The FTSE 100 has gone through 6000 today and everything looks bullish all of a sudden. We know that the troubles of the U.S. debt ceiling have only been delayed so further market uncertainty is inevitable over the next two months.
The DividendMax 2012 model portfolio outperformed the market in every quarter of last year and returned over 20% in the second half, outperforming the FTSE 100 by 15% over the 6 month period. We still believe that caution is the watchword and that large cap stocks paying ever increasing dividends protect against severe market volatility. Now, the search for value gets tough.
I have already highlighted value with Glaxo Smithkline and Vodafone in recent weeks. There are, as always, a number of candidates for dividend of the week. This weeks choice is a big payer from the past that should be on the road to recovery, in terms of the dividend at least. It has high dividend cover and has managed to extract itself reasonably successfully from the situation in Russia.
Yesterday it announced that production has begun on its Skarve field in Norway, which has a 25 year life. Norway is stable politically and it is a part of B.P’s strategy to continue expanding there. Dividend Cover is over 4 and the forecast dividend increase for the coming year is 16%. With cover expected to drop to around about 2, decent increases in the dividend can be expected for years to come.
The oil price is expected by analysts to continue strongly in 2013. On a forward PE of 7.5x and sitting 14.5% below its 52 week high, BP looks good value by any standards, especially given the recent Q3 results that surprised to the upside.
