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29 Mar 2017

Three strong UK shares for 2017 income investment

Writing for the What Investment website, Hargreaves Lansdown senior analyst Laith Khalif revealed the three best UK shares for income investors to put into their ISAs in 2017.

In terms of the income investing outlook as a whole, Khalif noted that it has become “increasingly difficult since the financial crisis” to achieve a sustainable income from your capital. This has been confounded by inflation, putting returns from cash and bonds “even further into the shade.”

But for income investors prepared to take some risk, he explains, the UK stock market offers some exciting opportunities. Below are three that he recommends for 2017.

Pennon

This FTSE 250 water utility group offers a prospective yield of 4.4%, says Khalif, and plans to increase its payout by RPI, plus a further 4% each year until 2020. While there are no guarantees, if Pennon meets its dividend target, investors could enjoy some “impressive increases.”

AstraZeneca

With a number of blockbuster drugs having lost patent protection, AstraZeneca´s past few years have underperformed. Shares currently offer a prospective yield of 4.7%; but with increased investment in the development pipeline of future drugs, things could be looking up. Much rests on the outcome of future lab trials and, more recently, trials of a new lung cancer treatment. However, investors will be in “good company,” as this stock is the largest holding in Neil Woodford´s Equity Income Fund.

Lloyds

One of the most held shares among UK private investors, Lloyds Banking Group is also becoming popular among fund managers, says Khalif. The bank has been remodelled as a simpler, more digitally-focused operation, recently announcing increased dividends. Shares offer a 5.5% prospective yield.

Copyright M2 Bespoke 2017

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