Even though the FTSE 100 yields around 4.3% at the moment, I’m considering the income investing potential of Vodafone Group plc (LON:VOD) (VOD.L), Centrica PLC (LON:CNA) (CNA.L), Royal Dutch Shell Plc (LON:RDSB) (RDSB.L) and Banco Santander SA (LON:BNC) (BNC.L). Could they be worth adding to my portfolio?
Vodafone’s dividend yield is over 7% at the moment, which suggests to me that investors are adopting a cautious stance regarding its future. With the cost of acquisitions and investment in 5G mounting up, there are concerns about its dividend prospects.
The recent update from the company, though, suggested to me that its dividends could be affordable. With Vodafone having growth potential from partnerships and acquisitions in my view, I’m optimistic about its long-term prospects, although volatility may remain high in the near term.
Shell’s share price could come under further pressure in my view. The oil price may not have finished its fall of the last couple of months, with investors adapting to news that there will be waivers for eight countries regarding the sanctions being applied to Iran.
This means that supply growth may be higher than previously expected. However, with Shell having what I believe is a strong balance sheet and diverse business model, I feel its 6% dividend yield could be relatively appealing in the long run.
Centrica’s 8% dividend yield continues to be one of the highest in the FTSE 100 at the moment. The company, though, faces political and regulatory risk, as well as potential challenges from the major changes it is making to its business model.
However, with cost cuts set to improve the company’s efficiency and it appearing to have a large margin of safety in my eyes, I feel that Centrica could offer recovery potential in the long run.
Banco Santander’s share price has disappointed in 2018, with it seemingly affected by an uncertain outlook for the global economy. Political risks in the UK and Brazil, which are two key markets for the bank, may also be holding back its performance to some degree.
Since the bank is forecast to post positive EPS growth in the next two financial years and has a dividend yield of over 5%, I feel it could be undervalued given its relatively efficient business model. As a result, I’m cautiously optimistic about Santander’s prospects over future years.