Sunday newspaper share tips

By This Is Money
Updated: 05:54 EST, 16 August 2009

 

Each week This is Money rounds up share tips from the Sunday newspapers. This week James Fisher, Diploma and the Mail on Sunday gives an update on its Dogs of the Footsie.

Man reading the FT

In the pink: What are the newspapers tipping?

Mail on Sunday

The Mail on Sunday's share tipper updates her Dogs of the Footsie portfolio… You can also sign up for free additional Midas share tips that will be sent to your inbox once a week.

- Midas

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

Every three months we review the portfolio and make changes to it, throwing out stocks that are no longer expected to be among the ten highest yielders and replacing them with ones which are. Only three Dogs are leaving the portfolio in the latest reshuffle - Aviva, BT and Rexam.

In May there were already doubts about the ability of Aviva (formerly Norwich Union) to increase dividend payments. These proved well founded and on release of its halfyear figures on August 6 the company cut its half-year dividend by more than 30%. Full-year forecasts duly plummeted and the prospective yield sank in tandem.

Rexam last month axed its halfyear dividend entirely and said the full-year payout would be just 8p, compared with earlier estimates of nearly three times that figure. The BT story is more upbeat. It leaves the Dogs because the shares have risen almost 40% over the summer.

The August Dogs, then, are BP, Cable & Wireless, Man Group, National Grid, RSA, Severn Trent, Shell, Standard Life, United Utilities and Vodafone.

The Sunday Telegraph

James Fisher, which operates in specialist marine markets, has been able to grow even through the downturn. The niche parts of its business have more than made up for pressure on cyclical-exposed operations, such as its coastal tanker fleet.

However, this operation should start to become very cash-generative again when the global economy picks up. The company's last trading update was in May, when it said trading was ahead of the equivalent period in the previous year.

James Fisher is a well-run company with significant technical expertise operating in high-margin specialties. Shares in James Fisher - 455p - are a buy for their secure niche revenues and cyclical upside when markets improve.

Diploma provides disposable diagnostic equipment to laboratories, hydraulic seals and gaskets for heavy industrial machinery, and wiring and tubing for electronics. Shares are some 15% ahead of their position in July, following a positive trading update which showed the resilience of its business.

It said revenues in the year to date were 1% ahead of the comparable period last year, although some of this is the result of acquisitions and currency.

The group's cash-flow generation is strong and Diploma is also debt-free and has £25m of banking facilities, which it could use to make small strategic bolt-on purchases should the opportunity arise.

Diploma made six purchases in the past two years and further purchases are likely to be in the European life sciences sector or a seals distributor that is based outside the UK. The shares - at 149p - are a buy.