Sunday newspaper share tips

By THIS IS MONEY
Updated:

 

Each week we round up share tips from the Sunday newspapers.

Man reading the FT

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• Financial Mail's Midas column, which this week reviews its Dogs of the Footsie portfolio of high-yielding stocks

Financial Mail

The Midas Dogs of the Footsie portfolio has gained ground. Intriguingly, too, the number of new entrants in the portfolio is lower than it has been in years.

The experimental portfolio is made up of the 10 highest-yielding stocks in the FTSE 100 - shares that are expected to provide the most generous dividend in relation to their share price.

Our analysis is carried out on a forward-looking basis, so we calculate yields based on brokers' predictions for the next full-year dividends of every company in the FTSE 100.

Every three months we review the Dogs, throw out stocks that are no longer among the ten highest yielders and replace them with those that are. Stock market conditions have been tumultuous over the past couple of years and activity within the Dogs portfolio has followed suit.

Six months ago, for example, no fewer than seven companies were ejected from the portfolio as yield predictions yo-yoed.

This time, only one company is leaving - Standard Life. It is replaced by gas and electricity group Scottish and Southern Energy, which joins BP, Cable & Wireless, Shell, Man Group, National Grid, Royal SunAlliance, Severn Trent, United Utilities and Vodafone. A company's yield rises if the share price falls or the forecast dividend increases. And it falls, therefore, if the share price climbs or the forecast dividend decreases.

Sunday Telegraph

The international growth potential of childrenswear retailer Mothercare is illustrated by the fact there are 24m babies born in India every year and 19m born in China. Opportunities in Britain include the chance to secure significant rent reductions across its stores, as 60% of the UK lease portfolio is up for renewal in the next three years.

Recent interim figures were good, despite exceptional charges causing the firm to post a pre-tax loss of £7.1m. The dividend was raised almost 20%. Shares are expensive for a retailer, but are a buy at 628p for those with a longer-term perspective. Marine and engineering specialist James Fisher has skills and technical knowledge that are very rare and therefore valuable.

Part of the firm's business is to ship oil around the UK and Europe and obviously prospects for this aspect of the company will not improve until the economy recovers. But in a recent trading update the company confirmed that third quarter trading was in line with expectations, with a strong performance in all technical divisions.

These operations offer services like submarine rescue, North Sea oil and gas engineering and nuclear decommissioning. They have high margins and skills that are in demand. Investors should buy at 429.5p.

The Sunday Times

Marc Bolland arrived at Wm Morrison as a nobody in British retailing. Three years later he is quitting for a job every young shopkeeping trainee must dream of — chief executive of Marks & Spencer.

Morrison's latest trading update showed its breakneck sales growth is slowing. Bolland is getting out at the right time. Food inflation has flattered all the big supermarkets, so 2010 will be a much tougher landscape to navigate than this year's.

But whether Bolland is the man to fix the deep-rooted structural problems at M&S is another matter. The food business is under attack from Waitrose, the pension deficit is ugly, there are big balance sheet debts and, as Tesco clothing boss Terry Green said last week, Bolland will need to rely on the people already in situ to unravel what's gone wrong in clothing.

Adam Fowle's first results presentation as the permanent chief executive of Mitchells & Butlers, the pub giant, will mark the start of a new era for the Harvester and All Bar One owner.

Fowle is likely to alter the way M&B's pub portfolio is structured, with sites organised by the prices they charge rather than the style of the venue, but it won't go much beyond that. Why change a winning formula?

Like-for-like sales for the year should be up 1.6% and, having earlier smashed through the 100m-meals-a-year barrier, the company may make something of the fact that it now serves more than 500m drinks annually.

But before anyone gets too carried away, it's not entirely a case of trebles all round. Costs remain an intense pressure on the company, a fact likely to be reflected in a 25% fall in pre-tax profits. Rising food and drink prices, an increase in the minimum wage and utility costs have all taken their toll.

More interesting are the long-term intentions of M&B's biggest shareholders, the currency tycoon Joe Lewis, with a 22.9% stake, and Irish horseracing duo John Magnier and JP McManus, who together hold 17.5%. All have remained tight-lipped about what their ambitions are for a company that is not currently paying a dividend as it concentrates on repaying bank debt of nearly £400m. But no doubt they will want to give Fowle the chance to shine.

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