then there is BHP’s record of value creation to consider. Since 2001 BHP’s shares have outperformed virtually all other large companies, with a total shareholder return of 400%.
