Company reporting season wraps up this week. Here are 5 stocks that have stood out from an income perspective and should be able to keep delivering in the medium term.
While “high” income is important, the stability or certainty of that income is just important. I like stocks that have annuity style characteristics – you can have a high degree of confidence that the income will be paid.
Normally, a resource stock wouldn’t qualify for this list because it has absolutely no control over the price it receives for its output. It is a price taker, and we know that commodity prices can be very volatile. The recent BHP experience, where it tried to be an “income stock” by promising a progressive dividend, is a salutary reminder. But I think Woodside, owing to its cash flow, balance sheet and commitment to sell down projects, is in a different category and I have included it in the list.
The other point to make is that income stocks won’t star in a bull market. They will underperform. Conversely, they should do better in a bear market and preserve more of your capital. In the main, they will be low beta (less volatile) stocks relative to the rest of the market. Boring, but hopefully dependable.