|The Morgan Stanley Bull|
Think of the kind of salaries that would have been paid to do this bit of research - I'm glad I'm not paying for it!
Anyway, as I don't take any currency risks in my investments (apart from the Pounds that I spend), I've skimmed off just the FTSE results.
The information appears courtesy of Citywire's Chart of the Day.
Morgan Stanley apparently screened for a high return with a fair degree of safety and at least a prospect of increasing returns in later years:
- a high dividend yield showing dividend per share growth in 2012 and 2013
- where the payout ratio is not too onerous (less than 75%)
- strong balance sheets with an average debt to market cap ratio of less than 30% over 2012 and 2013
- overall market cap above £3 billion; and free cash flow yield greater than 5%.
And the UK FTSE components are:
- BAE Systems
- Reed Elsevier
- Tate & Lyle
- Reckitt Benkiser
I hold the companies shown in bold - so what am I missing? Well, Morgan Stanley did not rank according to current/forecast dividend yield (but rather Free Cash Flow Yield), which for some of these shares is fairly pedestrian. Looking at Free Cash Flow is sensible - as it gives a more accurate picture of financial sustainability - but it does not tell you the yield on your investment. So perhaps this selection leans more towards safety than income yield?
Being a touch cynical, I suspect that Morgan Stanley may have done this research to market one of their products, so the result might be a bit tendentious. Still, it's free.
What do you think?
I am not a financial advisor and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.