There are several stocks listed on the London Stock Exchange, all promising returns on investment. However, there are some stocks that consistently perform better than the rest in terms of return on investment. “Based on your goals as an investor, a stock may be rated as a high performing stock or a stock that is performing below expectations”, explains investor Saar Pilosof. “The truth is that stock market performance is cyclical and circumstantial and a stock that may perform well this quarter may perform poorly for the next threequarters and so on, depending on theinvestor’s goals”.
Since most investors measure stock performance in terms of dividend yield or capital gain profitability, a reasonable measure of stock performance may be dividend yield and capital gain profitability. Some of the top performing stocks on the FTSE 100, in terms of dividend yield, are as follows:
- HSBC Holdings – 6.19%
- Royal Dutch Shell A – 7.17%
- Royal Dutch Shell B – 6.96%
- Vodafone – 6.13%
- Centrica – 6%
These stocks span various industries and most of these companies pay up to 4 dividends per annum. The current yield on the FTSE stands at only 3.73%. Of course, dividend yield is not the sole indicator of the best performing stocks. In truth, the best stocks to invest in are those that not only have high dividend yields, but they should be stocks issued by companies that have a track record of consistently increasing profitability over the last 5 to 10 years. Return on capital employed (ROCE) is also another measure that may be used to determine which stocks are the best stocks in the UK. Some companies with high average ROCE over the past 10 years include Domino’s Pizza UK (38% ROCE with a dividend yield of 2.5%) and Pay Point (33.9% dividend yield and 4.2% dividend yield).