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I shake my head when I see a big business building a huge debt pile without really seeming to care too much. And when I see big-spending dividends at the same time, it makes me twitch. But we shouldn’t forget that Rolls-Royce was struggling even before the pandemic. In the two years prior to the Covid crash, Rolls shares were down 35%. It’s based on the US. But what if I buy Lloyds Banking Group on a price-to-earnings (P/E) ratio of six, and it falls to 4.2?
I really don’t see it staying at 10% for 20 years. But I think it shows the value of any cash we might invest now, while yields are so high. Uncerainty In 2024 and the years ahead, as billions worth of investment is pumped into the emerging sector, I think a host of opportunities across a variety of businesses will surface. The dividend yield suddenly looks better now too. Forecasts vary, but they indicate around 5% for 2023. And that’s in a tough year. Earnings are predicted to keep growing. And dividends are expected to reach 6.5% by 2025. I’m thinking about Vodafone and BT Group in particular here. Both were a lot more resilient in the face of the pandemic slump, so they have that going for them. And it might not be fair to compare such different businesses.
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Lloyds shares reached above 54p in February. Since then, they’ve fallen by 12%. But I don’t think that’s due to any real analysis of the bank’s long-term outlook. That hasn’t changed, as far as I can see. Bank sentiment But those who take on the risk and buy today could secure that 10%. And that’s the kind of yield that can provide long-term riches. For one thing, it’s more than just a miner. It’s also one of the world’s largest commodities traders. That includes energy products and agricultural goods, so it’s a bit more insulated from the traditional mining cycles. Forecasts are clouded with uncertainty right now. And I expect the whole financial sector — banks, insurers, investment firms — to stay wobbly until the economy gets closer to normal. Based in London, Edward is a freelance investment analyst/writer who has clients all across the world. Before launching his own investment content business in 2017, he spent 15 years working in private wealth management and institutional asset management in the UK and Australia.
Banks and insurance firms feature in the list of biggest dividend rises, too, with HSBC Holdings at the top of the list. Would I put this much into Phoenix shares? I would, but only as part of a diversified portfolio. Diversification is an essential part of my strategy. I think some of the fear is well placed too. Vodafone, for example, has paid high yields for years but with only bare cover by earnings at best.Roland holds the CFA UK Investment Management Certificate (IMC) and has passed the CFA Level 1 exam. A keen private investor, he also runs an internet business. There’s some doubt in that, sure. Especially as mining earnings look a bit shaky this year. But plenty of sectors look like they could end the year on an upbeat note.
I’ve learned one thing from the pandemic days. Investing in high-street retail is risky, and could face a lot of challenges. Stephen has a PhD in Philosophy and teaches at the University of Oxford. He's an enthusiastic Warren Buffett follower and focuses on buying quality businesses at sensible prices. He's also a podcaster with the PlayingFTSE show. In addition, he has worked as an investment and risk consultant for major hedge funds in London, New York, Moscow, and Dubai, and regularly appears as an oil and financial markets expert on various international television networks, including the BBC, and Al Jazeera.Alan is a freelance writer who began writing for The Motley Fool in the late 1990s. He has been a private investor for more 30 years, and has explored a number of strategies, settling on high-yielding blue-chip shares. But forecasts put Rolls on a P/E of over 30 for this year. And it’s still above 20 in 2024. If we adjust those for debt, the equivalents come in at 38 and 25 respectively. That might be a bit too rich. I want to get in while they’re cheap, like right now. It’s even better when my favourite shares are being unfairly hammered. I buy shares to hold for at least a decade, and I’ll use monthly ups and downs to my advantage. Cheaper now