Friday Email: 17 January 2014

Yesterday we saw a small bounce in mining stocks which have been out of favour for a few years now. Citigroup called them higher and it may well be the start of a return to favour. Difficult to call, but if it is, they have a long way to go. The FTSE 100 underperformed the FTSE 250 by a good margin last year and a big bounce by the miners could see a reversal of that. This will be offset somewhat by those mining stocks that were relegated to the FTSE 250 from the FTSE 100 last year. For those of you that do not understand mining stocks, we favour the Blackrock World Mining Trust which will give you an immediate presence in most of the big miners worldwide including UK favourites Rio Tinto, BHP Billiton and Glencore. Another big attraction of this stock is actually the very attractive yield. In the past two years in spite of the woes of the mining stocks they have paid a dividend of 21p against the current share price of 470p.

We mentioned the attractions of Imperial Tobacco this time last week and that proved to be an excellent call as from Wednesday (buy by close of play Tuesday) you are now eligable for a big dividend of 81.2 pence and we were rewarded with an increase in the shares on the Tuesday prior to going ex from 2214 to 2253p. They fell to 2170p on the ex day and have since risen to close at 2242p after a 47p rise yesterday. The shares are up a further 15p to 2257p in early trade this morning. Any purchase made since we highlighted the stock last Friday is well in the money.

The week ahead continues to be quiet as we edge towards February and the start of the UK reporting season, which runs through March. This will be very important as we will see if the markets optimism last year will be reflected in earnings this year. From a dividend perspective most of the final dividends are declared during this period as the December year end is still the most common.