Income Investing

Time for a heads up. I am still alive and investing though yet to get control of my early morning blogging time.

With interest rates on saving accounts being truly pathetic at the moment surely now is a good time for people to start investing in defensive stocks purely for the yield? It is, but it won't happen as for most people the stock market is a dangerous wilderness best left to the professionals.

For myself I am building an income portfolio that will one day pay for a family holiday every year. It would struggle to pay for a monthly fish supper at the moment but investing is for the patient!

Anyway the idea is to build up a portfolio of 10 diversified stocks and let the dividends build up in the account rather than re-invest them like I normally do.

As normal real life proved to be rather messy and at present my RBS holdings are showing a huge loss and not likely to yield anything for a while. On the other hand my Barclays shares, luckily bought in the first half of last year, are showing a huge profit and have started yielding. Other holdings like Tesco, BP and British Land are doing fine and throwing off nice dividends.

One British company I have yet to invest in is GlaxoSmithKline. However having briefly looked at its latest report I think I will soon be a part owner of this pharmaceutical giant. It has an enormous diversity of products, 10% earnings yield and a 5% dividend yield coupled with single digit sales growth and a CEO focussed on costs and productivity.

As a final icing on the cake it pays dividends quarterly. This means that if you built up a portfolio split evenly between GSK, BP and British Land you would get a 5% yield, some diversification and a dividend on every month of the year. What is not to like?

As much as I like investing I have to admit that only long term savings should be invested, even if you stick to defensive companies like the 3 above. So for now I will have to stomach getting about half of one percent interest on our savings and just enjoy BP and the like paying for our monthly fish supper!