Sunday tip round-up: Dogs of the FTSE, Investors´ favourites

18th Mar 2012 14:07

Since the year 2000 experience seems to show that investing in the highest yielding stocks of the UK´s benchmark index, when the economy is recovering, can be a sound strategy. Therefore, given signs that the worst is over the Midas team at the Daily Mail has decided to re-launch their 'Dogs of the FTSE' strategy to see how they perform in what they hope will be an improving environment. Just as they have done in the past, they will take a notional £10,000 and invest it in the ten highest-yielding stocks of the FTSE 100. In November, when they last checked on "their" Dogs, the portfolio included Admiral, Aviva, BAE Systems, Icap, Inmarsat, Man Group, Resolution, RSA, Scottish & Southern Energy and Standard Life. Inmarsat fell out of the FTSE 100 in December and shares in Icap and Standard Life have risen sharply in recent months, so all three are out of the portfolio. Thus, the three new joiners are AstraZeneca, National Grid and Vodafone, which have been in and out of the Dogs for years. Hedge fund manager Man Group has the highest yield at 9.4%, followed by RSA at 8.6%, Vodafone at 7.8% and Aviva at 7.4%. The remaining Dogs all yield between 6% and 7.1%, significantly above the Footsie's average yield of about 3.5%. "Ironically, in 2007, six of the Dogs were banks, including three that no longer exist. Of the rest, only Vodafone is in today's portfolio. Times change and so do the Dogs. It will be interesting to see how this portfolio performs," Midas points out.Britain's top ten favourite shares may include a supermarket, two pharmaceutical giants, a controversial major oil company and a telecoms group, but they do have certain characteristics in common, The Times says. They are global businesses, often with household-name products, such as Persil, the washing powder. Size matters ? there are no small obscure stocks in our list of the shares most widely held by the army of private investors, a mostly silent but powerful group that still accounts for 12% of all shareholdings. Bad publicity does not necessarily cause a share to lose favour among these fans. Tesco, for example, has held onto its place, despite a recent profits warning, but do these shares deserve their popularity? Do they repay private investors' faith? The newspaper has assigned the following ratings to these shares: Tesco (hold), Vodafone (buy), RSA Insurance (sell), GlaxoSmithKline (buy), Aviva (buy), Royal Dutch Shell (hold), British Petroleum (buy), AstraZeneca (sell), Rio Tinto (buy) and Unilever (buy). "Two smaller and racier stocks favoured by private investors are Gulf Keystone Petroleum and Rockhopper Exploration," The Times adds. AB